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Spanish Property Prices Fall by 1.3% Q3 2008

2008-10-16T08:00:00Z

Average Spanish property prices rose by 0.4% over 12 months to the end of September, but fell by 1.3% in the third quarter, according to the latest figures from the Ministry of Housing.

Taking into account consumer price inflation, which stood at 4.5% in September, the real cost of housing has fallen by 4.1% over the last 12 months.

Newly built property prices rose by 1.7% over 12 months, but fell by 0.8% in the quarter. Resale or ‘second hand’ property, which the Ministry of Housing defines as more than 2 years old, fell by 0.3% over 12 months, and by 1.7% in the quarter.

On a yearly basis, average prices rose by as much as 5.9% in the Andalucian province of Huelva, home to the Costa de la Luz, and by 4.9% in the province of Valencia, in the Valencian Region. Average prices also rose in Galicia (+3.7%), Barcelona (+3.5%), Teruel (+3.5%), Almeria (+3.3%), Tarragona (+3.3%), Cadiz (+2.8%), Seville (+2%), the Balearics (+1.7%), Pontevedra (+1.2%), Girona (+1.2%), Asturias (+1.1%), and Granada (+0.5%).

Average prices fell in all other regions, the most in Madrid (-3.7%), Cantabria (-3.0%), Las Palmas (-2.5%), Tenerife (-1.7%), Castellon (-1.5%), Alicante (-1.5%), Malaga (-0.7%), Cordoba (-0.5%), Murcia (-0.5%), and Extremadura (-0.4%).

The problem is, few people actually believe the Ministry of Housing’s figures, which show average Spanish property prices still rising in nominal terms in the middle of a property market crash. Countries with more reliable housing market statistics, such as the US, the UK and Ireland, all have property prices falling by double digits, and are probably a better guide to the true situation in Spain. It is fair to assume that Spanish property prices are down by a similar amount, and by as much as 20% in coastal areas full of holiday homes.

If the Ministry of Housing’s figures still look wildly optimistic, new data from Tinsa, one of Spain’s leading appraisal companies, looks slightly more credible. According to Tinsa, Spanish property prices fell by 4.9% over 12 months to the end of September, and by 5.9% in the first 9 months of 2008. As with the government’s figures, resale prices fell more than newly built prices, probably because private vendors have more room for manoeuvre on price than developers.

According to Tinsa, 75,000 new properties were sold in the second quarter of the year, the equivalent of 41% of the number of homes finished in the period, which drove up the inventory of new homes to 680,000.

Tinsa estimates there will no more than 300,000 transactions in all 2008, implying that the stock of unsold new homes will rise to 930,000 by year end.

Tinsa expects the inventory of new homes to keep rising into 2009, as construction on current housing developments finishes, and that it will take at least 2 years for the market to digest the housing overhang.

Story from Spanish Property Insight

INE v MVIV Stats = D'oh!

2008-10-02T08:00:00Z

Despite an unprecedented collapse in the Spanish property market, not to mention a monumental property glut that makes America’s housing overhang look trivial, Spanish property prices fell by just 0.3% over 12 months to the end of the second quarter, if you believe a house price index just launched by Spain’s National Institute of Statistics (INE).

The result of a collaboration with Eurostat – the EU’s statistics office – the new index is supposed to conform to a standard that makes it easy to compare housing markets within the EU. Some also hoped that it would prove more reliable than the Ministry of Housing’s index, which many experts agree is close to useless. The early signs are not good.

According to the new index, average Spanish property prices fell by just 0.3% over 12 months to the end of June, with resale prices falling 4.9%, and new build prices actually rising by 5.3%.

But according to anecdotal evidence and independent surveys, and contrary to what the new index says, both new build and resale prices are falling substantially, probably by more than 10%, and where prices aren’t being slashed there are simply no sales.

The fact is that the Spanish property bubble has burst, and its credit-deranged prices are no longer relevant now that the credit crunch is with us. The new index does not reflect this.

Official indexes in markets like the UK, the US, and Ireland, which have gone through a similar housing boom and bust to Spain, all show prices falling by more than 10% a year. In Spain, on the other hand, the official index would have you believe that prices are stable, even if the trend is down.

