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Kyero.com Q2 2009 Spanish House Price Index

2009-07-03T08:00:00Z

According to the Q2 2009 Spanish House Price Index from Kyero.com, the average asking price of a Spanish property has decreased by 2% from Q1.

Download the latest Spanish House Price Index. It's updated and published quarterly to evaluate the advertised prices of 100,000 Spanish properties.

Lugo province leads the way with asking prices dropping by almost 16% quarter-on quarter and almost 30% year-on-year

Provinces with decreasing prices
Province	Q1/Q2 2009	Q2 2008/2009
Lugo	-15.8%	-29.2%
Barcelona	-12.85	-0.8%
Sevilla	-5.1%	-27.1%
Cordoba	-4.6%	-9.0%
Valencia	-3.6%	-12.8%
Pontevedra	-3.2%	-22.3%
Teruel	-2.9%	-27.8%
Murcia	-2.6%	-6.3%
Alicante	-2.4%	-3.1%
Coruna	-1.6%	-1.2%
Almeria	-1.6%	-6.9%
Granada	-1.1%	-1.2%
Castellon	-0.8%	-5.1%
Jaen	-0.6%	-3.1%
Badajoz	-0.5%	-9.9%

While the average asking price has dropped significantly in many provinces - a welcome and necessary move - some have actually recorded price increases.

Provinces with increasing prices
Province	Q1/Q2 2009	Q2 2008/2009
Fuerteventura	+11.0%	+4.9%
Asturias	+5.3%	+15.6%
Huelva	+4.8%	+8.4%
Malaga	+3.4%	+6.7%
Tenerife	+1.6%	+0.9%

It's difficult to justify why asking prices in these areas appear to be increasing - especially when common sense and first-hand experience tells us that actual sales vales are dropping. In all likelihood, there are two factors at play:

Vendors are not dropping asking prices to leave more room to negotiate a higher final sales price
Much of the property stock is 'stale' and is being left on the market at unrealisticly high prices

Loosely correlating these house price trends with the latest Kyero.com enquiry report, it appears that neither of these tactics of artificially inflating house prices is effective.

Potential buyers are seeking, finding and enquiring about properties which they judge as representing good value. For this category of Spanish property, there appears to be no shortage of potential buyers.

I double-checked this theory with a local estate agent who will only market a property if he believes it to be competitively priced.

He cited a recent sale where the property was on the market for just two weeks, and received two asking-price offers in that time. The particular resale property was nothing special - just competitively priced.

I asked him whether he was losing business by turning away vendors who have unrealistic price expectations. He smiled and said "My commission on a property I can't sell is precisely zero. With my marketing expenses, I actually save money by not accepting these properties."

In the Spanish property market where the lack of official house price data actively stifles buyer confidence, a savvy vendor can gain an advantage by pricing their property competitively, and being willing and able to justify that asking price.

In today's connected property market which provides freedom and ease of access to information, the old tactics of double the price and offer a 50% discount are no longer effective - just ask any property buyer.

Martin Dell, Kyero.com

TINSA House Price Index May 2009

2009-06-11T07:00:00Z

The Tinsa House Price Index for May 2009 is available to download - and it makes for encouraging reading

Last month's TINSA report fell a little flat because of the hope it would show that the decrease in house prices had reversed.

Actually, both the March and April TINSA reports showed that Spanish property prices had remained at a relatively stable 10% down on an annual basis.

While this is far from exciting - and a far cry from a complete turnaround - the TINSA data does suggest that house prices in Spain have bottomed out.

Click either image to download the latest TINSA report

For the past four months, the TINSA index has been steady, 10% down Y-O-Y. Compared to the dramatic decline measured between the middle of 2006 and the start of 2009, that's quite a significant change in trend.

Once again, the TINSA data seems to be a far more accurate measure of what's actually happening in the Spanish property market.

The official government data from the Institute of National statistics and Ministry of Housing are only admitting a 10% decline in house prices from peak to trough - something anybody actually buying and selling property in Spain knows to be ludicrous.

