Reference year for house prices now back to 1999

House-hunters making offers in Spain today should use the price of 1999 to 2000 as guide to current values, argues Juan Fernandez-Aceytuno, a property market bigwig

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That means that Spanish house prices have given up pretty much all the gains they made in Spain’s runaway real estate boom from 2000 to 2007. They are back to where they were fourteen years ago in nominal terms, and even more in real terms (adjusted for inflation).

Fernandez-Aceytuno, head of Sociedad de Tasación, one of Spain’s biggest appraisal companies, advises serious vendors to drop their price by 15pc to 20pc from current market asking prices to make a quick sale, adding that equilibrium prices are around that level. “That would be close to what I consider to be the punto of equilibrium,” he said in comments to the portal Finanzas.com.

According to Fernandez-Aceytuno this is a time of opportunity for bargain-hunters, especially those targeting the portfolios of banks such as Bankia, La Caixa, and the Sareb – Spain’s so-called Bad Bank.

With prices near the bottom, this is the time to buy before a recovery starts to push them up, he argues. “If funds believe this is the time to invest, it’s because they can see there will be a recovery,” he said, referring to a recent spate of big investments by foreign funds in portfolios of properties sold by banks and the City of Madrid.

During the interview with Finanzas.com he also defened the record of appraisal companies during the boom, saying their only mistake was “not warning that those prices were unsustainable.” Others would argue that the appraisal companies charged inflated fees to do whatever their paymasters the banks told them to do.

Comments

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4 thoughts on “Reference year for house prices now back to 1999”

  1. Steve

    Let him give his own house away because I’m damn sure no one else will. Why don’t these “experts” tell us to pay to give them away altogether. The way it’s heading I don’t think anyone will ever see Spain as a country to invest in!

    1. nick

      Sound’s quite balanced to me. Spain is the not UK and specifically is not London. There is a surplus of housing relative to demand, and arguably even in absolute numbers terms.

      And that environment makes for a buyer’s market, particularly when one throws rampant unemployment into the mix. Buyers market = price falls or at the very least price constraints.

      Ultimately any product, including a house, is ‘worth’ exactly what one can sell it for an no more.

      Incidentally house prices are not rising in the rest of the world.

  2. Juan

    To Steve
    Sorry Steve it must be extremely difficult to see your investment drain away but it should not allow you to be infected with the common Spanish complaint of denial. There is an enormous overpriced property glut (2 million +). Prices are only rising in the areas of the world which have not experienced over production and gross overpricing. In these areas the market force of demand exceeding supply is in operation. Spain cannot even predict when this will happen. One other factor, when the market stabilises the 67% of foreigners ( 1.3 million +) which want to leave Spain will put their property on the market, thus creating another slow down or even a drop in values.
    One ray of hope Steve is that if you are lucky occasionally properties are sold to less aware clients at 2007 value. In the meantime enjoy what the beautiful country of Spain has to offer, its still a great place to live in.
    Regards
    Juan

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