According to the new index, prices were still rising on an annual basis as recently as the end of March, by which time the Spanish press had been writing about Spain’s property bust for almost a year.

If the point of an official index is to provide reliable and timely insight into the state of the market, then this new index isn’t much use.

Story from Spanish Property Insight

Kyero Q3 2008 House Price Data Released

2008-10-01T15:59:00Z

The latest Kyero.com Spanish House Price Index reflects average asking prices for Q3 2008 - and it contains some surprises.

Overall, the average house price in Spain appears to have increased from €240,000 to €245,300 - in just three months. In the current market conditions, how can an apparent increase in house prices be explained?

Digging a little further, the overall increase can be narrowed down to 10 provinces which have experienced sizable quarterly increases themselves.

Provinces increasing in price Q3 2008
Province	Qtr increase	Yrly increase
Gran Canaria	+39.9%	-2.3%
Girona	+17.9%	+10.8%
Fuerteventura	+10.5%	-12.7%
Albacete	+10.4%	+8.0%
Asturias	+9.0%	+8.1%
Cadiz	+6.3%	+1.8%
Malaga	+4.3%	+1.4%
Pontevedra	+3.3%	+13.0%
Granada	+2.2%	-0.1%
Mallorca	+2.0%	+9.4%

In six of the ten cases, the apparent increases can be explained by a lack of representative data, as detailed below:

Gran Canaria - Canary Islands: Suspiciously low figures for Q2 makes Q3 look like a growth quarter - although Q1 to Q3 trend is more or less flat.
Girona - North-east Spain: Insufficient data for all sizes of property
Fuerteventura - Canary Islands: 1 bed properties decreasing slightly, 2, 3 & 4 bed properties increasing.
Albacete - Central Spain: Insufficient data for all sizes of property
Asturias - Northern Spain: Insufficient data for all sizes of property
Cadiz - Southern Spain: 1 bed properties reducing in price, 2 bed properties holding steady, 3, 4 & 5 bed property prices all over the place.
Malaga - Southern Spain: Apparent growth on 2,3,4,& 5 bed properties.
Pontevedra - North-west Spain: Insufficient data for all sizes of property
Granada - Southern Spain: Marginal apparent growth on some sizes of property skewing the overall average
Mallorca - Balearic Islands: Apparent growth on 2,3,4,& 5 bed properties.

However, this still leaves 4 provinces where the apparent increase in price cannot be explained by a lack of statistical relevance. After double and treble-checking the price calculations, there appear to be no errors.

Exactly why asking prices in Fuerteventura, Cadiz, Malaga & Mallorca appear to be growing is a mystery to me. If you have an opinion on one of the above provinces, please select any of the above links and leave your comments using the form at the bottom of each page. In the meantime, I'll carry on routing around for an explanation.

This reminds me of when slide-rules were introduced to maths lessons at school (yes, I'm that old). What always baffled me about those calculator pre-cursors was that you needed to have a rough idea of the answer before using the contraption in the first place. So, with house price statistics, we question them only when they don't fit with our gut-feel of what the numbers should be.

Martin Dell, Kyero.com

Q2 2008 Spanish Housing Ministry Figures Released

2008-09-26T10:58:00Z

Year-on-year Q2 2008 saw foreign buyers in Spain completing on 31% fewer off-plan properties and 67% fewer resale properties. Spanish buying was down by 14% and 44% respectively. Overall, the total value of property transactions fell from € 39.7 Billion to € 26 Billion - a drop of 35% Y-O-Y.

The Spanish Ministry of Housing should be operating the nation's bus service. after a six month wait for a quarterly update to their stats, they publish two quarters in the same month.

Perhaps that's one of the reasons the Spanish Institute of Statistics have finally announced that they will be publishing their own (and by inference, accurate) house price index next month.

