Knight Frank Global House Price Index flatters Spain

Spanish property prices fell by 6.8% over 12 months to the end of March, and by 3% compared to the previous quarter, according to the latest Global House Price Index just published by international real estate consultants Knight Frank.

Taking the figures at face value, Spain ranks number 30 out of 46 in order of declining property values. Compared to some other countries, like the UK (-16.5%), the US (-16.9%), not to mention Dubai (-32%), and Latvia (-36%), Spain’s 6.8% fall in year-on-year property values looks modest in comparison.

“Of the first quarter data which we have received, Israel was the top performer over the 12 month period ending Q1 2009 recording growth of 10.9%, followed by the Czech Republic at 9.9%,” explains Nick Barnes, head of international residential research at Knight Frank. “The better performing markets tend to be smaller and with fewer structural imbalances. The worst performers were Dubai and Singapore who recorded a fall in average prices over the period of, respectively, 32% and 23%, while a further five countries also returned double digit declines.

The rankings, however, are distorted by the fact that 30% of the countries covered by the index had not reported housing market data in time for the report. “We can only surmise that the data collection bodies have either been unable or unwilling to publish the data to timetable – perhaps a reflection of the ailing health of their respective residential property markets?” says Barnes.

Spanish figures from the Ministry of Wishful Thinking

The other problem with the Knight Frank index, at least as far as it concerns Spain, is that it uses the official house price data published by Spain’s Ministry of Housing, which, as I have repeatedly pointed out, is so inaccurate it borders on useless. The official figures are interesting only to the extent that they tell you if prices are going up or down, and they don’t always get that right either. In reality, Spanish property prices are probably falling in the 20% to 30% range, maybe more, which would push Spain down to the very tail end of the index, rubbing shoulders with Singapore and Dubai.

Of course Knight Frank are not to blame. Like The Economist, which also publishes regular global house price information, they have to rely on the official figures from the government. But when it comes to Spain, the official house price figures are a joke (I’m sure Spain is not alone here). I can’t help thinking that an index like this gives the Spanish numbers credibility they don’t deserve.

You can see the whole ranking here: Knight Frank Global House Price Index


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