The property registrars say Spanish house prices rose by 6.56% on average last year, though other sources of house price data are not so bullish.
The chart above, prepared by the registrars, illustrates the curve of Spanish house prices through boom and bust, and towards recovery, all according to their data and methodology.
The registrars also provide a chart showing how house prices have changed in annualised terms each quarter since 1995. Prices fell substantially between 2008 and 2013, and have been on a sharp upward curve ever since. Notice that an upward curve doesn’t necessarily mean increasing, as a rapid change from -10% to 0% is also an upward curve.
Despite recent growth rates in this index, house prices are still down 28.4% from the peak, and back to where they were in 2004, more than a decade ago.
Despite what looks like a hefty increase compared to other sources, the registrars describe the improvement as a “recovery in house prices, but towards sustainable growth rates, in other words, a positive scenario, with moderate price increases.”
The registrars forecast that their index will moderate to around 5% annualised growth in house prices in the coming quarters.
They explain that price changes depend largely on local market conditions, with some segments doing much better than others. However, they claim that even areas where there has been no sign of recovery to date are starting to show the first signs of improvement, whilst other areas are steaming ahead.
SPI HOUSE PRICE INDEX TRACKER
Seen in the context of the SPI House Price Index Tracker, which tracks the seven most watched indices in Spain, the data from the registrars looks to be far too optimistic (see chart below, highlighted in yellow). With the exception of the National Institute of Statistics (INE), which uses data from the registrars for its own index, all the other indices are bunching between 0% and 2%, making the registrars index look like an outlier
Why the big difference? It must have something to do with the methodology used by the registrars, which none of the others use.
The registrars use price data taken from all the home sales deeds they inscribe in the property register in the period or year, to which they apply the Case-Shiller methodology of “repeat sales”, which uses data on properties that have sold at least twice, in order to capture the true appreciated value of each specific sales unit.
As S&P Dow Jones explain (the publishers of the S&P/Case-Shiller US Home Price Index), “The indices measure changes in housing market prices given a constant level of quality. Changes in the types and sizes of houses or changes in the physical characteristics of houses are specifically excluded from the calculations to avoid incorrectly affecting the index value.
Which index gives the most accurate picture of price changes in the Spanish housing market? That’s a complicated question for another day, but I suspect that if this index is based on “repeat sales” it’s missing many new home bank repossession sales, which would drag the index down.
In conclusion, the registrars say the housing market is “showing a recovery in most of its variables, although in a moderate tone. Nothing gives cause to expect intense growth, rather a progressive recovery, showing a change of trend in numerous variables, towards a mild recovery or stability.”