Here's an analysis of the newly-revised Q1 2008 and newly-released Q1 2008 information. You can download sanitised versions of the MVIV data for:

Resale Market Suffering

Resales transactions overall dropped from 116,508 properties in Q2 2007 to 61,609 in Q2 2008 - a decrease of 37% Y-O-Y. In the same period, new build transactions dropped from 93,733 to 79,329 - a decrease of 15%. The sharper slowdown in the resales market reflects three realities:

Developers and constructors have more margin to play with - and can offer deeper discounts to buyers
The 'sales' of most new-build properties were actually contracted several years ago - the current stats reflect completions, not sales.
Private sellers of resale properties are choosing to maintain their asking price and wait - if they possibly can

Number of property sales (Foreign buyers)	Q2 2007	Q2 2008	Change %
New build	6,407	4,417	-31%
Resale	17,815	5,950	-67%
Total	24,222	10,367	-57%

Number of property sales (Spanish buyers)	Q2 2007	Q2 2008	Change %
New build	87,326	74,912	-14%
Resale	98,693	55,659	-44%
Total	186,019	130,571	-30%

Spanish Property Market Shrinking

With the number of transactions down by 46% overall (from 210,241 Q2 2007 to 113,938), the amount of money changing hands in the market is also down significantly. However, the Ministry's average sales prices are still unreliable as this comparison against Kyero's data demonstrates.

Average sales value (Andalucia Resales)	Q2 2007	Q2 2008	Change %
MVIV	156,000	157,000	+1%
Kyero	250,000	238,000	-5%

Even though the MVIV data is still showing a 1% Y-O-Y increase in price for resale property in Andalucia, this clearly isn't consistent with a property market experiencing a decline in volume of 46%. The MVIV data hides the fact that less and less money is being handed over 'under the table' - therefore artificially increasing the recorded transaction value.

The Kyero data hides the fact that even though resales asking prices appear to have slipped 5% Y-O-Y, there is no reliable record of actual sales prices. Again, in a declining market, actual sales values are likely to be significantly lower than their advertised prices.

Bearing in mind these limitations, we still see a significant decrease in the overall sales volume of the Spanish property market.

Value of property sales €Bn (Foreign buyers)	Q2 2007	Q2 2008	Change %
New build	1.3	0.9	-31%
Resale	3.0	1.2	-60%
Total	4.3	2.1	-51%

Value of property sales €Bn (Spanish buyers)	Q2 2007	Q2 2008	Change %
New build	16.6	14.0	-16%
Resale	18.8	9.9	-47%
Total	35.4	23.9	-32%

(All MVIV figures quoted exclude sales of subsidised housing)

Compared to this analysis of the Q1 2008 MVIV data, the decline in the Spanish property market has yet to bottom out. Comparing the Y-O-Y declines experienced in Q1 and Q2 2008, the rate of decline is still increasing.

Y-O-Y % Change	Q1 2008	Q2 2008
Foreign purchases	-56%	-57%
Spanish purchases	-29%	-30%
Foreign spending	-49%	-51%
Spanish spending	-30%	-32%

Martin Dell, Kyero.com

New 'Official' House Price Index in Spain

2008-09-25T19:54:00Z

Spain will launch a new house price index on Oct. 1, the statistics institute said on Thursday.

The data will be an alternative to Housing Ministry figures which analysts have criticised for not reflecting the property market slump.

Spanish house prices declined 0.3 percent between April and June, while home sales fell 31.5 percent in the second quarter from last year, the Housing Ministry said earlier this month.

Real estate firms including Tinsa, Facilisimo and idealista.com estimate prices have slipped around 5 percent this year and some economists have said the value of Spanish real estate could drop by more than a third.

The new House Price Index (IPV) will report quarterly data on new and used homes, but the institute said it aims to report the data on a monthly basis and they could form part of Spain's EU-harmonized inflation figures.

Story from Forbes

Q1 2008 Spanish Housing Ministry Figures Released

2008-09-11T12:06:00Z

The Spanish Ministry of Housing recently revised their house price data for Q4 2007 and provided provisional data for Q1 2008. It makes you wonder what they've been doing for the past 5 months or so doesn't it?

