The latest official House Price Index analysed in detail.
Last month I reported that Spanish property prices fell 8pc in the biggest drop since the crisis began, according to the official House Price Index published by the Government (Fomento). Now I have had a chance to bash the data into a table (see below – click table to enlarge) that shows how prices have changed in the last quarter, year, decade, and peak-to-present, by a selection of provinces / Regions.
Regular readers will know that I think the official index is a bit of a joke, but nevertheless we have to keep an eye on it, if only because all international organisations like the OECD, World Bank, IMF, EU, etc., base their conclusions on it. Also, the official index does a reasonable job of illustrating trends (prices going down or up), even if it is not very accurate.
But I do have a personal rule of thumb I use to interpret the data, and make it more accurate (in my opinion). To work out how much property prices have fallen since the peak I just add -10pc to the official figures, meaning that national prices are down 33.6pc, and Malaga (Costa del Sol) prices down 39.3pc. I may not be right, but I’m certain it’s more accurate.
Note that, in real terms, meaning after inflation, Spanish house prices have been falling uninterruptedly since the end of 2007, as illustrated by the next chart. That means more than 4 years of prices falls, with the biggest taking place most recently. Even the official index shows that house prices are accelerating downwards at an increasing rate, especially in real terms.