Spanish Housing Market

Spain Housing Market in Crisis

Some economic statistics on Spain displayed here, which suggest that it is still in crisis. Worrying times ahead, but great if you want to buy a property in Spain.

Spain Housing Market Statistics

The funny thing about Spain (and Ireland) was that before the 2008 recession their deficit situation was quite good. Of course, this was the consequence of a housing boom which boosted GDP growth and finances, yet, stored up a whole load of problems now. As ever, it’s worth reminding ourselves that irrespective of the efforts of the Government to capitalize the banks, if their underlying assets are falling in value then more capital will be needed.

The key is the Spanish housing market and, things don’t look good.

Spain House Price Index

Firstly, the latest quarterly numbers (general index) for the Spanish house price index is out from the Instituto Nacional de Estadistica

(%)	Q1 2010	Q2 2010	Q3 2010	Q4 2010	Q1 2010	Q2 2010	Q3 2010	Q4 2010
New Housing	-4.2	-1.7	-2.6	-2.1	-1.9	-5.2	-5.0	-8.5
Existing Housing	-1.4	0.0	-1.8	-1.6	-6.3	-8.3	-9.6	-13.7
General Index	-2.9	0.9	-2.2	-1.9	-4.1	-6.8	-7.4	-11.2

These are annualized numbers which suggest that Spain’s housing market is getting worse.

Furthermore, despite the fall in bond yields since the ECB’s LTRO operations, the banks in Spain are tightening lending conditions.

Spanish Bank Lending

Here is a summary of the Banco de Espana Bank Lending Survey

Index	Q1 2011	Q2 2011	Q3 2011	Q4 2011
Housing	11.1	11.1	11.1	22.2

This number is just the share of banks tightening vs. easing. It’s a similar type of survey to the one that the Federal Reserve does for Bank Lending.

And, nor is it likely to get better any time soon! 

Spanish Bank Bad Debts

Let’s go back to the Banco de Espana for a breakdown of lending and deposits of credit institutions and, then compare this with how many are classified as doubtful

Eur (bn)	2005	2006	2007	Q2 08	Q3 08	Q4 08	Q1 09	Q2 09	Q3 09	Q4 09	Q1 10	Q2 10	Q3 10	Q4 10	Q1 11	Q2 11	Q3 11	Q4 11
Total	1202	1508	1760	1838	1853	1870	1862	1861	1846	1837	1827	1847	1837	1844	1824	1818	1788	1783
Bad	9.6	11	16	31	49	63	79	86	90	93	98	99	101	107	112	122	128	136
%	.8	.7	.9	1.7	2.6	3.4	4.3	4.6	4.9	5.1	5.3	5.4	5.5	5.8	6.1	6.7	7.2	7.6

The rise in the doubtful rate is worrying.

The crisis isn’t over for Spain.

Source:

House Price Index
Banco de Espana Bank Lending Survey
Banco de Espana Credit Data