You can download sanitised versions of the MVIV data for:

Comparing numbers for Q4 2007 to Q4 2006 and Q1 2008 to Q1 2007, we get an idea of the scope and speed of the slowdown.

Resale Market Suffering

Comparing the number of property transactions completed in Q1 2007/8, both foreign and Spanish buyers seem to be favouring an off-plan purchase. Even though sales of newly built properties and resale properties have declined by 32% Y-O-Y overall, sales of new builds have reduced by 12% and resales by 47%.

That trend is further amplified when looking at transactions involving foreign buyers, where new build transactions have slipped 26% Y-O-Y, and resales by 46%.

It's no surprise that developers and constructors have more margin to play with and more incentive to sell quickly to preserve cash-flow or service debts. Predictably, with sales volumes down overall, both Spanish and foreign buyers are eschewing the purchase of a resale property for the bargain-basement new builds.

Number of property sales (Foreign buyers)	Q4 2006	Q4 2007	Change %	Q1 2007	Q1 2008	Change %
New build	7,310	5,636	-23%	6,435	4,775	-26%
Resale	18,616	10,104	-46%	20,083	6,909	-66%
Total	25,926	15,740	-39%	26,518	11,684	-56%

Number of property sales (Spanish buyers)	Q4 2006	Q4 2007	Change %	Q1 2007	Q1 2008	Change %
New build	96,074	88,589	-8%	74,078	4,775	-11%
Resale	113,455	70,615	-38%	102,004	57,713	-43%
Total	209,529	156,481	-25%	185,281	131,791	-29%

Spanish Property Market Shrinking

With the number of transactions down by 32% overall, the amount of money changing hands in the market is also down significantly. However, the Ministry's average sales prices are still unreliable as this comparison against Kyero's data demonstrates.

Average sales value (Andalucia Resales)	Q4 2006	Q4 2007	Change %	Q1 2007	Q1 2008	Change %
MVIV	141,000	174,000	+23%	205,000	210,000	+2%
Kyero	262,000	245,000	-6%	248,000	238,000	-4%

Even though the MVIV data is still showing a 2% Y-O-Y increase in price for resale property in Andalucia, this clearly isn't consistent with a property market experiencing a decline in volume of between 30% to 60%. The MVIV data hides the fact that less and less money is being handed over 'under the table' - therefore artificially increasing the recorded transaction value.

The Kyero data hides the fact that even though resales asking prices appear to have slipped 4% Y-O-Y, there is no reliable record of actual sales prices. Again, in a declining market, actual sales values are likely to be significantly lower than their advertised prices.

Bearing in mind these limitations, we still see a significant decrease in the overall sales volume of the Spanish property market.

Value of property sales €Bn (Foreign buyers)	Q4 2006	Q4 2007	Change %	Q1 2007	Q1 2008	Change %
New build	1.3	1.2	-8%	1.2	1.0	-11%
Resale	2.8	1.8	-36%	3.2	1.3	-59%
Total	4.1	3.0	-27%	4.5	2.3	-49%

Value of property sales €Bn (Spanish buyers)	Q4 2006	Q4 2007	Change %	Q1 2007	Q1 2008	Change %
New build	18.0	17.5	-3%	15.7	13.9	-11%
Resale	20.8	12.8	-38%	18.8	10.3	-45%
Total	38.8	30.3	-22%	34.4	24.2	-30%

In Q1 2008, foreign buyers accounted for 8% of the total number of property transactions, and 9% of the total transaction value. This indicates that foreign buyers tend to spend between 5% and 11% more than Spaniards on a property purchase in Spain.

Popular Towns in Spain

Looking at the number of property completions in Q1 2008, we see that some towns are faring better than others.

