Map of housing affordability in Spain

The average home in Spain costs 7.8 years of wages according to a study by the Savings Banks’ Foundation (Funcas).

The map above (no longer available) shows the housing affordability ratio by region (house prices / annual wages), colour-coded from dark red (least affordable) to green (most affordable).

Relative to incomes, the Basque Country and the Balearics are the most expensive places to buy property in Spain, whilst Extremadura and Castile & Leon are the cheapest.

A national average affordability ratio of 7.86 despite the worst property crash in history suggest that Spanish property prices are still too high. The study as reported in the Spanish press, however, did not provide comparisons to other countries or Spain’s long-term average, so it is difficult to judge.

Furthermore, the study almost certainly used official house-prices, which as regular readers will know, grossly overstate the real cost of property in Spain.

If it is true that Spanish property prices are still too high in relation to incomes, then either prices must fall (likely) or wages must rise (very unlikely).