On the other hand, TINSA's data shows a 28% decline from peak to trough - a far more realistic figure and one which tallies well with what we observe happening in reality.

Even if TINSA's figures for the rest of the year show the Spanish property market bumping along the bottom at the current levels, many people will be relieved to have actually found the bottom - rather than worrying about how much worse things can get.

Martin Dell, Kyero.com

Knight Frank Q1 Report

2009-05-27T08:00:00Z

According to the latest house price analysis from Knight Frank, the Spanish property market isn't faring too badly compared to some other countries.

Just focusing on countries which have experienced a year-on-year decline in house values, Spain is far from the worse affected.

At the bottom of the chart are Dubai and Latvia, both with whopping 30+ percent annual decreases in house prices.

Faring worse than Spain are Norway, Ireland, Denmark, Poland, Hong Kong, Estonia, UK, United States, Singapore, Dubai and Latvia with annual decreases between 9% and 36%.

Spain's modest loss of almost 7% is nothing to shout about - except that, looking at some of its neighbours - it could be a lot worse.

Even though the Knight Frank report sees little reason to be cheerful, countries such as Israel and the Czech Republic actually managed a 10% increase in house prices comparing Q1 2009 with Q1 2008.

The bad news for Brits wanting to buy property in Spain is that over the last 12 months, UK house prices have slumped 10% more in the UK than in Spain. To make matters worse, Sterling is now worth 16% less in Euros than it was at the start of 2008.

A year ago, selling a UK home for £200,000 to buy a property in Spain would have yielded approximately €270,000 of buying power in Spain. Today, that same home would sell for 16% less - £168,000 - and translate to just €190,000.

However, due to the fact that Spanish property also reduced by 6% in value over the same period, that €190,000 would have a purchasing power of €201,000 when compared to 2008. Even so, that represents a drop in real terms of €70,000 or approximately 26% in just 12 months.

Knight Frank Global House Price Index, Quarter 1 2009

Country	Year on year (% change)
South Africa	-0.3%
Sweden	-0.6%
Finland	-0.7%
Thailand	-1.0%
Philippines	-1.0%
Germany	-1.5%
Greece	-1.5%
Cyprus	-2.2%
Ukraine	-2.3%
Canada	-2.4%
Luxembourg	-2.4%
Slovenia	-3.1%
China	-3.9%
New Zealand	-4.0%
Croatia	-4.5%
Malta	-5.6%
France	-5.7%
Portugal	-5.9%
Australia	-6.7%
Spain	-6.8%
Norway	-9.4%
Ireland	-10.0%
Denmark	-11.6%
Poland	-13.0%
Hong Kong	-15.7%
Estonia	-16.2%
UK	-16.5%
United States	-16.9%
Singapore	-23.8%
Dubai	-32.0%
Latvia	-36.0%

Data from Knight Frank

Post Mortem: Mark Stucklin reminds us that the Knight Frank report is based on official government figures. In the case of Spain, we know that these are woefully optimistic and inaccurate.

Tinsa Spanish House Price Index March 2009

2009-04-15T07:00:00Z

The eagerly awaited March Spanish house price index from Tinsa is, unfortunately, not good news.

You can download the latest three page Spanish and English guide here.

After analysing last month's report, we commented "Comparing January 2009 with January 2008, the index (and therefore house prices) had decreased by 10%. The glimmer of hope contained in the Tinsa index for February 2009 shows this rate of decline slowing to 9%. Hardly cause for celebration yet - but let's face it, any good news is welcome at the moment. Many people, including myself, will be eagerly awaiting the first Tuesday of April to see if that trend continues in the March edition of the Tinsa index."

The March edition of the Tinsa report shows their index decreasing by 9.7% - more than in February, but less than in January - by a whisker.

Basically, these numbers show nothing - other than the Tinsa index, and therefore property prices in Spain have been dropping by around 10% Y-O-Y for the past three months.