New Build Top 10	# Units Sold
Málaga (Malaga)	765
Gijón (Asturias)	643
Orihuela (Alicante)	553
Cartagena (Murcia)	549
Estepona (Malaga)	518
Valencia (Valencia)	514
Burgos (Burgos)	501
Roquetas de Mar (Almeria)	498
Algeciras (Cadiz)	497
Las Palmas de Gran Canaria (Gran Canaria)	475

Resale Top 10	# Units Sold
Valencia (Valencia)	1069
Sevilla (Sevilla)	1018
Palma de Mallorca (Mallorca)	708
Zaragoza (Zaragoza)	667
Málaga (Malaga)	626
Alicante (Alicante)	591
Bilbao (Vizcaya)	544
Torrevieja (Alicante)	486
Murcia (Murcia)	439
Marbella (Malaga)	422

Outright Top 10	# Units Sold
Murcia (Murcia)	2465
Valencia (Valencia)	1583
Málaga (Malaga)	1391
Sevilla (Sevilla)	1344
Alicante (Alicante)	1059
Gijón (Asturias)	1033
Zaragoza (Zaragoza)	1009
Palma de Mallorca (Mallorca)	998
Orihuela (Alicante)	936
Cartagena (Murcia)	897

(All MVIV figures quoted exclude sales of subsidised housing)

It's surprising to see Gijón in Asturias so high up in the sale of new build properties, alongside such traditional heavyweights such as Estepona and Malaga. Remember, however that these are new build completions where the initial sale will have taken place some years earlier.

Also surprising is the appearance of Marbella in the resales Top 10 and Murcia city as the outright winner in combined unit sales in Q1 of 2008. Even though the market has slowed, clearly a significant volume of property is still being bought and sold in Spain.

Martin Dell, Kyero.com

FT Lanuches European House Price Guide

2008-07-25T07:56:00Z

UK newspaper the Financial Times (FT) has launched, what it calls, the first European house price guide which brings together data from across Europe.

The company said that the launch of the dedicated microsite will help rectify the “lack of effective house price data in Europe” and is collated using official data from national statistics offices, central banks, land registry, surveys, lender valuations and will be updated on a ongoing basis. The microsite will allow the user to download selected data the statistics into a single excel spreadsheet.

The European house price information, can be accessed through an interactive map and graph covering annual, bi-monthly, quarterly and monthly figures from 1970 onwards. This allows the user to view hotspots across Europe on an interactive map and to view trends through interactive graphs capable of selecting individual countries over a period of time.

“Within Europe it is very hard to find out an individual country’s housing data, which is surprising considering the importance of the housing market to any country’s economy,” said Simon Briscoe, statistics editor, Financial Times. “The microsite will help provide investors and researchers with a resource that can be used to spot trends.”

As well as the varying house valuation data, the microsite also provides other essential information such as the country’s mortgage debt and offers analysis and commentary from FT journalists. The European House Price Guide follows the launch of its UK House Price Index earlier this year.

Story from OPP (registration required)

New Spanish House Price Index Q2, 2008

2008-07-02T09:27:00Z

Now that there’s detailed Spanish house price information on Kyero.com, we’ve taken the opportunity to streamline the pdf version of the Kyero.com Spanish House Price Index.

As you can see from the image above, it’s just 3 pages in length now – but there’s no shortage of information in there. There are average proces for 30 Spanish provinces and pricing trends going back to the last quarter of 2006.

We’ve also worked hard on the layout and presentation to make it easier to read, understand and digest – I hope you like it and that it proves to be a useful overview and companion to the detailed information now available throughout Kyero.com. Either way, love it or hate it, please let me know.

Martin Dell, Kyero.com

New & Improved Spanish House Price Index

2008-06-17T09:22:00Z

One of the problems we've been wrestling with is how best to present the quantity of pricing data we've amassed over the years (we've produced over 5 million points of data by updating our house price stats every month since the middle of 2005).

Hopefully, these new features, released only yesterday, will make it easier for you to dive in at the level you need without getting bogged down in too much detail.

You can find links to this new data from every property page and every property results page - just look for these About links at the bottom of the left-hand column.

These links are always relevant to wherever you are currently searching or viewing property details and link to more information about that particular town, province or region.

Clicking that house prices link will display this page about house prices in Malaga province. Here's what you'll find there

We now show when we do not have sufficient data to reliably display an average price
The quarterly average price is the biggest number, going back to 2005
Each quarter is compared to the province or regional average price
Each quarter is compared to the national average price
The current year is highlighted
The latest quarterly figures are summarised with links to province, region and national averages where appropriate
Average prices can be broken down even further by size of property
The original PDF house price index is still available for those who prefer a consolidated 'big picture' report

I hope you find this new layout more comprehensive without being overwhelming. Love it or hate it, please let me know so that we can make whatever adjustments are necessary to make this as useful as possible.

