Here is an article in today’s Wall Street Journal about house prices in Spain that I contributed to.
The description of SPI isn’t exactly accurate, and there are a few other statements I would question, but the general thrust of the article is sound – that the market lacks transparency, which unnerves investors and delays any recovery.
Some Question Accuracy of Government Data on Property Values; Further to Fall?
By SARA SCHAEFER MUñOZ
NOVEMBER 26, 2010
Spain faces a problem as empty homes left over from the housing boom go up for sale: determining just how much the properties are worth.
Analysts, property-sales representatives and economists said data coming from the government and even some large appraisal companies understate the drop in real-estate prices. That is causing confusion and scaring off some investors who could help banks clear their backlog of homes.
The discrepancies are owed, in part, to a quirk in how some Spanish home-price data are calculated. The data are based not on actual sales prices, but rather on appraisals by private companies, which in a slow market are heavily reliant on asking prices. The result is a variation in estimates of Spanish home values.
The Ministry of Public Works recently said that the price per square meter of homes for sale in Spain has dropped 11% since the market’s 2007 peak. But data from Tinsa, a large Spanish appraisal firm recently bought by private-equity firm Advent International, show an 18% drop in the same period.
Meanwhile, many smaller firms that are helping banks sell thousands of property assets said average actual sale prices have fallen between 20% and 30%.