1. FACT – true prices paid for houses have fallen 50% or more in most areas of the country and NOT the 30% shown in the registrar’s statistics.
2. CAUSE – Traditionally the full price paid for a property was not shown in the official sales document, with as much as 30% being in cash ‘under the table’. Thus the register shows low values. However, stronger disciplining of money laundering, etc, has meant that the registered prices are probably now only 10% down on the real total money exchanged.
3. RESULT – So registered prices should appear to be rising by 20%. However, as prices have in fact fallen 50+%, the registered prices show an incorrect statistic of -30%.
Even analysis of Asking prices, which should avoid the above problem, fails the accuracy test. In ‘good’ times, buyers paid the price asked as they knew it would be higher a few months later. Now, with so much supply chasing so little demand, combined with historic prices still being quoted, actual sale prices are negotiated down to 10 – 20% less than the average asking price. So once again, the asking price stats can show a reduction of 30%, when the actual reduction has been 50%.
I’ve Blogged on this subject previously, but I feel that it’s so important for Spain and its economy that the international market needs to be aware of the true situation. There is no further 20% drop in house prices to come as its already happened -(always assuming that SAREB, the Bad Bank, doesn’t do anything silly!)