Martin Dell, Kyero.com

Spanish Government Data Conceals Scope of Downturn

2008-05-14T06:00:00Z

Data recently released by the Spanish Ministry of Housing for 2007 reveals that the market slowed by at least 11% in 2007 compared to the previous year. The total Euro value of property transactions fell from €159 Billion in 2006 to €142 Billion in 2007.

	2005	% +/-	2006	% +/-	2007	% +/-
Q1	€27.3B	+22.9%	€37.4B	+37.2%	€38.9B	+4.0%
Q2	€34.9B	+22.9%	€41.5B	+18.9%	€39.7B	-4.2%
Q3	€31.9B	+23.4	€36.8B	+15.6	€31.9B	-13.5%
Q4	€37.9B	+24.4%	€42.9B	+13.1%	€31.3B	-27.0%
Total	€132B	+23.5%	€159B	+20.3%	€142B	-10.6%

The year-on-year slowdown is actually likely to be closer to 15% as the government figures do not account for cash changing hands as part of a property transaction. Due to a government crackdown, more property deals are now more completely notarised than previously. This has the effect of making current prices appear to have grown - when in fact the growth is due to a greater proportion of the transaction being notarised.

The Government trends are further compromised because they combine sales of newly built properties with those of resales. This means that market trends are obscured because sales of newly built properties today were essentially transacted several years ago - but completed today.

Today's sales of new build properties are a reflection of market activity several years in the past, not an indication of the current health of the market. Finally, a further muddying of the official figures occurs because sales of subsidised housing are often included.

Analysing the volume of non-subsidised resale property transactions is the best indication of longer term property market trends in Spain.

The number of resale transactions fell from 532,838 in 2006 to 403,642 in 2007 - a 24% decrease year-on-year. What escapes many analysts is that this isn't a new trend. The number of transactions have been declining steadily since Q2 2006, with Q4 2007 showing a hefty 41% decrease in just 12 months.

	2005	% +/-	2006	% +/-	2007	% +/-
Q1	125,717	+4.5%	136,363	+8.5%	122,087	-10.5%
Q2	148,922	+5.1%	145,289	-2.4%	116,508	-19.8%
Q3	122,405	-1.9%	117,109	-4.3%	85,044	-27.4%
Q4	151,585	+2.8%	132,071	-12.9%	77,996	-40.9%
Total	550,634	+2.7%	532,838	-3.2%	403,642	-24.2%

If we compare the sales volume of new build properties, we see a very different picture because it lags the resales trend by at least 18 months.

The 2007 new build figures below show a similar trend to the 2006 resales figures - and are clearly on the decline.

	2005	% +/-	2006	% +/-	2007	% +/-
Q1	60,950	+4.6%	86,358	+41.7%	89,712	+3.9%
Q2	80,216	+13.3%	94,333	+17.6%	93,733	-0.6%
Q3	82,842	+25.2	93,081	+12.4	86,836	-6.7%
Q4	82,052	+13.6%	103,384	+26.0%	90,068	-12.9%
Total	306,060	+14.4%	377,156	+23.2%	360,349	-4.5%

Compare these two sets of numbers to the official market index from the Spanish government. Below, they add in subsidised housing and present their index of the market trend.

	2006	2007
Q1	+11.8%	+7.2%
Q2	+10.6%	+5.8%
Q3	+9.8	+5.3%
Q4	+9.1%	+4.9%
Total	+10.3%	+5.8%

The Government line until quite recently has been that price growth was slowing down but that prices increased in 2007. In reality the volume of resales has fallen by 24%, the volume of new builds by 5% - and house prices have definitely not increased to compensate for this overall decrease in volume. Overall the number of property transactions is down from 909,994 in 2006 to 763,991 in 2007 - a decrease of 16%.

