Spanish Property Market Review 2012 and Prediction 2013

Transactions, prices, supply and demand

Although many agents and writers will argue that property values have reached rock bottom, we have yet to find any evidence of this being the case. We are aware of segments of the market showing stability or even growth but these are limited to properties in prime locations attracting the super-rich. We go on to discuss this sector further on in the report.

Our analysis is based on transactions, house price indexes and changing supply and demand levels.


Amount of Transactions

According to Tinsa, the largest Spanish valuation company, the number of transactions over the last 6 years across Spain was:

2007  – 836.871

2008 – 564.464

2009 – 463.719

2010 – 491.287

2011 – 349.118


2012 figures are not yet available though we understand the year or year fall will sit at around 10%, leading us to believe the number of transactions might be around 300,000.

What is important here is the falling number of transaction appears to be stalling and stabilizing, which offers some positive news, only in that the trend of falling transactions is less severe than previously.   


Average Property Prices as a % growth/fall year on year.

The methodology used in assessing house prices in Spain is varied and often unreliable and difficult to compare.

Tinsa, the largest valuation company in Spain bases its statistics on comparable evidence used in its own valuations, then applies that to an index. It also weights its results.

The Spanish national house price sales index (INE) works on registered sales values so theoretically, it should be the most accurate.

Idealista, kyero, and obtain stats from their own sites and the marketed prices.

Achieved sale values are often impossible to establish due to the common practice in Spain of registering a lower declared sale figure for taxation purposes.   Although less frequent these days, for comparative purposes it makes exact statistics unreliable.

This occurs with at all levels but perhaps more so at the top end of the market where it is often the case that the balance or premium is paid in cash and the exact amount of money changing hands does not appear in any official public documentation. The nature of these transactions, often carried out through trusts and overseas companies, is discreet, due to wealthy and well-known homeowners insisting on their financial privacy being maintained. The vendor’s requirement for confidentiality results in restrictions being imposed on public access to sale value. This inevitably leads to inaccurate public records and lower registered deed values.

There have also been accusations of the political manipulation of figures, such as during the second quarter of 2010, where the index rose, and the then prime minister Zapatero suggested prices has bottomed out and would not go any lower.  These results were made, coincidentally, just before the general elections.

Going on the evidence we have, we start by looking at percentage falls year 2011 to 2012. Please note, at the time of writing, some of these results are not to the end as year results had not been published at this time of writing.

Typical results for 2012 show:

                                          2011-12                     -10.2%

Tinsa                                 -11.3%

INE                                      -9.4%

Economist                           -9.3%

Kyero                                  -8.5% (to October)                           -10.37%                    -10.5%


Average house prices in €

Figures given, vary significantly

INE                                                          70,500€

The ministry of works (formento)            93,700€ (to sept 2012),

Expansion                                            135,000€

Kyero                                                   244,000€ (to oct 2012) mainly overseas purchasers

Tinsa                                                   190,000€ (90m2)

We do not think it is advisable to rely on the average price for all property sales as the figures given seem to vary wildly, perhaps due to the weighting and method of calculation of what is an average property.


Price € per meter square

Fotocasa                                                              1,891€   (to Dec 2012)

Tinsa                                                                    1,524€                                                            1,887€   (second hand)

Idealista                                                               1,873€   (second hand)

Tinsa                                                                   3,502€ (highest)

Tinsa                                                                   1,271€ (lowest)

Euroval                                                                1,607€

Taking the above as a some average, the € p/m2 nationally would therefore be in the region of 1936.42 €p/m2.  Based on an average of the above and the average price as 180,087€.



Below we have reproduced the INE house price index per recorded transaction over the last 5 years.  Date is available up to the end of the 3rd quarter 2012


2012 3-4

2012 2-4

2012 1-4




2011 4-4

2011 3-4

2011 2-4

2011 1-4





2010 4-4

2010 3-4

2010 2-4

2010 1-4





2009 4-4

2009 3-4

2009 2-4

2009 1-4





2008 4-4

2008 3-4

2008 2-4

2008 1-4





2007 4-4

2007 3-4

2007 2-4

2007 1-4





This index makes bleak reading. It indicates 21 months of falling prices.

House prices rose 44% from 2004 to 2008, at the tail end of a housing boom. Since the bubble burst prices have fallen by a third.

Looking at demand over the last 5 years, it is most definitely down , however the statistics are dressed up.  Many businesses such as imply interest based on search engine enquiries equates to real demand. Similarly, agents are also noting an increase in enquiries though this does not equate to sales so and has to be discounted.

Similarly, some agents state sales are up in some areas, but that may be based on exceptionally poor previous year’s figures.

An example is given with one well known British developer based in Mallorca claiming sales are up 140% on last year in a development, this could be interpreted to mean they sold  5 units in 2011 and 7 in 2012. It may not also state any other factors, such as heavy discounts.

in our view, the demand  is there to enquire but conversion levels to sale is at an all time low due to no bank finance and buyers being prudent and waiting for prices to fall further.