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360 billion wiped off value of Spanish housing stock since 2008, if not more

The value of Spain’s total residential housing stock, including the residential land-bank, has declined by 6.8pc since the peak, from 5.3 to 4.9 trillion Euros, according to a new study by the BBVA foundation and the Valencian Institute for Economic Research (IVIE).

If correct, that means that 360 billion Euros has been wiped off the value of Spain’s housing stock, and therefore national wealth, since the bubble burst. That is the equivalent of around 35pc of Spanish GDP.

The first chart here illustrates how values rose rapidly during the boom years of 2000 – 2008 (built housing stock in light blue, land-bank in dark blue), then fell slightly in 2009 and leveled off in 2010.

To put these figures in perspective, the housing stock in 2010 was equal in value to 9.7 years of total salaries and wages, compared to just 5.8 years back in the year 2000, before the boom took off.

But as you might suspect from a Spanish bank like BBVA, with a big vested interest in the price of residential property and land, the study might have been conducted by bank staff wearing rose-tinted spectacles, and I for one expect the real fall to be much larger.

I can understand how the increasing volume of housing stock and land-bank (+2.4pc) compensated falling prices (-9.2pc) but I doubt any international observers will swallow BBVA’s conclusion that the total value of Spain’s residential housing stock and land bank has fallen by just 6.8pc since the peak. I guess the study is based on dodgy official statistics that understate price declines.

If I had to take a guess I would say that the real fall in the value of Spain’s housing stock is bound to more than 20pc. It turns out we are not as rich as we thought.

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