There's no sign of a recovery in the Spanish property market in this month's Tinsa index.

RICS 2009 European Housing Review

2009-03-18T08:00:00Z

The RICS European Housing Review 2009 is commissioned and published by RICS (Royal Institution of Chartered Surveyors) which is the largest organisation for professionals in property, land, construction and related environmental issues worldwide.

The Spanish property market slowdown intensified during 2008, though recorded prices in the two official indices surprisingly showed only stagnation or moderate falls.

The Housing Ministry information based on the property registry, which significantly lags market transactions, recorded a -3% year-on-year change in 4q 2008 and the new INE index based on data from notaries, shown a slight negative change in 2q 2008.

The country had one of the biggest housing market booms in Europe, so the expectation is for a more marked price correction, partly for domestic reasons but also because the second home market had been so strong and foreign buyers played such an important part in it. Now they are few and far between.

Spanish property prices increased by 2.2 times in real terms between 1996 and 2006, housebuilding rates rose to record heights, and mortgage debt increased dramatically.

Housing investment alone was 8% of GDP in 2006 and construction as a whole, much of it related to real estate, about 13% of GDP; while household debt reached 125% of personal disposable income in 2007 – three-quarters of it related to mortgages.

Non-price data were showing the extent of the market turnaround in 2008, which seemed to accelerate significantly from the third quarter onwards. Transactions were down by 30% year-on-year in 3q 2008.

Housing starts were down by almost a half in June 2008 compared to the year before as developers dramatically cut back output.

In contrast, completions were actually up by a third on the year because developments from the previous period of high output were still being built out. This continuing flow of new stock onto the market has been exacerbating an already significant supply overhang.

What is more, Spain’s housebuilding has been at extraordinarily high levels for a country of its size and even the mid-2008 level of starts was likely to be far higher than the market would absorb in the months to come.

So, new supply will continue to put downward pressure on prices and further substantial falls in building are to be expected.

Spain was Europe’s largest user of capital markets to fund mortgages. Around 30% of them utilised residential mortgage-back securities and the rest covered bonds.

The impact of the credit crunch on mortgage availability has unsurprisingly been dramatic and mortgage lending had fallen almost 45% year-on-year by August 2008.

Worrying factors are the impact of the credit crunch on the availability of mortgages; the ability of the housebuilding industry to continue to cut back output in order to limit supply overhang; and the weakening of an economy that is contracting because of the scale of the reduction in housebuilding and the ending of a consumer boom.

The government has introduced some fiscal measures to revive the economy and offset the decline in the housing market but the scale of the downswing is such that any actions are only likely to moderate some effects rather than negate current housing market dynamics.

Second homes markets are obviously not only affected by developments in Spain but also by events in the originating country of purchasers.

Many buyers in Spain have been from the UK, which is expected to have the worst recession amongst the major EU economies and, furthermore, sterling has slid substantially against the euro, significantly raising sterling-denominated Spanish house prices.

Such factors further add to housing market woes in many parts of Spain, especially around the coast and on the islands.

Download the complete RICS 2009 European Housing Review (pdf document) or visit RICS.org for more information

Goodbye MVIV & INE, Hello Tinsa

2009-03-11T11:34:00Z

Despite my reservations about the official house price data from the Spanish Ministry of Housing (MVIV) and the National Institute of Statistics (INE), we've been updating and translating some of that data and making it available here.

We've now decided to stop updating that data because the data from Tinsa is better, more readily available and answers the question most people want answered:

"When will the bottom of the market occur?"

Tinsa publish changes to their Spanish property index on the first Tuesday of each month - and you can download it here. It's a three page report - in Spanish and English - and it's worth 15 minutes of your time to make sense of the data it contains.

I commented last month about why the Tinsa data is valuable, so let's see how we can use it.

The first thing to point out is that the Tinsa index doesn't attempt to give actual house values, its value is in quantifying the broad trends in the Spanish property market. So, starting at a nominal figure of 1,000 in 2001, the general Tinsa index peaked at 2239 in early 2008, and has since fallen to 2,039 last month.

