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I’m setting up this thread to track and discuss the evolution of house prices in Spain in the course of 2013. This is where I’ll put all the latest data on Spanish property prices as the Spanish house price indices are published each month.
Starting with the latest house price index from the Registradores, Spain’s property registrars….
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In its annual report 2012 just published the Bank of Spain estimates that Spanish property prices have fallen 34.4pc peak-to-present (since Q2 2008). That compared to 27pc declared by the Dept. of Housing (Fomento). The price trend so far this year has continued down. Residential investment went down last year for the 5th year running and is expect to decline again this year.
BUT, they expect some areas to recover quicker than others (they are bright sparks at the BoS).
They note that some coastal areas in particular have a big over-supply of property and a low level of sales. Much of the building boom was concentrated on the coast with holiday-home buyers in mind. On the other hand, Madrid, the Basque Country, Asturias and Galicia have relatively low new housing inventories.
There will be no increase in housing starts this year thanks to weak demand, falling prices and excess inventories.
Rental demand will go up.
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Solvia / Banco Sabadell warn that the price of “many properties” will start rising in the second half of the year. “There is a lot of demand and stocks are running low,” said MD Miquel Montes in comments to the Spanish press. They have already started raising prices on some homes in Valencia.
Solvia sales are up 40pc this year, with a big increase in British and Russian buyers. They also not an increase in “neighbourhood investors”, locals investing in buy-to-let in their immediate neighbourhoods.
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Miquel Montes? 😆 Surely he’s stating the obvious, many price rises will be due to Solvia’s and Sabadell’s offloading at rock bottom prices, and it is in his interests to say that 😉 But does it mean the overall market will rise 🙄 ?
If you buy fire-sale stock from bankrupts, auctions, distressed sellers, stack em high sell em low, prices will rise. You can do it at antique auctions. Buy an item for £10 it will often double in price, buy enough and make good profits, buy one for £100 it might make a tenner, bad business, have seen many dealers get it wrong whilst the savvy get it right 😛
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According to the statistics published today by Tinsa Spain’s cities have been hardest hit with an annual fall in housing prices of 13.3%. They are followed by the Metropolitan areas, registering a 13.2% fall, and the Mediterranean coast where prices are down 8.5% on last year.
The areas least affected were those categorized in the Other Municipalities section and the Balearic islands where prices were down 7.2% and 5% respectively.
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House Price Index data released by Instituto Nacional de Estadistica for the first quarter of 2013 reveals the highest quarterly price fall since 2007.
House prices fell 6.6% in the first 3 months of this year, new housing dropped 6.8% while the rest of the market saw a decline of 6.5%.
Every region in Spain posted negative annualised declines in Q1 as illustrated by the chart below.
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The price of Spanish resale housing fell 1.5% in 2013’s second quarter according to research released by the Spanish real estate news portal idealista.com. The decrease means that the average price per m2 in Spain is now at 1,723 euros.
Regions
Every one of Spain’s autonomous communities experienced price declines as shown in the chart below.
Provinces
The picture was almost as bleak for the breakdown of price changes by province but four did see price increases, Cuenca (1.9%), Guipúzcoa (1.6%), Albacete (0.8%) and León (0.2%). The rest of the statistics for Spanish provinces are in the chart below.
Further falls expected
The head of research at idealista.com, Fernando Encinar, believes that “although our study shows more price falls the market has still not absorbed the impact of Sareb aggressively slashing its prices which should lead to prices being driven down even further and provide a stimulus for sales.”
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The Bank of Spain has released its annual report for 2012 in which it estimates that there has been a total fall of 34.4% in the price of Spanish housing since the adjustment began in the second quarter of 2008.
The report notes that this negative trend has continued into 2013 and has also accelerated. The 34.4% total is higher than the recent estimate made by the Ministry of Public Works which put the total reduction at 27%.
Regional differences
The Bank of Spain believes that some Spanish regions will take much longer than others to recover from the housing crisis as already there are large differences apparent. On the coasts there is a massive amount of unsold housing with very few purchases while in Madrid, Aragón, País Vasco, Asturias y Galicia the unsold housing stock is much smaller.
Rental market
One of the conclusions of the report is that renting will grow in popularity due to the tax breaks for house purchases that expired earlier this year along with the change in tenancy laws which have made rental contracts less rigid.
The Spanish rental market may be primed for growth according to the Bank of Spain report -
GLOBAL PROPERTY GUIDE HOUSE PRICE RANKINGS
In the first quarter of 2013 the only countries in which property prices fell more, year on year, than in Spain were the Netherlands (-10.99%) and Greece (-11.53%). Spain posted a decline of 10.24% year on year although prices rose by 0.28% on the previous quarter.
