The SPI House Price Index Tracker plots the progress of the six most-watched house price indices in Spain, and brings them together in one chart.
The following residential property price indices were updated in the second quarter of 2019 (all figures show latest year-on-year percentage change):
- The Ministry of Public Works (Fomento) +4.4% in the first quarter, based on official valuations
- The National Institute of Statistics (INE) index +6.8% in the first quarter, based on data from the Land Registry
- The Spanish Land Registrars’ Association +8.7% in the first quarter, using their ‘repeat sale’ methodology
- The Association of Spanish Notaries index -1.7% in April
- The Tinsa index based on property valuations carried out by the company +3.6% in May
- The Idealista.com (property portal) resale asking price index +5.8% in May
As I always feel I should stress, these figures for country-wide house prices don’t tell us anything about what’s happening in local segments, but they do suggest where we are in the property market cycle. This chart suggests that the Spanish housing market is still on the upside, the negative result in April from the notaries’ volatile index notwithstanding.
Spanish house prices by type of area
The house price index published by appraisal company Tinsa based on valuations is also broken down by type of area such as cities, coast, and islands. According to Tinsa, house prices in May were up an annualised 4.8% in big cities and provincial capitals, 2.9% on the Mediterranean coast, and 8.5% on the Balearic and Canary islands, where home sales are declining even as house prices rise.
Thoughts on “Spanish house price data published in Q2 2019”
If there was ever an example of “too much information,” then this surely is it. For those seeking to sell or buy a property in Spain, I would have thought that a single reliable index of sale prices achieved would be the best guide guide. This SHOULD be the notarial index; it certainly would be if the figures were accurate which, as many of us know, is not always the case,
Behrou G. says:
These are all different indices Mark and quite useful in a basket, providing for additional interpretations that you’d not be able to get from a single index. The fact that there are so many indices in Spain is actually very nice if you really want to delve into what’s happening and extrapolate for future performance.
The Notary one is actually the least useful of them all as a single index precisely for the reason you mentioned. However, used in conjunction with the other indices, you can see what percentage of transactions are still being done in the black. The closer this index gets to INE, the better in terms of proper legal transactions being carried out.
The Idealista one is only for resale properties, so by comparing that to INE you can see how resales are doing relative to new builds. For example, there has clearly been a slow down in price increases for resales compared to new properties since late 2018 which is confirmed by other data and news releases.
The Tinsa index is based on valuations only. so by comparing this to INE you can get the relative performance of homes that require mortgages to homes that are paid for in cash, since getting a mortgage will require a property evaluation while buying cash doesn’t.
Therefore, the closer the Tinsa index gets to INE the healthier the market is whereas the opposite indicates either a slowdown in lending or tighter lending practices or economic stress in the population. The drop since January is most likely related to the new mortgage laws so not immediate cause for concern (unless it continues).
Last, but not least the registrars data presents not only a time lag to INE but should typically exceed it by 1-2 percentage points. This is because every time you use “repeat sales” methodology, you include any renovations carried out on the house as an actual increase in the value of the house.
With INE these are averaged out but with “repeat sales” they become more pronounced. That’s why “repeat sales” methodologies always overestimate price increased and always underestimate price decreases. For that reason, they’re typically the go-to index for RE agents! 😉
Hope that helps.