October house prices in Spain.
Whilst only one of many different reports released in Spain which publish the average house price data the TINSA report for October showed a stabilizing but continuing decline in the average price per meter squared achieved for residential property.
The cumulative adjustment on prices from its height during 2007 shows a drop of 41.4% across Spain and 48.6% in the coastal areas. This data is based on Tinsa valuations undertaken in the month.
There remains according to TINSA an annual decline in average prices but the annual rate of decline which has slowed since the middle of 2013 is the same in October as it was in September at minus 4.2%.
Price stabilization across the different areas
Large Cities and Capitals showed an improvement in annual decline being only 2.2% down on October of last year. This suggests that the Spanish buyers themselves are starting to regain some confidence in the market in general and that there is a belief in the major employment and business areas that prices are now as low as they will go.
The overall general index is down 3.4% in the first 10 months of 2014 this compares to a drop of 8.4% between January and October of 2013. Coastal areas continue to perform below the average and the Balearics and the Canaries fell by 5% in October out of kilter with many of the mainland Spanish regions.
Whilst the Islands have shown higher price decreases than most in the last couple of months and this may seem quite strange given buying activity levels in both places it must be borne in mind that during the crisis the Islands held up on prices significantly better than the mainland. For instance over the same period in 2013 the Islands dropped 1.6% in comparison to the other areas where drops in 2013 accumulated were between 8% to over 10%.
Validity of house price information in Spain
The prices given by Tinsa do not reflect actual completions so the overall validity of the numbers can be questioned. The data is however set against a benchmark of over 10 years ago so on a like for like basis it is robust when looking at trends.
Quarterly the Ministry of Infrastructure in Spain publish house price data taken from Land registry, this data should technically should be more accurate as it monitors closely actual prices being paid, however because the information comes from land registry the data for each quarter is behind the curve as it takes a few weeks from completion for land registry to register the sale.
Where should prices bottom out
On average in Spain now prices are at the same level as 2003 and it appears this may in fact be where the decline naturally settles. Some pundits had predicted 2002 prices may well be met before the decline in property prices stopped, this may still finally be the case but there are now some indicators the market will not fall back that far.
With Spanish Banks starting to lend again, all be it at more cautious levels than before the market seems to be moving in the right direction.