This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
Official Spanish property prices are still more than 50% too high, says The Economist magazine. But if official statistics can’t be trusted, neither can this conclusion.
Spain is the third most over-valued property market in the world, according to The Economist magazine’s quarterly global house price survey.
Using a long-run average of price-to-rents ratio, The Economist finds that house prices in Spain are still 50.4% over-valued, despite a property market crash well into its third year.
That makes Spain one of the most over-valued markets in the world, at least amongst the 20 markets worldwide monitored by The Economist.
But, as I always have to point out, through no fault of The Economist, it’s global house price survey is highly misleading when it comes to Spain. They use official house price statistics, which in Spain’s case are baloney. In reality, prices are down much further than the official stats say, which means that housing is not as over-valued as the ratio suggests.
That said, prices are probably still a little over-valued in relation to rents. But nothing like 50%.
adiep says:
Im not so sure Mark. If you look at the average euro/m2 history on Idealista, which are I believe calculated by them with their data and not on TINSA, then you can see there hasnt been a huge drop in asking prices, perhaps 15%. If they are using the TINSA numbers, then they are bloomin daft and someone should tell them they have a far better mine of information. Real asking price data..
Here is the link im talking about
http://www.idealista.com/pagina/informacion
See the excel titled – historical report: price evolution venta 2000-2010 en excel (283kb)
Mark says:
Asking prices are just vendor fantasies.
Charles Mackenzie-Hill says:
Can once reverse calculate the house prices from a rental rate?
As an example we have this property for sale in Balcon de Benavista for 215,000 Euros. We thinks that’s to high. The vender now would like to let the apartment rather leave it standing empty for what we feel could be sometime. The only rent we have been offered , that we felt was by someone of good means and character, has been 600 Euros monthly. Not great I know. Now, can one do the reverse math’s and find the true value ? Going by the monthly rental. For your curiosity here Is the flyer for the property in question. http://cmhproperties.vflyer.com/home/flyer/home/3370770 It is a nice property . But I think you will find the percentage return, if you were an investor rater alarming, especially without, at this time, the capital growth. Long , long term ownership is probably the only way you will gain?
chris mccarthy says:
Asking prices from Vendors are indeed fantasies, so are the government stats, so are the valuation Tinsa figures – I have just had privileged access to Estate Agent data on actual sales for the past 18 months and when these are compared to 2006 then the average actual / factual selling price for all sales, and these being well over the 200 mark, is down by 35% but the clearest and most significant data available that says this is fact, is the agents actual average commission paid across all sales – which is also bang on at 35% less than it was during the 2006 period.
Forget Tinsa, Forget Idealista, Forget Housing Ministry, Forget the Banks or the Economist, just for goodness sake ask the agents who are doing the actual selling!
Mind you, these figures are only related to the Costa del Sol and are against the more premium property market, there are still many other units that have fallen by 40%+ and more available but not selling that are 50% down.
This 35% fall is the top end of the market holding up!
oidunno says:
Good analysis Mark.. great comments all.
SPI is the only light in a lot of darkness.
And the Economist should know better. LoL.