Despite an unprecedented collapse in the Spanish property market, not to mention a monumental property glut that makes America’s housing overhang look trivial, Spanish property prices fell by just 0.3% over 12 months to the end of the second quarter, if you believe a house price index just launched by Spain’s National Institute of Statistics (INE).

The result of a collaboration with Eurostat – the EU’s statistics office – the new index is supposed to conform to a standard that makes it easy to compare housing markets within the EU. Some also hoped that it would prove more reliable than the Ministry of Housing’s index, which many experts agree is close to useless. The early signs are not good.

According to the new index, average Spanish property prices fell by just 0.3% over 12 months to the end of June, with resale prices falling 4.9%, and new build prices actually rising by 5.3%.

But according to anecdotal evidence and independent surveys, and contrary to what the new index says, both new build and resale prices are falling substantially, probably by more than 10%, and where prices aren’t being slashed there are simply no sales.

The fact is that the Spanish property bubble has burst, and with it the inflated price of property for sale in Spain. Now the credit crunch is with us, the new index should reflect this. It does not.

Official indexes in markets like the UK, the US, and Ireland, which have gone through a similar housing boom and bust to Spain, all show prices falling by more than 10% a year. In Spain, on the other hand, the official index would have you believe that prices are stable, even if the trend is down.

According to the new index, prices were still rising on an annual basis as recently as the end of March, by which time the Spanish press had been writing about Spain’s property bust for almost a year.

If the point of an official index is to provide reliable and timely insight into the state of the market, then this new index isn’t much use.