Sanity Returning to Spanish Property Prices?

April 1st, 2011

Today we published our Q1 2011 Spanish house price index. It’s free to download and summarises the asking prices of all properties advertised on Kyero.com.

For quite a long while, the Kyero index showed that the average house price in Spain was actually increasing – we record asking prices – even while the credit crunch events of 2008 played out.

While other indexes based on sales volume or market valuations saw a significant decline in average house prices, the Kyero index continued to rise, or, at best, remain stable.

Inevitably, this lead me to conclude that asking prices were not a very useful measure of actual market activity – bur rather a reflection of the behaviour of naive, over-optimistic, or ill-informed vendors.

The latest report shows a decline in the average asking price from €280K to €270K – a small but significant indication that perhaps vendors are becoming more realistic about what their property is actually worth on the open market.

Some of the average figures for individual provinces are still all over the place, but overall, I hope we’re beginning to see a new realism in the asking prices of Spanish properties.

Of course, asking prices are still an imperfect measure of market values – but so also are every other set of data made publicly available in Spain.

My advice is to use our Spanish house price index along with the valuations from TINSA and government data and form your own opinion and picture of what’s actually happening in the particular micro-property market you are interested in.

Weighing this report alongside a raft of other metrics we track in intimate detail, my guess is that now is a great time to haggle a good deal on property in Spain. I think we’re at, or near, the bottom of a 10-year property cycle and we’ve 5 years of growth ahead of us.

That won’t be true of every location – and it certainly won’t be true of houses or developments which were ill-conceived and badly located in the first place. However, armed with the available data, the prudent buyer can get a great deal now – particularly buyers from other Eurozone countries.

Martin Dell, Kyero.com

Since early 2005, The Kyero.com Spanish House Price Index has provided an independent and statistically accurate benchmark of property pricing in Spain.

Properties where the freehold is not for sale are excluded from The Kyero.com Spanish House Price Index. This excludes rentals, leasehold properties and fractional ownership properties.

Properties where the number of bedrooms entered is unreliable are also excluded – as are properties with unusually high or low prices.

The Kyero.com Spanish House Price Index uses a median calculation which is more representative of a group of prices than is the more common mean calculation. Median is simply the middle number in any group of figures – it is widely accepted as more representative of a group of numbers because it is less sensitive to a few, unusually large or small numbers in the group