In terms of describing the trend in Spanish house prices, that correlates very closely with reality. between 2001 and 2008 house prices more than doubled, and in the last 12 months or so, they declined by about 10%.

Tinsa also maintain separate indexes for different parts of Spain - and we can see the relative performance of large cities, metropolitan areas, the Mediterranean coast and the Islands.

While none of this type of information is particularly unusual in other countries, the Tinsa index is unique in Spain. The fact that it started in 2001, is accurate, freely available and in English, makes the Tinsa index unique in Spain.

Tinsa also chart a rolling annual change in their index. Their latest report shows that between the years of 2001 and 2006, their index (and therefore house prices) increased at about 15% per annum.

Around mid 2006, that rate of increase began to slow and since early 2008, the index (and therefore house prices) began to show an annual decrease. Again, this is entirely in keeping with our first-hand experience of reality in Spain.

Last month's Tinsa index showed that, comparing January 2009 with January 2008, the index (and therefore house prices) had decreased by 10%. The glimmer of hope contained in the Tinsa index for February 2009 shows this rate of decline slowing to 9%.

Hardly cause for celebration yet - but let's face it, any good news is welcome at the moment. Many people, including myself, will be eagerly awaiting the first Tuesday of April to see if that trend continues in the March edition of the Tinsa index.

Basically, Tinsa have managed to do what the Ministry of Housing and the Institute of National Statistics have failed to do - provide accurate and usable house price data for the Spanish market.

That's why, for the foreseeable future, we'll be reviewing the Tinsa data each month and leaving the Ministry data on hold.

Martin Dell, Kyero.com

Finally, Realistic Spanish Property Trends

2009-02-19T08:00:00Z

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

Q3 2008 Spanish Housing Ministry Figures Released

2009-01-09T16:08:00Z

Zamora: A 77% increase in sales of new-build properties comparing Q3 2008 with Q3 2007

The Ministry of Housing recently released their provisional figures for Q3 of 2008. You can download the revised, sanitised and translated MVIV figures from Kyero.com.

Most of the data released by the Ministry of Housing (MVIV) is unreliable because it uses property valuations rather than actual sales prices. However, the Ministry's figures for the number of property transactions is rock-solid, and provides a useful insight into Spanish property market trends.

The big story is that developers are forging ahead with sales of new build properties - at the expense of the resales market. Even so, in most areas of Spain, sales of both new build and resale properties were dramatically lower, comparing Q3 2008 with Q3 2007.

Overall, the volume of property transactions completed in Q3 2008 reduced by 42% YoY. Sales of new build properties reduced by 25%, with resales transactions decreasing by 50%.

Sales of new build properties decreased in almost every province - Huesca saw the largest decline at 42% YoY. However, as developers in some provinces rush to complete, sales of new builds actually increased - three by 70% or more:

Increased new build transactions Q3 2007/2008
Province	% increase
Murcia	+1%
Santa Cruz de Tenerife	+3%
Córdoba	+5%
Badajoz	+13%
Extremadura	+18%
Cáceres	+26%
Jaén	+27%
Teruel	+70%
Álava	+71%
Zamora	+77%

Across Spain, the number of resales transactions fell in every province, Alicante was the worst hit - recording a decrease of 59% YoY.

The reduction in the volume of transactions in Q3 2008 translates to an overall reduction in spending of almost 11Bn Euros in Q3 2008 - 3.5Bn less on new build properties and 7.5Bn less on resale properties. Only one province, Teruel, saw an increase in overall spending - by 11M Euros - thanks mostly to increased sales of new build properties.

The fact that the resales market is suffering more than the new build market is not surprising for two reasons:

Sales of new build properties completed in Q3 2008 were actually contracted some years earlier. Buyers of these properties are under contract to complete or forfeit their deposit money. Developers are forging ahead to complete on developments to bolster their cash flow.
Developers have a lot more scope and motivation to reduce prices of new build properties than do vendors of resale properties. As the Kyero Q4 2008 Spanish house price index demonstrates, vendors persist with unrealistic pricing of their properties - hence they are not selling.

