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.

Kyero.com Spanish House Price Index
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In the UK, we take the reliable and accurate house price index from the Land Registry for granted. In Spain, such information is not available - and the information which is published from 'official' sources is inaccurate and unreliable.

Even worse, the majority of speculation of a house price crash in Spain is based on this misleading information published by the Spanish Ministry of Housing (Ministerio de Vivienda).

The Ministry of Housing figures for price per square metre of housing, although widely adopted as gospel are misleading for 3 reasons:

1. There is no standard method of measuring floor areas - different handling of terraces, communal areas and stairways can skew the floor area of a property by 50%
2. The official sales price of a property does not account for the cash which passes directly from buyer to seller. This has always been common practice in Spain and, although now on the decrease, can skew price trends by a further 30%
3. The Spanish postcode system is hundreds of times less accurate than the UK system. In London, 10 houses share the same postcode, in Madrid it's 1,500. Outside of major Spanish cities, a single postcode can cover several towns and villages. Even if the MVIV price per square metre was otherwise reliable, it cannot accurately reflect trends within a city or town

It's highly likely that the Ministry of Housing figures could be up to 80% inaccurate. Worse, there's no way of knowing which of their figures are accurate or skewed. Compared to the statistics from the UK Land Registry, those from the Spanish Ministry of Housing are, quite simply, useless.

The MVIV statistics say that house prices have continued to grow by 10-15% per annum but are now showing signs of slowing. Speculation of a house price crash is based on these figures and the fear that continued house price growth in the future is uncertain and unsustainable.

Kyero.com Spanish House Price Index

To help UK buyers to understand the Spanish property market, Kyero.com has been recording actual asking prices of 80,000 properties for sale in Spain from 600 estate agents since 2003.

The Kyero.com Spanish House Price Index is updated every month and is available as a free download from this page.

This information is automatically groomed to make it more reliable and practical by removing unusual properties from the calculations. What's more, any analysis of asking prices will naturally predict actual sales values by 3-6 months.

According to the Kyero.com Spanish House Price Index, there has been no sign of a crash having occurred nor of one being imminent. On the contrary, Kyero.com says that the end of the boom predicted by the MVIV figures has already occurred over the past two years.

Far from an imminent crash, the Spanish property market has already experienced a soft landing with prices growing at the rate of inflation for the past two years.

Using more reliable/real world statistics is the key to seeing that the rumours of a crash are unfounded.

Smart buyers can profit from doing their own research and buy when less well-informed homeowners are selling.

Because of all the 'Crash' scare-mongering, it's definitely a buyers market in Spain at the moment – particularly in areas experiencing a temporary glut of new-build properties.

There are still opportunities for bargains on all of the traditional costas as well as inland and in the northern provinces.

Although it's unlikely that the double-digit gains of previous years will be achievable in the near future, the Spanish property market is stable and healthy.

8 Tips for Buyers

1. Do your own research and background reading BEFORE even thinking of purchasing in Spain
2. Read this independent review of the Ministry of Housing figures
3. Keep an eye on the free Kyero.com Spanish House Price Index
4. Visit Spain independently and have a look around
5. Take your time and have realistic expectations
6. Remember that making a mistake can be costly.
   You need a 20% increase in house prices to cover the cost of buying and selling.
7. Never be tempted to buy when the paperwork isn't 100% in order
8. Always use an independent lawyer

This week, the International press has been full of speculation over the sharp drop in the share prices of Spain's developers. Is it all doom and gloom for the Spanish property market? Updated figures from Kyero.com today tell their own story - analysis by Martin Dell, Managing Director of Kyero.com.

According to the Kyero.com Spanish House Price Index, the average property in Spain now costs €250,000 and is available in Alicante province. Topping the charts is Barcelona province with an average property costing €606,000 (a premium of 142% over Alicante) and bringing up the rear is Cuenca province which, at a discount of 84% over Alicante, weighs in with an average of just €39,000.

Clearly, it's difficult, and probably unwise, to generalise about property prices in Spain when the cheapest location is 16-times cheaper than the most expensive, and when there's a wide range of provinces and prices inbetween.

Different Markets within Spain

Comparing Barcelona to Cuenca is meaningless other than as a way of demonstrating the spread of property prices in Spain. It's more useful to compare similar provinces and regions to get a feeling for what's going on with Spanish property prices. I'd like to suggest that we divide Spain into five chunks:

1. Large Cities - Barcelona, Madrid ..
2. Established Costas - Costa del Sol, Costa Blanca ..
3. Emerging Costas - Costa de la Luz, Costa Verde ..
4. Inland - Jaen, Cordoba ..
5. Islands - Mallorca, Tenerife ..

