The SPI House Price Index Tracker plots the six most-watched Spanish house price indices one chart (above).
The six indices are updated and reported at different times, as often as not sending contradictory messages to the public about the direction of the market.
Some of them are published monthly, some quarterly, and some lag the market by several months when they are published. Some are based on valuations, some on asking prices, and some on sales prices that are never made public. They are all mixed up and reported in the press as ‘house prices’ with little context or nuance.
Personally, I don’t find any of them particularly useful for understanding market prices, but taken together they do give us a sense of the overall direction of the price trend. If you take a step back and look at the chart, you get the picture. House prices have been growing for several years, but are now turning down.
Bearing in mind their limitations, the following residential property price indices were updated in the third quarter of 2020 (all figures show latest year-on-year percentage change):
- The Spanish Government (Ministry of Transport, Mobility, and the Urban Agenda (MITMA) based on officially-recognised valuations -1.7% in Q2
- The National Institute of Statistics (INE) based on data from the Land Registry +2.1% in Q2
- The Spanish Land Registrars’ Association using their ‘repeat sale’ methodology +4.4% in Q2
- The Association of Spanish Notaries based on sales witnessed by its members -7.3% in August, up from -9.4% in July
- The Tinsa index based on property valuations carried out by the company -2.2% in September
- The Idealista.com (property portal) resale asking price index +0.4%% in September
It looks like the Covid-19 shock has had an impact on house prices, with all the indices showing a downward trend since the virus arrived in Spain. But if the idealista asking price index is anything to go by, it shows house prices recovering after lockdown and ending September fractionally higher than last year, suggesting the coronavirus crisis was short-lived in the housing market. That might turn out to be an illusion, it’s too early to tell.
The Tinsa index also shows how prices have changed by type of area, with the the areas of the Mediterranean coast and Spanish islands falling the most in September, as is to be expected of areas that rely more foreign buyers.
My hunch is that Spanish house prices are going to end up falling for a year or two as a result of Covid-19 and the government response.