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

Spain will launch a new house price index on Oct. 1, the statistics institute said on Thursday.

The data will be an alternative to Housing Ministry figures which analysts have criticised for not reflecting the property market slump.

Spanish house prices declined 0.3 percent between April and June, while home sales fell 31.5 percent in the second quarter from last year, the Housing Ministry said earlier this month.

Real estate firms including Tinsa, Facilisimo and idealista.com estimate prices have slipped around 5 percent this year and some economists have said the value of Spanish real estate could drop by more than a third.

The new House Price Index (IPV) will report quarterly data on new and used homes, but the institute said it aims to report the data on a monthly basis and they could form part of Spain's EU-harmonized inflation figures.

Story from Forbes

The Spanish Ministry of Housing recently revised their house price data for Q4 2007 and provided provisional data for Q1 2008. It makes you wonder what they've been doing for the past 5 months or so doesn't it?

You can download sanitised versions of the MVIV data for:

• Average price paid
• Number of transactions
• Sales volume

Comparing numbers for Q4 2007 to Q4 2006 and Q1 2008 to Q1 2007, we get an idea of the scope and speed of the slowdown.

Resale Market Suffering

Comparing the number of property transactions completed in Q1 2007/8, both foreign and Spanish buyers seem to be favouring an off-plan purchase. Even though sales of newly built properties and resale properties have declined by 32% Y-O-Y overall, sales of new builds have reduced by 12% and resales by 47%.

That trend is further amplified when looking at transactions involving foreign buyers, where new build transactions have slipped 26% Y-O-Y, and resales by 46%.

It's no surprise that developers and constructors have more margin to play with and more incentive to sell quickly to preserve cash-flow or service debts. Predictably, with sales volumes down overall, both Spanish and foreign buyers are eschewing the purchase of a resale property for the bargain-basement new builds.

Spanish Property Market Shrinking

With the number of transactions down by 32% overall, 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 2% 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 between 30% to 60%. 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 4% 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.

In Q1 2008, foreign buyers accounted for 8% of the total number of property transactions, and 9% of the total transaction value. This indicates that foreign buyers tend to spend between 5% and 11% more than Spaniards on a property purchase in Spain.

Popular Towns in Spain

Looking at the number of property completions in Q1 2008, we see that some towns are faring better than others.

(All MVIV figures quoted exclude sales of subsidised housing)

It's surprising to see Gijón in Asturias so high up in the sale of new build properties, alongside such traditional heavyweights such as Estepona and Malaga. Remember, however that these are new build completions where the initial sale will have taken place some years earlier.

Also surprising is the appearance of Marbella in the resales Top 10 and Murcia city as the outright winner in combined unit sales in Q1 of 2008. Even though the market has slowed, clearly a significant volume of property is still being bought and sold in Spain.

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