Friday, April 11, 2008

Spanish property inflation rates

The quarterly figures released by the Spanish Ministry of Housing (Ministerio de Vivienda) is the most commonly used housing market statistics for property prices in Spain.

The figures for the third quarter (Q3) in 2007 shows that average national Spanish property prices rose by 0.3%, which translates itself into an annual increase of 5.3%. This is a deceleration compared to second quarter (Q2), when prices rose by 1.5% for that quarter, and 5.8% over 12 months. Average Spanish property inflation rates have been progressively falling after peaking 18.5% in 2003, to 9.8% in 2006, to 5.3% in 2007.

The deceleration in the rate of house price inflation and a drop in demand in certain places don’t mean the end of decade long property boom. The fall in the inflation rates do not pertain to the country as a whole. Murcia region's property market is expanding at a considerable pace and is likely to keep growing as Madrid saw rates drop to two per cent, but Murcia had 10.7% annualised price growth.

This is the forecast by the experts for 2008

BBVA (Spanish bank) : prices +1.4% in 2008 and -1.9% in 2009
Deutsche Bank: prices -2% to -8% in 2008
Natixis (French bank) : prices +2% to +3% in 2008
Crédit Agricole (French bank) : -10%

This comes after the recent survey by Yorkshire Bank which revealed that Spain is one of the most popular foreign destinations among overseas property investors from the UK. This shows after all the negative publicity in the media; Spain is the perennial favourite for British buyers.