MADRID (Reuters) - Spanish house prices fell at the sharpest pace since current records began in the first quarter, data showed on Thursday, deepening a property market slump and serving up more bad news for the country’s battered banks.
Prices dropped 12.6 percent year on year, national statistics institute INE said. The fall was the biggest since the data series began in 2007, easily beating the previous trough of 7.7 percent in the second quarter of 2009.
Spain’s banks were left high and dry after a housing boom collapsed four years ago, saddled with billions of euros in bad debts related to the property sector, while sky-high unemployment has driven a sharp climb in unpaid loan rates.
The government said last weekend it will borrow up to 100 billion euros from Europe to help recapitalize the lenders, though many economists believe the aid will not be enough to avert a full sovereign bailout.
With the banks struggling to stay afloat, loans for anyone wishing to buy a new home are declining rapidly, with mortgage lending suffering its largest fall in over six years in February.
In a report earlier this month, the International Monetary Fund (IMF) said Spanish house prices could drop by almost 20 percent this year under an adverse scenario.
Reporting by Paul Day; Editing by Fiona Ortiz, John Stonestreet