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%.