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.
Some of these indices are updated monthly, and some quarterly with a delay of several months, making them somewhat tricky to compare purely on the basis of publication dates.
Then, of course, there is also the problem of the data not being very useful for different reasons all related to the lack of transparency in the Spanish property market. At least three of these indices are based on valuations or asking prices, rather than actual sales prices, which might be significantly different.
Bearing that in mind that these indices might not paint a totally accurate pictures of house prices changes in Spain, the following residential property price indices were updated in the second quarter of 2020 (all figures show latest year-on-year percentage change):
- The Ministry of Transport, Mobility, and the Urban Agenda (MITMA), which includes the housing department, and was formerly known as The Ministry of Public Works (Fomento) index up +3% in the first quarter (Q1), based on officially-recognised valuations.
- The National Institute of Statistics (INE) index +3.2% in Q1, based on data from the Land Registry
- The Spanish Land Registrars’ Association +6.9% in Q1, using their ‘repeat sale’ methodology
- The Association of Spanish Notaries index +3.3% in April 2020 (and -2.2% in Q1)
- The Tinsa index based on property valuations carried out by the company +1.5% in Q2 (and +3.5% in Q1)
- The Idealista.com (property portal) resale asking price index -4.8% in Q2 (down from +3.2% in Q1)
National house price indices don’t tell us what’s happening in local segments, but they do help us understand where we are in the market cycle, in which local segments play a part. If the cycle is turning down, this will influence local markets.
Before the Coronavirus crisis struck in March, all the indices were in positive territory, but five out of six were on a downward trend, the Tinsa index being the exception. That suggests the market was already cooling down on the back of lower demand.
And with the exception of the notoriously volatile index from the notaries, which yo-yos up and down, and tends to be restated months later leaving it somewhat unreliable when first published, you to go back to the end of 2016 / start of 2017 to find any negative numbers. The overall picture is one of rising house prices for at least the last three years.
Now Covid-19 has arrived from China, and plunged global housing markets into great uncertainty, and Spain is no exception. How will the coronavirus crisis affect house prices in Spain? I have no idea except to say I expect them to go down by double digits before the crisis is over, and some sort of recovery begins.
The latest figures shown above give us some idea of what to expect. You can see that the most recent figures, from Tinsa and Idealista, have taken a downward turn in June, but the price declines are still quite modest. The other four indices, on the other hand, have not yet had time to reveal the impact of the crisis on Spanish house prices.
So, as I said in ny review of the figures for Q1, “there will be little house price data to publish for Q2. It is going to take six months or more before we can see this chart with numbers that give us an idea of where prices are heading in the light of the coronavirus crisis.”
In a recent survey of readers I found that most foreign investors, owners, and vendors expect Spanish house prices, in particular holiday-home prices, to fall by 10% or more. But most of the price forecasts I have seen so far from ratings agencies, property companies, and financial institutions, forecast a peak-to-trough fall of less than 10%.