ARCHIVED - Tinsa report Spanish property value increase of 3.1 per cent in October

Various factors dampen optimism over continuing rises in market value in the near future

The leading Spanish property valuation firm Tinsa published its latest batch of monthly data regarding the market value of housing across the country on Wednesday morning, reporting that in the month of October the recovery in market prices of recent years continued to slow down.

The year-on–year increase of 3.1 per cent was the ninth consecutive rise of under 5 per cent, and indeed the increase in the Tinsa index since the start of 2019 is just 2.3 per cent. In fact, in Mediterranean coastal areas there has barely been any movement at all in 2019 (a rise of just 0.7 per cent), and the nationwide index dropped during the month of October by two points to 1,527.

However, the firm reports that the figure is now 16.6 per cent higher than when the market bottomed out in February 2015 (but still 33.1 per cent lower than at the height of the boom in late 2007).

The staggered nature of the recovery can be seen in the breakdown of the figures, which shows that in Spain’s regional capitals and other large cities market values have risen by over 25 per cent in the last three and a half years, while elsewhere there are increases of 23.7 per cent in the Balearic and Canary Islands and 18.9 per cent in Mediterranean coastal areas, but only 7.6 per cent in the catch-all category of “other municipalities”. This might indicate that the locations where the recovery started latest are now those enjoying relative prosperity, whereas those where prices started to rise earliest could be expected to have reached a “ceiling”.

The October figures again show the sharpest year-on-year increase in the Canaries and the Balearics (5.4 per cent), while elsewhere the rises are more modest at just 1.6 per cent in “other municipalities”, 3.4 per cent in regional capitals and other large cities, 3.3 per cent in “metropolitan areas”, and 2.7 per cent in on the Mediterranean coast.

The latest bulletin also contains the monthly “market snapshot”, in which Tinsa highlight reasons to expect upward or downward movements in the value of homes in Spain, summarizing the following indicators among others:

- Sales figures: the latest monthly data (for August) show a sharp 20.8 per cent year-on-year decrease and an accumulated fall during the first 8 months of the year of 1.7 per cent.

- Building licences: the latest monthly data (for August) show a 14.1 per cent year-on-year decrease but an 8.3 cent rise over the first eight months of 2019.

- Mortgages granted: in line with the drop in sales figures, the latest monthly data (for August) show a 29.1 per cent year-on-year decrease but a 5.8 per cent rise during the first 8 months of the year.

- Unemployment: the latest monthly data (for October) show a 2.37 per cent year-on-year decrease during the last 12 months, the last positive figure for years after a rise of almost 100,000 during last month.

- Euribor: the interest rate on which most mortgage repayments in Spain are calculated is currently at -0.304% (the average for the month of October), having risen from the new record low of August.

In general these factors point to rather less certainty over the nature of future developments than has been the case for the last couple of years. Especially eye-catching are the poor sales figures for August, and it will be interesting to see the results for September when they are published next week, but none of the most recent data as summarized above can be said to be conducive to optimism regarding a rise in market value in the immediate future.

The Spanish property market, though, is far from uniform, and national averages tend to distort the picture: there are regions where the outlook is rosier than in others, but in overall terms it appears that the demand for housing across the country may have reached a natural peak, and that in consequence there is less upward pressure on market value.

In short, the continuing recovery is looking rather more fragile than has been the case for the last couple of years.

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