With such a marked slowdown in the Spanish property market, the question everyone asks is "Why aren't we seeing house prices falling by 20-30%?" The broad answer is that only 'distressed sellers' are willing to negotiate aggressively on price at the moment.

In the category of 'distressed' we find individuals who must sell for whatever reason and developers who need to service their bank debt. These two categories do not constitute the entire market by any means - and it is for that reason that asking prices have not fallen across the board.

The property market in Spain is a buyers market currently IF the seller needs to sell. Many sellers are maintaining their asking prices and are happy to wait until the market bounces back.

Download the updated and translated data from the Spanish Ministry of Housing

Martin Dell, Kyero.com

Revised Price Index

2008-04-04T16:40:00Z

Thanks to Sam at A Place in the Sun we found an error in the latest price index and corrected it.

There was a discrepancy between our latest Spanish house price index and the national average price for Spain here.

Now they’re reconciled (apart from a small rounding error) and I’m happy to report that we all agree that the national average price of property in Spain is €240,000 – Thanks Sam :)

Martin Dell, Kyero.com

Lies, Damned Lies and Statistics

2008-03-25T08:30:00Z

After writing about the decline of foreign property transactions, I got my wrists slapped by Luisa at Mirodali Properties.

She quite rightly pointed out that, by combining sales figures for new-build properties and resales, I had (unintentionally) distorted the actual growth rates for each province.

This is because a new-build property essentially gets 'sold' prior to construction but the sale is only recorded after construction. Hence, the growth rates of new-build completions actually reflect buying activity that is two, three or more years old.

Compare this to the sale of a resale property which is notarised within a few months of a buyer saying 'Yes, that's the house I want' and you begin to see the problem.

By combining new-build and resales growth rates, I added apples and oranges and made bananas - my apologies.

Another facet I did mention but perhaps didn't stress enough is that the figures I analysed were for foreign buyers only - not all purchases.

Here's a revised spreadsheet (keeping apples and oranges separate this time).

Luisa was absolutely spot-on - mixing numbers for new-build properties and resales is meaningless. Here's what struck me when comparing the number of resales transactions between Q2 2006 and Q2 2007:

Overall, resales transactions dropped by almost 20% from 145,000 to 116,000

Andalucia resales fell overall by 13% despite 23% more purchases by foreigners. Spanish resale purchases fell by 17%.

Granada province was the jewel in the crown of Andalucia showing an overall 19% increase in resales transactions - a reflection of both Spanish and foreign buying trends.

Apart from Granada, every other province in Andalucia recorded an overall decline in resales transactions, despite increased activity in many provinces from foreign buyers. Spanish buyers, who account for approximately 85% of all resale purchases only increased their purchasing in Granada by 14%.

The Canary Islands overall saw 16% more resale purchases in Q2 2007 compared to Q2 2006 - largely thanks to 73% more foreign purchases but Spanish purchases increased by 4% too.

The Balearic Islands also saw a healthy increase in foreign purchases - up by 18% from 817 to 960.

Foreign purchases now account for 15% of all resales transactions. Proportionally, more foreigners are buying in Spain than ever before - favouring the regions of:

Andalucia (up from 9% to 13%)
The Balearic Islands (up from 20% to 24%)
The Canary Islands (up from 17% to 26%)
Valencia (up from 23% to 26%)
Murcia (up from 23% to 25%).

(Percentages are the proportion of all purchases made by foreigners)

Foreign interest declined in many regions - significantly in Calatlunya and Madrid - down by 10% and 25% respectively.

In summary, it seems as though Spanish buying activity is cooling faster than foreign activity. Perhaps this is because the Spanish economy is more reliant on the construction industry than elsewhere in Europe. In essence, as the construction boom has ground to a halt, there are more unemployed construction workers with less spare cash than previously.

Martin Dell, Kyero.com

Foreign Property Transactions Down 16%

2008-03-12T16:22:00Z

The latest figures from the Spanish Ministry of Housing contain good and bad news about how many homes were purchased by foreigners during the second quarter of 2007.

