News on house prices in Spain is confusing depending on which report is looked at.
Spanish house price information where is the data extracted from.
One of the longest running reports dating back to and tracking house prices in Spain is from TINSA one of Spain’s largest valuation companies. TINSA have been tracking average prices per meter squared monthly and year on year since 2001. The key issue with the data provided by TINSA is firstly it is based on their own valuations and secondly the sample of valuations used each month is small. On the upside the regularity of the data means that whilst the price per square meter itself on a small sample may not reflect what prices houses are being bought at the trends never the less over the years should provide some level of certainty.
According to TINSA in the month of August buyers in Spain continued to see a fall. The rate of the decrease has slowed considerably during 2014 but the trend remains downwards when looking at a year on year basis. From July to August within 2014 there was also an overall drop but again the rate of the drop is slowing in most regions.
August TINSA report
The Balearics which in the July report showed an actual increase on the monthly evolution year on year showed a significant drop in August of over 8% balancing out the increases reported in July.
Other Coastal areas whilst down stabilized with the percentage decrease in August being no more than the decrease percentage in July and major Cities performed slightly better with a lower percentage decreases in August than was reported in July.
Overall the general index fell by 4.3% when compared to August of last year and since the peak the price adjustment is now down 41.8%.
Average price per square meter are now at a level reflecting those considered by TINSA in the year of 2003 and this is the case pretty much across all regions. There is a general consensus that 2002 prices will be reached before the market stabilizes completely.
In certain pockets and areas within regions where housing supply is not high and the area itself is well sought after we have seen some increases at least in activity and level of buyers in competition with each other to buy.
Spanish House price Index
The National Statistical office in Spain releases quarterly the Housing Price Index and in the second quarter of 2014 reported a small but significant increase in as much as it was the first increase since 2008 of the housing market in Spain.
The INE take data from Notary and Land registry so in terms of actual prices being paid is perhaps a truer reflection as it covers areas and pockets where the recovery is underway and actual sales that have taken place. What this data tells us that whilst there may still be a downward trend in certain areas or types of homes there are areas and properties that are now selling at higher prices than last year and this portion of house sales is pushing the overall market up, all be it at a very slow rate.
The INE have only been reporting since 2007 so the trend information is not as robust but the specifics are.
Whether the upward trend for Spain and sellers in Spain continues for the third quarter, which finished yesterday, remains as yet to be seen. If the TINSA data is to be taken into account it might be the case that the second quarter was a blip.
How do buyers in Spain assess the market conditions
Assessing when buying in Spain whether the market has bottomed out must therefore be looked at from both the micro and the macro level. Whilst in some areas, and for some types of purchases the market may still have a way to go, in certain areas and for particular properties the market may well have reached rock bottom and could be on the rise.
How quickly properties are selling, buyer activity level in that area and supply of the type of property to be purchased must be taken into consideration along with the general data covering the whole of Spain or an individual region.
There appears to be much higher levels of buying activity in the two key Cities of Barcelona and Madrid along with the better known coastal areas which have long attracted overseas buyers.
The price of the holiday home in well known resorts with high levels of tourist facilities and good communication infrastructures are now holding up quite well as second home buyers assess that due to the current Euro rates and previous drops in price, real value for money can be achieved.
Anecdotal information from professionals on the ground.
Lawyers providing legal advice and support in Spain and mortgage advisers are reporting more and more instances of a buyer being gazumped or a property selling before a private purchase contract can be safely secured.
Whilst because of the market conditions in certain areas, overseas buyers are tempted to move very quickly to secure the perceived bargain, purchasers must be careful that the desire to secure the property does not mean corners are cut within the conveyance process and monies committed and private purchase contracts signed before it is safe to do so.
For buyers requiring funding to buy in the areas of higher activity it is more important than ever that a mortgage approval is gained before making an offer both to ensure the offer is accepted and that the purchaser can move at speed and with certainty.
It is tempting, in what can be perceived to be a rising market, for the market to be talked up just because a few houses have sold for more than the asking price or more than one purchaser is interested in an individual property. This does not necessarily mean the Spanish market is rising or about to explode there will be plenty of well priced quality property on the market in Spain for a little while to come yet.