Latest official property price figures stay detached from reality

mviv-price-index-1q10
The latest property prices figures from the Ministry of Housing maintain the pretence that house prices have barely fallen despite the property market crash and a savage recession.

According to the Ministry’s figures, average prices (excluding social housing), fell by just 4.7% over 12 months to the end of March, and by 1.4% from the end of the previous quarter. Taking inflation into account, prices fell by 6.1% in real terms over a year, all according to the government.

If true, that implies a peak-to-present price fall of just 12.6% since Q1 2008, taking prices back to where they were at the start of 2006. In reality prices are probably down between 30% and 40%, though nobody knows for sure, thanks in part to the lack of credible and reliable data from the government.

For what they are worth, the government figures claim the average price of property now stands at 1.866€/m2, down from a peak of 2,101€/m2 in March 2008.

And as the table below shows, we are expected to believe that prices actually rose on a quarterly basis in Malaga (Costa del Sol), Murcia, and Tenerife (Canaries) – 3 regions devastated by the collapse in holiday homes sales.

mviv-price-index-selected-regions-1q10

It is a mystery why the government bothers to publish figures that are so clearly detached from reality.

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