As property buyers and sellers in Spain eagerly watch for an opportune time to make their move, what do the latest statistics say about the true state of the Spanish property market?  Is the price of housing increasing, decreasing or holding steady...?

In short, buyers are bewildered.  There is such a disparity between rival sources of information that buyers don’t know who to trust or what to believe. Kyero.com, the Spanish property portal, regularly publishes updated statistics on the average asking prices of 90,000 properties across the whole of Spain. The Ministry of Housing in Spain (MVIV) produces quarterly reports on actual property transactions.

According to Kyero.com, prices nationally fell by 1.2% in the 3 month period ending September 2007, but increased over the previous 12 months by 2.5%.  However, according to the Spanish Ministry of Housing, prices increased by 0.3% quarterly and 5.3% annually.  In other words, the Kyero.com figures, although not entirely discouraging, are 3 to 4 times more conservative than those produced by the government. 

Black money

The statistical methods used by MVIV differ significantly from those employed by Kyero.com.  The government body records sales price per square metre and Kyero.com documents asking prices.

As such, the figures from Kyero.com tend to be forward-looking and more accurately address the question "What will happen to Spanish property prices?" and the MVIV statistics record what actually happened.  So, some discrepancy between the two sets of figures is to be expected, but this alone does not account for the vast differences apparent between them. 

Questions have to be raised on the ‘black money’ issue which is still rife in Spain. This is where a significant portion of money is not declared in the sales price and is instead transferred in cash to the seller in an effort to avoid paying full tax on the transaction.

An interesting by-product of the government continuing to crack-down on black-money deals is that official statistics will reflect an artificial rise in property prices - simply because more of the transaction value is declared. This factor alone is believed to skew the prices recorded in the Spanish system by as much as 30%.

There are further problems when calculating price per square metre because agents and sellers record surface areas differently, some including balconies and outside space whilst others omit these keys areas.  Such a discrepancy is believed to skew the recorded price per square metre by as much as a further 30%.

Knock on effect

The knock-on effect of these two problems means that the official government prices could be either 50% lower or 70% higher than their "true value".  Factor-in the discrepancy between today's asking prices and actual sales prices in 9-12 months time; it's easy to understand why buyers in Spain are confused.

"Unlike in the UK, accurate official statistics on actual property sales prices are simply not available in Spain" comments Martin Dell of Kyero.com. He continues, “In the UK, detailed sales prices are available down to an individual property but in Spain, the most detailed information available is an average price per square metre in a major city. 

“It's essential that buyers from outside Spain have access to understandable, reliable and useful statistics on house prices:  It's why we started producing an independent Spanish House Price Index in 2005.  The ideal situation would be for the Spanish government to open up their data to the public and then we could accurately correlate asking and selling prices. 

“I strongly believe that, given access to more reliable and transparent information, foreign buyers would more confidently invest in Spanish property.  In the meantime, we'll do everything we can to help buyers make sense of the statistical information which is available."

Explore the latest Spanish house price statistics for yourself at Kyero.com (http://www.kyero.com/price_index/) and Mviv.es (http://www.mviv.es/es/index.php?option=com_content&task=view&id=672&Itemid=414