Independent and accurate property prices in Spain

Download the latest Spanish House Price Index
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The Kyero.com Spanish House Price Index is free to download.

It's updated and published quarterly to evaluate the advertised prices of 100,000 Spanish properties.

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Kyero.com Spanish House Price Index
(Reprint permission granted when this line and hyperlink included)

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

• Average house prices
• Number of sales
• Value of sales

Martin Dell, Kyero.com

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

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:

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



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



3. 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.



4. 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%.



5. 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.



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



7. 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)



8. 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

• Original data is freely available to download from the web site of the Ministerio de Vivienda. No changes have been made to the source information other than for clarity of presentation and translation into English.
• New construction is defined as properties less than 2 years old. These figures *might* include property purchased off plan and 'flipped' or resold in the same period and while the property is still technically 'new'
• Resales are defined as any property older than two years - again, this may not strictly correlate to a property having been sold a number of times
• Except where specifically mentioned, all figures exclude sales of subsidised or social housing.
• Sales of urban and rural land are excluded.
• Sales to 'foreigners' are categorised as resident, non-resident and 'other'. For the sake of clarity, only figures for foreign residents in Spain are presented here as they account for the vast majority of cases.
• Actual prices are likely to be unreliable due to the fact that some of the sales price passes from buyer to seller 'under the table'. This amount is never notarised and therefore cannot feature in the MVIV figures.
• As the Spanish government increases their efforts to stamp-out these 'black money' practices, house prices might 'appear' to be increasing when, in fact, a proportion of that increase must be attributed to a larger propeortion of the actual sales value being notarised.