Comparing Q2 2006 to Q2 2007 we see the following:

Overall number of property transactions fell by 16% from 28,702 to 24,222
Andalucia region had a very strong Q2 in 2007 - up by 23% from 3,253 to 4,359. New build completions in Andalucia were up by 60% and resales up by 23%
The strongest performer in Andalucia region was Cadiz province with new build completions up 185% from 41 to 117. Sevilla province came a close second with new build growth of 153% from 17 to 43 - seemingly at the expense of resale growth - up just 1%.
Malaga and the Costa del Sol was far from disastrous, up 61% overall from 1,402 completions to 2,262 and a strong showing for both new build and resale properties.
The islands had a respectable performance. The Balearics improved by 17% overall and the Canaries by 43% - thanks to resale property performing well.
Valencia region experienced 7% fewer property completions - down from 7,409 to 6,969. Alicante province experienced poor new build performance, down by 16% from 4,975 to 4,794. Resale completions increased by 6% from 2,715 to 2,878 giving Alicante an overall drop in completions of 4%.
Valencia province experienced the reverse split between new-build and resale completions. New build completions increased by 23% and resales decreased by 12% - producing an overall drop in volume of 9% in the province.
Normally significant contributors to the number of property transactions, Catalunya region dropped by 39%, Madrid by 57% and Murcia by 24%.

Even though these figures are now almost 9 months old, it's the first time that this data has been made available to the public. It confirms the scope of the downturn in the number of property purchases by foreigners in Spain.

What's surprising is how well the region of Andalucia performed and, in particular, the strong performance of Malaga and the Costa del Sol.

Download the full set of MVIV data

New Ministry Statistics

2008-03-12T12:56:00Z

We just updated the fourteen spreadsheets produced from studies by the Spanish Ministry of Housing (MVIV) - they now include revised totals for Q1 2007 and Q2 2007

There are three groups of figures:

Average house prices - Actual figures should be taken with a pinch of salt but trends should be interesting to analyse. One advantage that these figures have over the more common 'per square metre' MVIV prices is that they dispense with the inaccuracy of poorly measured and documented floor areas.
Number of sales - These are the most interesting figures. Accurate numbers for how many properties are being purchased. This is the most accurate and reliable data available on the real size of the Spanish property market.
Value of sales - Multiplying the first set of figures by the second set of figures yields this set - an estimation of how much money is being spent in the Spanish property market. Again, these numbers will be lower than the actual total spent, thanks to a proportion of black money deals but the trends will be useful to observe.

There's a new spreadsheet showing sales by town too - should be interesting to see which towns are popular - and which aren't

We'll post some anaylysis and insights here later this week.
Martin Dell, Kyero.com

Gran Canaria Price Trend?

2008-01-21T12:43:00Z

Question: We are condisering investing in a two bedroom rental property in Gran Canaria shortly. According to your index the prices have remained fairly steady over the past few years but do you see any particular trend and could this be affected by a possible relaxation of the building morartorium in the future?

Answer: I agree with you that the market in the Canary Islands has been pretty flat recently:

One of the problems with this trend is that there's so little reliable data available. Our own trends for the Canaries are the result of just a few hundred properties for sale there (compared to approx 20,000 in Malaga). So you should be aware that a few unrealistically priced properties would skew these trends dramatically.

Having said that - there isn't a more reliable source of data (in my opinion) for these reasons.

In terms of future trends, that's even harder to predict. My gut feel is that prices will be pretty much flat across Spain for the next couple of years. Aside from distressed sales, I don't see prices falling much. Spanish sellers would rather wait then reduce their prices and they form the bulk of the market.

If buying now, I wouldn't count on any capital gains in the short to mid term (although I think actual losses are unlikely). In terms of the potential rental income of a property, again I would be wary of banking on that to meet mortgage repayments. There are a lot of holiday home rentals in Spain - more than there are tourists to fill them.

The long let market will grow, I believe, but outside of the largest cities, that's not a well established market. There's demand, but insufficient supply at the moment. I believe that the long let market will grow over the next couple of years but, again, it's a little too soon to tell how that's going to pan out.

Martin Dell, Kyero.com