Reports Poke Holes in Property Recovery Story

After weeks of reports touting slight increases in Spain home prices, two new reports illustrate the Spain property market is still far away from a real recovery.

The latest report from Tinsa, the valuations company, show home prices were down 4.3 per cent in August from July, which is a sharp contrast to recent data suggesting prices were moving up for the first time in six years.

The Tinsa statement came just days after the Ministry of Public Works released its own report, which showed “unsubsidized” home prices fell 2.9 per cent. Average prices are at €1,459 a square meter, which is similar to 2004 levels.

All the reports use different standards and data – and reflect different periods of time – but, if nothing else, they make it clear that home prices have yet to fall into a solid upward trend, despite the recent positive data.

Tinsa was not all doom and gloom, as they reiterated that price declines are slowing and there are positive. Although valuations “do not yet register any general increase in prices,” if the economic situation continues to improve Tinsa forecasts its general index could end the year flat.

“There are micro-markets where prices still have more to fall, and others where prices could already be rising,” Tinsa says.

Tinsa found the biggest fall in the Balearic Islands — an 8.3 per cent decline – even though the Balearics have been one of the strongest markets in recent months. Tinsa showed the Balearics up 4.2 per cent in July and the Ministry of Public Works reported prices in the islands were up 3.4 per cent in the second quarter.

The next biggest drop in the Tinsa index was in the coastal municipalities, where prices were down 7.1 per cent. While foreign demand is helping boost sales in many waterfront markets, the coast areas are facing a well-publicized over-supply of homes that won’t improve quickly.

Overall, average prices have fallen 41.8 per cent from the 2007 peak, Tinsa reports. The biggest drop was on the coast, where prices are down 48.4 per cent, compared to 34.5 per cent on the islands and 45 per cent in the big cities.