The full table can be found below.
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The consultancy RR. de Acuña & Asociados predicts that the price of housing in Spain will fall another 25% from its current levels so that its price will equal 4 years of income for the average Spanish family.
The ideal cost range for any country according to experts is between 3.8 and 4 years but the current level in Spain is 5.9 years of income which the majority of analysts believe is unsustainable,
The predicted drop in prices would mean that the cost of Spanish housing would reach 1999-2000 levels.
Graph showing the evolution of the average number of years of families’ income required to buy a house in Spain -
A study by the Spanish real estate research body Tinsa shows that the cost of holiday housing in the Province of Barcelona has fallen 48.5% since 2007. The zones which have been worst hit in the province are Pineda de Mar, down 52.1%, and Mataró, -52%.
Other coastal provinces which have seen large drops in the value of their holiday housing in the same period are Girona, -45%, and Tarragona, -44.5%.
The majority of buyers on the Costa Brava are from France, Belgium and the Netherlands as well as, to a lesser extent, Britain.
A beach in the area of Mataró in Barcelona Province which has seen falls of 52% in the
price of its holiday homes -
Are these statistics based on actual prices that vendors pay to purchase a property, or one some arbitrary amount that a bureaucrat feels that the property is valued at from a taxation point of view?
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@Mexberry wrote:
Are these statistics based on actual prices that vendors pay to purchase a property, or one some arbitrary amount that a bureaucrat feels that the property is valued at from a taxation point of view?
Tinsa do valuations based on a bunch of variables, including recent sales. But none of it is as reliable as in the UK / US. All Spanish appraisal companies have a reputation for slightly doing what their paymasters (the banks) want. 🙁
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The rain in Spain falls mainly on the plan, but house prices will fall mainly on the coast; that’s the opinion of Diego Jiménez Albarracín, head of renta variable at DB (any city types care to translate renta variable? Variable Income? Equities? All I know is it’s not fixed income.)
Jiménez argues that prices will fall most on the coast because of the excess supply of new developments.
He also says the Sareb is right not to rush into liquidating stocks with lower prices, and should wait for the market to improve.
I’m not sure he’s right on either count.
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@mark wrote:
The rain in Spain falls mainly on the plan, but house prices will fall mainly on the coast; that’s the opinion of Diego Jiménez Albarracín, head of renta variable at DB (any city types care to translate renta variable? Variable Income? Equities? All I know is it’s not fixed income.)
Jiménez argues that prices will fall most on the coast because of the excess supply of new developments.
He also says the Sareb is right not to rush into liquidating stocks with lower prices, and should wait for the market to improve.
I’m not sure he’s right on either count.
I think (although not certain) that renta variable refers to equities, or shares on stock markets.
I find that this site is very good for showing examples of word usage and translation of relevant phrases.
http://www.linguee.com/english-spanishI understand the reasoning behind your doubts. It may be that inland property owners are content to keep property in the family for another 10 or 20 years rather than sell under pressure. ??
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Tinsa figures for August just released.
http://www.tinsa.es/es/11323/prensa/notas-prensa/ano-2013/publicacion-imie-agosto-2013.html
Main index -9.3pc
Mediterranean coast -8.1pc
Capitals and cities -11.0pcPeak-to-present:
Mediterranean coast -44.4pc
Capitals and cities -42.7pc
Balearics & Canaries -28.6pc -
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If I was thinking of buying Spanish property during the crisis and now I would buy in the Balearics being a smaller and safer market, I’ve always thought prices hold up better in Majorca for example, the Tinsa index shows large differences between the islands and mainland. Smaller markets are niche, as are smaller quality developments even on the mainland, rather than these large overbuilt developments, and whilst they cost more initially, prices tend to be more stable 😉
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I don’t know the Balearic market very well so you could be right there Mark, I assumed being smaller that property prices held up better than on the mainland. I do agree that mainland cities could be in more demand as most cities worldwide seem to be. I still think if Spain could reduce the empty unfinished and empty illegal stock maybe seriously bulldozing them, and then concentrate on small but good and pretty development, there could be a demand for these. I think it’s all the bad stuff that devalues and affects the overall prices.