The Spanish National Institute of Statistics (INE) also released their Q3 2008 House Price Index recently. It showed a 3.7% increase YoY for new build housing and an 8.6% decrease in resale property prices comparing Q3 2008 with Q3 2007.

However, the INE figures are calculated using values from notarised property transactions, which are unreliable. Tax evasion is widespread in Spain, and it is common practice to under-declare the notarised value of a property transaction - rendering the INE figures all but useless.

The well documented glut of new build properties is estimated to be over 1 million units which, at the current rate, will take two years or more to be absorbed into the market. Until that happens, expect the number of resales transactions to suffer - except for homes which are priced to complete with comparable new build properties.

Kyero Q4 2008 House Price Data Released

2009-01-02T10:34:00Z

Download the latest Kyero.com Spanish House Price Index. Updated with the latest analysis of average asking prices for Q4 2008, it shows Spanish house price trends from mid 2007.

Comparing the average asking prices of Q4 2007 and Q4 2008, many vendors and estate agents continue to price properties optimistically.

Although double-digit price decreases have been observed in six of the provinces measured, most Spanish property vendors seem intent on maintaining a fictitious asking price - presumably to leave room for haggling.

Overall, the average asking price in Spain fell by 0.3% over the past 12 months, yet 10 provinces recorded a price increase - some as hefty as 17%.

Whilst the reasoning behind adopting this kind of pricing is questionable, these statistics are consistent with the figures published by the Ministry of Housing and the Institute of National Statistics for Q3 of 2008.

The figures from the Ministry are based on property valuations rather than sales and are therefore subject to the whim of the assessor and the motive for the property valuation. Their Q3 2008 figures show a slight increase in the national average price of property in Spain.

The National Institute of Statistics uses actual notarised sales to publish their figures - which demonstrate a 3% annual decrease by Q3 2008. However, even these figures must be taken with a pinch of salt because they do not account for the still-common practise of conducting part of the property transaction in cash.

Whether it's notarised prices, property valuations or asking prices, each set of numbers hides the scope of the downturn in Spanish property prices. Personally, I believe that this lack of transparency is one of the fundamental causes of the property crisis in Spain - not a symptom of it.

Property vendors and their agents have the power to kick-start property sales by pricing properties to sell and being prepared to demonstrate an actual and significant reduction in their asking prices. Instead of asking vendors what sales price they want, estate agents in Spain can now drive the sales process by advising their clients of a realistic asking price - one which will attract buyers.

This week, I noticed the same property being promoted by a handful of agents between 385,000 euros and 280,000 euros. I also heard of a property sale where the price had genuinely been reduced to 3 million euros from over 4 million. Spanish properties are selling when the price is right.

In lieu of consistent and realistic property pricing in Spain, and in the absence of reliable price data, my advice to buyers is to completely ignore the asking price and make a cheeky offer. This is the most productive strategy until vendors and agents price properties to sell, or a reliable set of house price data becomes available.

As a guide, consult the Kyero.com house price index for the area you are interested in - and start making offers at 30% below that level. What's the worst that can happen?

