Finally, Realistic Spanish Property Trends
February 19th, 2009
At last, we have access to a set of numbers about the Spanish property market which are worth taking seriously.
Regular readers will know that the Spanish Ministry of Housing figures are laughable – not just because they still show property values increasing – but because their average house prices are calculated using mortgage valuations.
Last year, the National Institute of Statistics stepped-in with their own house price index – only to find that their figures also showed property prices in Spain increasing. Their figures are based on the actual notarised values of property transactions – which are heavily skewed by the amount of cash that changes hands ‘under the table’.
Even our own Spanish House Price Index, based on advertised property prices, continues to show property prices holding steady as vendors and their agents refuse to advertise at a substantial discount.
Tinsa, a leading company of property assessors have been compiling their Spanish property market index since 2001 – and making a summary of it publicly available since the middle of 2008.
Wait though, if the Ministry’s figures – based on valuations – are so wildly irrelevant, what makes Tinsa’s figures – also based on valuations – any better?
The short answer, as noted by Edward Hugh at Spain Economy Watch, is that the Tinsa trends reflect our first-hand experience of reality very closely. Tinsa’s reports are not focused on the actual price of a particular property – but on the overall trend in house prices. Whatever their methodology is, it seems to be working.
You can download the latest report from the Tinsa web site. Ignore the horrible mix of Spanish & English on the site – there’s great data here.
First off, this graph shows that their index of property prices increased steadily until the end of 2007 – precisely in accordance with our real-world experience. Since then, their index has dipped with their January 2009 index similar in value to that of January 2006.
The second graph shows the percentage of change in the index, year-on-year. We can see that between 2002 and the middle of 2006, their index of property prices increased by around 15% annually. Again, this is consistent with what actually happened in the market.
In the middle of 2006, the increase in property prices slowed down, so that by the end of 2007, property prices were increasing by less than 5% Y-O-Y.
At the end of 2008, property prices fell by 10% overall. These figures are the most sane representation of reality I have seen – from any source.
Now, as Edward Hughes notes, all we need to do is keep an eye on this second graph to see when it starts to level out and, hopefully, kick back up again.
If you want to know when the bottom of the Spanish property market is approaching, watch out for these monthly reports from Tinsa.
Martin Dell, Kyero.com