So, back to my choices, Balearics still, good cities, and/or small niche coastal developments 😉
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Whispered with some caution, but have just seen the latest email from our old mate Chris’ firm, and there is quite a pleasant villa for sale at a reasonably attractive price in Elviria which is a nice part of the CDS. Detached, with very good pool and nice garden, but the main thing is it’s well presented, kitchen could do with an uplift perhaps the only negative, but if it could be bought for 500k euros (or less) it could be a nice buy. It shows that presentation and upkeep are key to helping sales in Spain 😉
This sort of comes back to my point of smaller better quality more niche development for the Costas 😛
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Whilst it’s not the largest nor best looker outside, it’s what’s inside that counts, and the garden both of which are well kept, clean, and smart, plus of course the location is very good 😛
http://www.yourviva.com/buying/property/marbella/villa-for-sale-hot-v2752-ssc/
You do need to look at all the photos to appreciate it more 😉 It’s on for 559k but if it could be had for 500k or preferably less, I think it’s not bad 🙂
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@angie wrote:
Whispered with some caution, but have just seen the latest email from our old mate Chris’ firm, and there is quite a pleasant villa for sale at a reasonably attractive price in Elviria which is a nice part of the CDS. Detached, with very good pool and nice garden, but the main thing is it’s well presented, kitchen could do with an uplift perhaps the only negative, but if it could be bought for 500k euros (or less) it could be a nice buy. It shows that presentation and upkeep are key to helping sales in Spain 😉
This sort of comes back to my point of smaller better quality more niche development for the Costas 😛
500K?
My well diversified stock portfolio returned 24% this year so far. No property is going to do better therefore I will only put down as little as I can towards the purchase of a property until the market implodes…and that means I need to buy a bank-repo because no one will lend more than 60% to foreigners…
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@angie wrote:
Not as an investment, as a place to live duh! 🙄
yes I got it, that’s what I need too!
But I’d rather rent and trade the money so that I can make more of it 🙂
Unless I find an absolute bargain on the property market…which I am looking for!
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@angie wrote:
Now I understand you Aussie, nothing wrong with renting and using the money for investment purposes 🙂 You mentioned your returns 24%, out of interest are these secure investments, they sound like risk investments that have paid off for you 😕
Mainly stocks.
I have 16 years experience in the financial markets so I know what to do.
What may seem risky to you is a playground to me 🙂
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News is that Spanish property prices rose on a monthly basis, even the WSJ has reported the news.
There’s a good reason why prices might have risen, which is that the market is so thin that volatility has risen, which even the notaries pointed out the other day. None of which is good news. 😕
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@mark wrote:
News is that Spanish property prices rose on a monthly basis, even the WSJ has reported the news.
There’s a good reason why prices might have risen, which is that the market is so thin that volatility has risen, which even the notaries pointed out the other day. None of which is good news. 😕
That flies in the face of all economic principles. If a market is thin the natural and inevitable direction is prices go down. It does not create volatility. That is created by high demand and market sellers scrambling to gain the highest price.
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@logan wrote:
@mark wrote:
News is that Spanish property prices rose on a monthly basis, even the WSJ has reported the news.
There’s a good reason why prices might have risen, which is that the market is so thin that volatility has risen, which even the notaries pointed out the other day. None of which is good news. 😕
That flies in the face of all economic principles. If a market is thin the natural and inevitable direction is prices go down. It does not create volatility. That is created by high demand and market sellers scrambling to gain the highest price.
If a market is thin (few transactions), average prices can go sharply up or down, which is what I mean by price volatile. A few sales can skew the average, so you can’t have much confidence in the “trend” at a time like this.
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The ‘trend’ Mark has been continuously downward since the crash in 2007. A few sales will have no impact whatsoever on anything. Apart that is to encourage sellers of property to advertise more, believing they can influence the market into turning.
Of course there may be small pockets of local activity for a defined particular reason but that does not skew the overall consistent trend. I have thought for some time now the market in Spain has almost reached rock bottom in line with the economic performance of the country. If that should weaken further the property market will follow.
Equally the recovery in Spain will be very long, slow and painful for it’s population. The property market will reflect that especially the enormous back long of unsold bank stocks. You can add to that owners who want to sell because of rising costs to own a holiday home but have sat tight believing correctly it was pointless to try.
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@logan wrote:
The ‘trend’ Mark has been continuously downward since the crash in 2007. A few sales will have no impact whatsoever on anything. Apart that is to encourage sellers of property to advertise more, believing they can influence the market into turning.
But this is my point. In a thin market a few sales can have a big impact on the average price, which can be deceptive. All of a sudden it appears that prices are rising, when the underlying trend is downwards.
Anyway, this is not some unique insight to me, it’s just a fact that pricesindices are more volatile in thin markets.
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Such a shame that accurate actual closing prices are not easily available. The reality is, of course, even if you do find a price recorded, it may not reflect what was actually paid, as cash payments are still rife. Valuing a property can’t really be based on solid empirical evidence, in many cases, an educated guess must suffice.
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