The latest Global House Price Index from The Economist magazine makes it easy to compare how Spanish house prices have fared since 2007 compared to other housing markets around the world.
If you go back to the end of 2008, when housing booms in places like Ireland and Spain were coming to an end, Spanish house prices have fallen almost 40% in nominal terms, the same as in Ireland and Greece, whilst prices have risen by 20% to 30% in Britain and Germany over the same period (chart above).
If you go back to 2012 (next chart), only Greece has done worse than Spain in terms of crashing property prices. Ireland has had a turnaround, with prices up more than 20% since around mid-2013.
Will Spain now follow Ireland with fast rising house prices? I doubt it. There are still too many headwinds like high unemployment, low incomes, high transaction costs, and a glut of poor quality homes for sale. Prices might surge in some segments like prime Barcelona, Madrid, and the best areas of the coast, but I expect the average national price to stagnate for the foreseeable future.
+ The Economist global house-price index (subscription access)
Chris Perree says:
A very interesting set of statistics, implying the countries who embraced so called “austerity” which is in actual fact simply belt tightening have seen much more of a recovery in house prices and indeed economies.
This who continue to want limitless spending still dragging far behind.
Is membership of the Euro also a factor?
David says:
Two factors apparently not considered here. The most important being that Spain’s boom then bust was much larger and had more impact than most countries due to huge volumes in a frenzied construction period. So that brings into question supply and demand ratios?
The second being no-one inputs transaction costs comparisons and Spain’s must be higher than many countries at 11% to buy and anything from 5-8% to sell. So that brings into question who in their right minds really wants to add such a large bill to an asset purchase and sale?
Simon says:
Totally agree on the cost of buying there far too expensive. Also very slow to get permissions for change. I own a property there but won’t look to buy anything else in the near future