Spanish property prices fell 7.6% in the first quarter of the year compared to the same period last year, according to the official property price index published by National Institute of Statistics (INE). This is the biggest fall on record since the index started in 2007.
Broken down type of property, new build property prices dropped by just 2%, whilst resale prices fell a chunky 12.5%. This is the first time that new build prices have fallen since the index began.
In reality, the index has to be taken with a pinch of salt. Nobody in the business believes for one moment that new build prices are only down by 2% in a year. 20% would be a more accurate figure for both new build and resale prices.
Quarter to quarter, prices fell 2.7%, a slight improvement on the 3.1% fall clocked up in the previous quarter. This suggests that the rate of decline in prices might be slowing, having peaked at the end of 2008.
By region, prices fell the most in Catalonia (-13.7%), Madrid (-11.2%) and the Basque Country (-10.8%), all of them regions with the highest property prices in Spain. Prices fell the least in Galicia (-0.5%), Murcia (-1.6%), and Asturias (-1.8%), three regions with some of the lowest prices in Spain.
The INE compiles its index using data provided by notaries who witness most property sales in Spain. However, despite being present at the exchange of deeds, notaries do not, as a rule, witness undeclared cash payments, still a common feature of buying property in Spain. This distorts the data provided by notaries.