BRUSSELS (Reuters) - Residential property prices in Spain and Slovenia fell the most in the euro zone in the last three months of 2012, data showed on Thursday, a day after the European Commission warned of the fragility of the two countries’ economies.
House prices fell 12.8 percent in Spain in the fourth quarter of last year compared with the same period in 2011, the EU’s statistics office Eurostat said.
Compared with the third quarter, Spanish house prices fell 1.4 percent at the end of last year, although that drop was the smallest in percentage terms for the whole of 2012, suggesting the rate of decline may be slowing.
In Slovenia, which is facing a banking crisis, prices slid 8.8 percent between October and December versus the same period in 2011, and by 3.5 percent on a quarter-by-quarter basis.
That compared with a euro zone average fall of 1.8 percent in the fourth quarter on an annual basis. Compared with the third quarter, residential real estate prices were down 0.5 percent, Eurostat said.
Spain and Slovenia have deep banking and labour-market problems that are some of the most complex in the European Union, the European Commission said on Wednesday, naming the two countries in its early warning system that seeks to avoid national problems becoming a wider threat.
Eurostat’s real estate data, which the office began releasing for the first time in January, shows the extent of the property crash that followed the global financial crisis from 2008 and propelled the euro zone into its own debt crisis.
A bursting of the property bubble in Spain not only erased years of economic growth, but left banks with trillions of euros of bad loans, helping to push unemployment to record levels.
Slovenia is trying to avoid becoming the latest euro zone country to take a bailout, following the rescue of Cyprus.
According to the Paris-based Organisation of Economic Cooperation and Development, Slovenia’s local banks, mostly state-owned, are burdened with 7 billion euros ($9.2 billion) in bad loans, equivalent to a fifth of Slovenia’s annual output.
Slovenia is the only ex-communist European Union state that declined to sell most of its banking sector into private hands, a strategy that led to political influence, mismanagement and disastrous lending that has now put the sector at risk.
Reporting by Robin Emmott; Editing by Mark Potter