Independent and accurate property prices in Spain

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:

• Average price paid
• Number of transactions
• Sales volume

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:

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

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.

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.

(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.

Martin Dell, Kyero.com

Winner of the 2008 & 2007 CNBC award for Best Property Portal Spain and 2007 Best International Property Portal, Kyero.com is the leading web site connecting buyers and sellers of Spanish property. Featuring 100,000 properties from 1,500 estate agents, Kyero.com is privately owned and based in southern Spain.

Kyero.com was the first dedicated Spanish property portal to join the Association of International Property Professionals (AIPP), a consumer association setting standards and protecting buyers of overseas property.

Each quarter Kyero.com collates pricing information from thousands of properties to produce the Spanish House Price Index