The Tinsa General and Large Markets House Price Index (IMIE) published this week shows that property prices (resale and new-build) decreased by 3 per cent between December 2013 and December 2014.
That compares favourably to the previous year, when average property in Spain declined by 9.2 per cent in value, according to Tinsa, one of Spain’s biggest valuation companies
The index now stands at 1,343 points, the same as it was in July 2003, in the early stages of Spain’s disastrous property boom.
Peak to trough, Spanish property prices have fallen 41.2 per cent since 2007.
The five areas analysed by Tinsa (‘Capitals and Large Cities’, ‘Metropolitan Areas’, ‘Mediterranean Coast’, ‘Balearics and Canaries’ and ‘Other Municipalities’) all showed a sharp reduction in the rate of price declines last year.
‘Metropolitan Areas’ stood out with a year-on-year adjustment of just 0.2 per cent in December, compared to -11.5 per cent in 2013.
In the ‘Balearics and Canaries’ prices fell 2 per cent last year, not far off the 3.2 per cent registered in 2013.
On the other hand, the 2.8 per cent year-on-year decrease in provincial capitals and large cities was considerably below the drop of 11 per cent seen in 2013.
The biggest adjustments in the last 12 months took place in ‘Other Municipalities’ (down 4.7 per cent in the year) and in the ‘Mediterranean Coast’ (down by 4.5 per cent).
“The situation after seven years of crisis is that the average price for Spanish property is gradually stabilising around the values seen in the summer of 2003,” say Tinsa. “Municipalities on the ‘Mediterranean Coast’ have seen the biggest adjustment with the price drop of 49.5 per cent from their peak in 2007. Next are ‘Capitals and Large Cities’ with a decrease of 45.2 per cent and ‘Metropolitan Areas’ with 43 per cent. The variation between the highest point of the cycle is lower in ‘Balearics and Canaries’ where property prices are 31.1 per cent cheaper and in the smallest municipalities (‘Other Municipalities’), which have experienced an adjustment of 35.3 per cent since 2007.”
Stabilisation in 2014, Bottoming Out in 2015
The process of price stabilisation began in the second half of 2013 claim Tinsa. “The Tinsa IMIE has been characterised during 2014 by a moderation in the rate of price drops and includes several peaks and troughs, typical of stabilisation periods.”
House prices in 2015 will depend on the economy and job market – two of the main drivers of local demand. “If the expectations of growth and stabilisation in employment are correct and mortgage conditions improve, the average price for Spanish property could bottom out during the first months of the year with a year-on-year change around zero per cent,” forecast Tinsa.
This forecast does not apply to all segments of the market in equal measure. “The property sector is extremely varied and made up of multiple small markets with their own characteristics and dynamics,” Tinsa point out. “This probably explains why signs of recovery in consolidated areas in large cities and in coastal resorts favoured by foreigners will exist alongside price adjustments in areas with excess supply,” they conclude.