Martin Dell, Kyero.com

Comparison of Q4 2007 & 2008 asking prices
Province	Q4 2007 / €000's	Q4 2008 / €000's	2007/2008 Change
Teruel	190.7	124.5	-34.7%
Fuerteventura	216.4	158.7	-26.7%
Lugo	151.1	127.5	-15.6%
Sevilla	172.6	146.0	-15.4%
Tarragona	235.8	200.2	-15.1%
Huelva	256.9	229.0	-10.9%
Cordoba	144.3	130.1	-9.9%
Barcelona	621.3	563.0	-9.4%
Castellon	244.2	224.0	-8.3%
Caceres	129.5	119.8	-7.5%
Gran Canaria	222.6	206.4	-7.3%
Valencia	225.3	212.9	-5.5%
Murcia	213.4	201.7	-5.5%
Badajoz	89.6	85.8	-4.3%
Lanzarote	253.1	243.3	-3.9%
Almeria	199.0	193.9	-2.5%
Alicante	250.0	245.6	-1.8%
Huesca	285.3	280.8	-1.6%
Jaen	96.2	94.7	-1.6%
Spain	248.0	247.3	-0.3%
Granada	170.0	170.9	+0.5%
Malaga	307.8	311.0	+1.0%
Tenerife	220.6	223.5	+1.3%
Coruna	180.1	183.1	+1.7%
Girona	475.6	490.3	+3.1%
Asturias	161.0	176.7	+9.8%
Albacete	146.7	161.8	+10.3%
Pontevedra	269.6	300.8	+11.6%
Mallorca	448.8	526.7	+17.3%
Cadiz	272.6	319.9	+17.4%

Spanish Property Prices Must Fall by 23%

2008-11-17T08:00:00Z

Spanish property prices need to fall by 23% to bring housing affordability back to its long term average, and return the market to normality, argues a new report out today from property consultants Aguirre Newman.

The report asks how much average Spanish property prices have to fall to bring the cost of housing in line with the long term average of 30% of household income.

Assuming mortgage financing of 70% for 30 years with a rate of Euribor (4.5%) plus 0.5%, for a property of 75m2 and a disposable annual household income of 21,259 Euros, the report concludes that prices must fall by 23%.

The report focuses on primary housing, so the conclusions do not necessarily apply to prices for second homes, especial in coastal areas. Second homes are a luxury that tend to suffer more than primary housing in economic downturns.

Whilst identifying over pricing as the main problem, the report also points out that the market is under added pressure from the credit crunch and falling consumer confidence as unemployment rises.

With the property market paralysed by high prices, Aguirre Newman expect a trend towards renting over buying, should property prices not fall.

To date renting has been an unpopular option in Spain, with less than 8% of households renting, compared to 35% in other European countries. Aguirre Newman recommends legal and fiscal changes to stimulate the rental market.

The report forecasts that rents will increase just above inflation, making rental property investments worthwhile with the right legal and fiscal changes.

Story from Spanish Property Insight

October 2008: Spanish Property Prices Drop 6.5% YoY

2008-11-13T08:00:00Z

Spanish house prices dropped 6.5 percent in October from a year earlier, the eighth consecutive month of declines as a property sector slump deepened. The fall follows a decline of 4.9 percent in September, property surveyor group Tinsa said.

Statistics on Spanish property prices vary greatly, with the Housing Ministry reporting a 1.3 percent drop in the third quarter from a quarter earlier and an annual rise of 0.4 percent.

In a survey conducted by Reuters at the end of September, house prices were seen dropping 3 percent this year and 9 percent in 2009. Tinsa said prices in October fell the most in coastal areas, down 8.9 percent, followed by metropolitan areas, down 7.6 percent.

According to the official price index published by the Ministry of Housing, Spanish property prices rose by 0.7% over 12 months to the end of September. The problem is that nobody believes the official figures anymore, and as of yesterday it appears that even Beatriz Corredor, Spain’s Minister of Housing, has her doubts.

“The latest overall data that I have seen for the last 12 to 14 months points towards a big fall, of at least 15%,” said Corredor yesterday on Spanish TV. “Anyone who wants to buy will definitely be seeing a fall in real prices. It’s unanimous; all the statistics reflect a fall, it’s a reality that we now can’t deny.”

But in the same interview Corredor went on to say that prices are only falling in line with inflation, which contradicts any suggestion that prices are falling by 15%. Officials at the Ministry of Housing have since qualified her statements as simply a reference to figures from sources other than the Ministry of Housing, rather than a confirmation that prices are falling by this amount.

The Minister also argues that now is a good time to buy property in Spain, as both property prices and Euribor are falling.

Story from Forbes and Spanish Property Insight

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