Price Trends in Spain's Large Cities

The Kyero.com Price Index for Barcelona shows that average prices have increased by 12% over the previous 12 months although this increase has not been uniform across all sizes of property. Larger, 5-bed properties increased the most by almost 17% in this period, 4-beds by 6%, 3-beds by 7% (figures for Jun-Oct 2006 normalised), 2-beds by 2% (figures for May and Jun 2006 normalised) and 1-bed decreasing by 22% (Jun 2006 figure normalised).

Taking Barcelona as an example of Spain's major cities, it seems that larger, more expensive properties are increasing in value while smaller ones are decreasing or staying reasonably level.

The Story from the Costas

Comparing price movements on the Costa del Sol (Malaga), Costa Blanca (Alicante) and Costa Azahar (Valencia) we see stark contrasts.

Comfortably the most expensive of the three, the average Costa del Sol property costs €310,000 compared to €250,000 on the Costa Blanca and €217,000 in Valencia.

In the last year, Costa del Sol property increased in value by 11%, Costa Blanca property by 8% (normalised figures for Jun-Oct 2006) and property in Valencia has decreased in value over the same period by 6%. In each province, the same pattern we observed in Barcelona is also apparent - more expensive/larger properties are holding their value better (Valencia) or increasing in value more rapidly (Malaga & Alicante).

What is interesting is that neighbouring provinces Alicante and Valencia show markedly different trends - probably due to the adverse effects of the infamous 'Land Grab' problem in Valencia. This aside, for the moment at least, there is no evidence of a property price crash in these popular tourist areas.

More from the Costas

Two Kyero.com Price Indexes for the Costa de la Luz (Cadiz and Huevla provinces) show a similar pattern in this up-and-coming area - again there is no evidence of a looming crash.

Between the two provinces, the average property price now stands at €287,000 and has increased by a massive 48% over the past 12 months (normalised figure for Huelva Jun 2006). Once again, more expensive and larger properties have experienced more significant gains although this is less relevant statistically (1,000 properties on the Costa de la Luz compared to 36,000 in Malaga, Alicante and Valencia).

The Inland Exodus

Foreign buyers have been turning to inland Spain in search of cheaper housing for a many years. The Kyero.com statistics for Jaen and Cordoba provinces demonstrate that prices are stable and still very affordable in inland Spain.

In Jaen, the average property costs just €94,000 - a 62% discount on the national average price. In Cordoba, the €140,000 average is still 44% less expensive than the national average. Both provinces show a reasonably stable trend over the past 12 months with Jaen gaining 5% (normalised figure for Jun 2006) and Cordoba gaining 6% - again with more expensive properties increasing more than cheaper ones.

A Tale of Two Islands

The Kyero.com Indexes for the islands of Mallorca and Tenerife tell very different stories over the past 12 months.

The average Tenerife property costs just €219,000 and represents one of the bargains in island living. Prices there have increased at a steady 12% over the year although limited property numbers (1,500) preclude any more meaningful analysis.

The average property in Mallorca, playground of the rich and famous, costs a whopping €504,000 - second only to Barcelona when comparing different parts of Spain. Unlike Barcelona, prices in Mallorca have decreased by 14% over the past 12 months - again with the most expensive properties the least affected by this reduction.

Summary

Rather than concluding with some buy here or sell there recommendations, it's important to acknowledge that, while there will be overriding economic factors which affect the entire property market in any country, there are vast local and regional variations and even more variation at a micro level - even within the same town.

This quick trip around some of Spain's different regions has demonstrated some general trends - more expensive properties have performed better than cheaper ones - and some stark contrasts between seemingly similar markets.

Despite the recent doom-mongering, there is no statistical evidence of an imminent price crash in Spain. The Kyero.com Price Indexes react very quickly to bad news because they're based on asking prices, not sales prices.

As a leading indicator of price movements, they typically offer a 6-month 'preview' of how actual sales values will change. The quarterly Ministry of Housing figures lag market changes and are mostly useful for understanding what actually took place, not what is taking place, right now.

Don't forget to check back here on the 1st of June when I'll be analysing the freshly updated Kyero.com Spanish Price Indexes and, once again, letting the numbers speak for themselves.

• 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.