The Economist Global House Price Rankings: Spain Looking Cheap

Spain is one of the countries where house prices have fallen the most since 2008, and prices are still falling, shows the latest global house price rankings from The Economist magazine.

Ranking prepared by The Economist. Click to enlarge
Ranking prepared by The Economist. Click to enlarge
The Economist’s ranking helps us see how house prices are changing in different countries around the world. It makes comparison easier, and helps to identify where new bubbles might be forming.

There doesn’t look like much risk of a bubble in Spain anytime soon. Spanish house prices are down 31 per cent from the peak – the third largest decline of all – and prices are still falling, down 0.2 per cent on a year earlier. On the other hand, Spanish house prices are still overvalued compared to rents and income, suggesting that further falls are not out of the questions. That said, it does look like the big falls have already been wrung out of the system.

Commenting on Spain, The Economist points out that demographics are one reason why Spanish house prices are still declining. “Although Spain’s economy is growing again, prices there are still falling, as they are in France and Italy,” says The Economist. “Spain’s population shrank by 200,000 last year, as the unemployed emigrated to find work. In the three years before the crisis it grew by 800,000 a year.” Population decline is bad news for housing demand.

More countries look overvalued than undervalued in the latest rankings, and relatively speaking, Spain doesn’t look too bad. But which country looks like a real bargain, and in some ways competes with Spain for holiday-home demand? If you can stomach the political risk, and maybe an implied currency risk, this ranking suggests that Greece is the place to go bargain hunting for a holiday home today.

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SPI Member Comments

Thoughts on “The Economist Global House Price Rankings: Spain Looking Cheap

  • Is Spain perceived to look cheap because the property prices were so overblown during the boom which I believe is the case? Evidence of leading estate agents buying up blocks prior to re-marketing then at huge mark-ups even dare I say as much as 100% and certainly by more than 30%. It’s little wonder prices appear to have crashed to what look like bargains now when in fact they may not be. When these reports come out why don’t they also show that country’s transaction costs which are often exorbitant? It would also give potential buyers a better picture.

  • Campbell Ferguson says:

    Well said David. Its the whole cost of purchase that must be taken into account, not just the headline rate/sq m. In Spain, which also has high selling costs, you’ve got to sell ate 20+% above escritura price just to get your money back.

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