This week brought news from two different sources suggesting that house prices are turning around in some parts of Spain.
After seven years of consecutive declines were are starting to see signs that Spanish house prices have bottomed out, and even started to rise in some segments. However, it’s important to bear in mind that house price data in Spain is unreliable at best.
Appraisal Company Says Prices Up Three Per Cent In Q1
A recent article by the Spanish daily El Mundo reports that Spanish house prices rose by three per cent in the first quarter of the year (it doesn’t make clear if the increase was quarterly or year-on-year), according to data from Sociedad de Tasación, one of Spain’s biggest appraisal companies. That represents three consecutive quarters of house price increases based on valuations carried out by this company.
Sociedad de Tasación also say the number of mortgage valuations they are doing are increasing at a rate of “double digits”. Despite the good news, the boss of Sociedad de Tasación, Juan Fernández-Aceytuno says it’s too early to celebrate as “there is still much to do” to sort out the problems of the housing market.
I couldn’t find any reference to this data in a quick search of the Sociedad de Tasación web, but I’ll assume El Mundo have got the story right.
Asking Prices up 0.2% in Q1
At the same time, the latest index of asking prices for all types of residential property listed in the Idealista.com database shows that vendor expectations increased by 0.2% over the three months of the first quarter (to 1,597 €/sqm), with asking prices rising in nine Spanish regions, and falling in seven, with one unchanged. But, on an annualised basis , asking prices still fell by 3.5 per cent.
The following table from Idealista shows quarterly asking price changes (greatest increases and declines) by province in the first quarter.
“The data shows that the worst of the real estate crisis is behind us,” says Fernando Encinar, head of research at Idealista. “The two-speed recovery is now a reality, and whilst some market segments have started to see modest price increases, in others owners still have to reduce their expectations in order to make a sale.”
Like Fernández-Aceytuno of Sociedad de Tasación, Encinar also warns it’s too early to get the party started. Vendors are better off accepting a reasonable offer today rather than holding out for higher prices tomorrow, which might never come. “The improvement in perceptions of the economy, and of the real estate sector in particular, should not make us think about a rebound in prices and a new upsurge in general terms, so for vendors it’s still better to accept a reasonable offer today, rather than expect revaluations in the short term.”
A Trend Towards Price Stability
These two latest sources of data showing that Spanish house prices are no longer falling across the board come not longer after a slew of official press releases claiming that average house prices actually rose in 2014 (see Property Register House Price Index Up 2.5pc in 2014, Spanish Property Prices Rise For First Time Since 2008, and Official Spanish House Price Index Up Almost 2 Per Cent In 2014).
However, house price data in Spain needs to be taken with a large pinch of salt, and a bottle of Rioja. Given the serious problems still besetting the economy (like 24 per cent unemployment), credit restrictions, and housing glut, it’s unlikely that average Spanish house prices rose in 2014.
Nevertheless, taking all the different sources of house price data together, it does look like the situation is getting less bad, with prices turning around in prime destinations like Ibiza and Barcelona, as illustrated by the following chart.