Fri, 19 March 2010
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Official figures mask truth as a rapidly-slowing market forces sellers to aim lower.MADRID / BARCELONA – Mariano no longer believes in statistics. From his real estate agency in central Madrid, he has seen apartment prices plunge over the past year, even though official figures suggest property prices have barely moved or have even gone up.
The few homes Mariano has managed to sell since the crisis erupted went for 20 percent less than they would have a year ago, even though statistics released by the Housing Ministry suggest that average property prices across Spain are 0.4 percent higher than 12 months ago.
The National Statistics Institute (INE) says they are down a marginal 0.3 percent, while the real estate appraisal firm Tinsa offers a somewhat more credible estimate of a 5-percent decline based on a more selective sample.
Mariano is not alone in questioning the accuracy and veracity of the official figures. Like other real estate agents he believes the models and data used by the Ministry, INE and others fail to accurately reflect the real situation.
It is a surprising U-turn from an industry that just a few months ago was swearing that house prices could not fall or, at worst, would only fall slightly despite a clear excess in supply and shrivelling demand due to tighter credit conditions and weaker economic prospects.
Now, however, those same real estate developers and sellers are eager to get the message out that the market has found a bottom - even though no one can tell for sure when that will be. In their eyes, official figures showing double-digit declines may actually encourage would-be purchasers to buy.
"House prices won't fall anymore because they already have on several occasions. No one should expect drops of 30 or 40 percent because before that happens [developers] will just hand them over to the banks," argues Guillermo Chicote, the president of the Spanish Association of Developers and Constructors.
I have to agree that the official statistics are totally inaccurate and do not reflect the real situation in the Spanish property market. Prices where I am on the Costa del Sol have declined by up to 40% and many developers are, or have been reducing their list prices by 25 to 30% in an effort to reduce their stocks of unsold properties.
The "official" figures are completely misleading and mis-representative of the real situation and seem to be a further indication of a Government burying its head in the sand and not being willing to face up to reality
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