Despite the fall in Spanish property prices, Spaniards are still paying more than they used to for housing.
As you can see from the graph above, the housing affordability ratio, as calculated by the Bank of Spain (average property prices / average gross annual household income), has fallen from 7.7 years at the peak of the property boom to 6.2 years of income today.
Spanish families might welcome more affordable housing, but as the graph above also makes clear, housing is still much more expensive than it was before the boom, when it cost just 4 years gross annual income or less.
There are several reasons why the affordability ratio hasn’t improved more with falling property prices, including higher mortgage borrowing costs and lower household income.
None of this really applies to the cost of holiday-homes on the coast, where prices have fallen substantially more than the national average, and where foreigners with higher incomes than the Spanish national average tend to buy.