3.2% drop in prices says the Ministry of Housing
For the first time since 1993 the Spanish Ministry of Housing has stated that property prices in Spain have fallen by 3.2% (adjusted for inflation 4.6%) in 2008. The areas that saw the highest falls were the province of Madrid at 7.6%, Murcia and Tenerife at 5.8% and Castellon at 5.3%.
But does this conflict with the recent article on the prices based on TINSA that I wrote about? Yes and no.
First TINSA is an appraisal company, and in the past you never bought a property that was valued less than the sales price, in fact it was extremely rare. The reason being, when applying for a mortgage, the bank gave only a percentage (80% residents, 70% non-residents) of the valuation. In my case, when I applied for my valuation through TINSA, my house was valued at 393.000€ and the purchase price was 305.000€. So I was quite pleased.
Anyway enough about me, has property then been a good investment in Spain then? Since the last financial crash it became popular to move from buying shares to buying properties as nothing is as safe and bricks & mortar. So have those who bought properties 10 years ago made a sound investment or not?
According to the statistics, the values of Spanish properties are still substantially higher than they were 10 years ago with Andalucia 215% higher, Murcia at 211% and the Balearics at 200%.
Whereas banking shares of Barclays are down 56% and HSBC down 22%!
Of course this is slightly relative, as if you include the costs/taxes on the property over the last 10 years, that 215% figure for Andalucia might not be so high, but still substantially better than the banks.
And of course simply because you bought a property 10 years ago it does not mean you can increase the original price by 215%! Don’t get me wrong, you might be able to sell for more than that now, but that also comes down to the sort of property you have, what investment you’ve made in it, how the location has developed, etc…
Regards
Andrew Bellés
