Home » Spanish house prices continue with real decline according to global house price index

Spanish house prices continue with real decline according to global house price index

Spanish house prices are subdued by international standards as economic turbulence plays havoc with pricing signals around the world.

Spain was one of the few territories included in the quarterly global house price index produced by international real estate company Knight Frank where house price data fell in real terms (after inflation) in both the last quarter of 2021 and the first quarter of 2022.

As I reported back in May, Spain was the only major western economy to experience a real fall in house prices in the 2021 data. Nominal Spanish house prices increased by 4.4% in 2021’s data, but after taking inflation into account they were down by 2%, according to the Global House Price Index for 2021 researched and published by Knight Frank.

spanish house prices
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Fast forward to data published Q1 2022 (in Spain’s case referring to Q4 2021), and Spanish house prices were still up by 4.4% in nominal terms and still down by 2% in real terms, so Spanish real estate continues to sag in real terms whilst most other first-world territories have increased by double digits in nominal terms, and been positive in real terms. Click the table on the right to enlarge for viewing.

But this quarter Spain wasn’t so alone: Whereas last year Spain was the only major western economy and almost the only EU country (with Cyprus) where house prices fell in real terms, in this quarter Spain was joined by Finland, Cyprus and Lithuania.

Where are house prices heading in the current climate of instability with war, disease and inflation on the rise? In most territories “we expect a soft landing due to supply constraints, robust household balance-sheets and a greater willingness on the part of homeowners to spend more on their living arrangements following stringent lockdowns,” says Knight Frank, whilst pointing out that “house prices across 56 countries and territories worldwide increased by 10.2% on average in the year to March 2022,” and that “in real terms, global house prices declined for second consecutive quarter in Q1 2022.”

So the overall picture from the Global House Price Index is one of prices cooling in nominal terms and trending down in real terms, though Knight Frank do not expect this to lead to a global house price crash. And Spanish house prices have been the most subdued of all major western economies since at least last year, suggesting the Spanish market has suffered the least unsustainable inflation in recent periods, and might be less volatile moving forward.

For the Global House Price Index Knight Frank get their Spanish house price data from the ‘Spanish Ministry of Development’ which used to be called Fomento but has been rebranded MITMA. In the case of Spain, the data used for Q1 2022 actually refers to Q4 2021.

Prime Global Cities Index Q1 2022

spanish house prices
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Knight Frank also publishes a quarterly Prime Global Cities Index based on valuations in nominal prices and local currencies from 45 cities worldwide in their research network. Click the table to view.

In the case of major global cities Knight Frank points out that “Prime price growth slowed for the first time since the start of the pandemic, although on average prime cities continue to register 9% annual growth.” So, city price growth has been strong in the wake of the pandemic, but there are signs it might be coming off the boil.

Spain is represented by Madrid in the city index, which was in 29th place with 4.2% price growth over 12 months to the end of March. Once again a relatively subdued figure in the bottom half of the pack but not far in the red, which you could argue is a good position far from the extremes that lead to trouble one way or another.

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