Anything to Celebrate in Spain Today?

This week marks the 200th issue of the Property Pulse Newsletter. I'm not quite sure whether it's much of an anniversary of note, or how to celebrate it but I feel sure there will be a bottle of cava involved somewhere along the way.

I won't surprise you to learn that there has been precious little to celebrate in this week's Spanish property news. One silver lining to the cloud is that now even Spain's politicians have removed their smiley masks of optimism. I don't see reality and optimism as mutually exclusive, but I am bothered by a refusal to face facts.

Now, though, it seems that everyone from Zapatero down is holding their hands up and admitting that the country has not seen the likes of this financial crisis for a very long time. I like that. It creates the possibility of taking appropriate action when facts have been faced. A denial of reality merely causes the pain to endure.

Not everyone in the market is prepared to set aside their PR face though. This week, a spokesman for property developers in Spain confidently announced that property prices could not get any lower. He also commented that he would rather face bank repossession than discount his property stock any further.

Now, you can't blame the man for wanting to drum up a little business, but the fact that he can't or won't discount doesn't make his properties the right price. In fact, I imagine that if they were indeed repossessed by the bank, they would reappear on the market at a substantially greater discount than he's now prepared to entertain.

Then there's the question of which starting price we should use to calculate the true market value of a property. You've heard me bang on about this a million times I know, but without accurate, reliable and independent statistics of actual sales prices in Spain, we're all playing a guessing game.

The Kyero Spanish house price index is fine as far as it goes, but in a market like this, we all need to know the prices that properties are actually fetching. I think that this alone would reinvigorate the property market in Spain.

Of course, they'd need to be government sponsored and, for them to be reliable, the practice of swapping money under the table in a property deal should carry such severe penalties that the majority wouldn't risk it at all.

Instead of throwing billions of Euros at propping up Spanish banks, the Spanish government could pass and enforce laws to completely remove black money from the equation in property transactions. If they did that for just three months, the buying public would have a factual basis on which to evaluate the price of any property, and they'd be less afraid of making a bad decision or overpaying.

Money would flow back into the property market and we'd avoid creating another boom-bust-boom cycle where prices are hyped to the point of crashing.

I'm sure that this is an impossibly simplistic point of view, but I do believe that transparent and reliable housing data would make a huge difference to the Spanish property market.

Martin Dell, Kyero.com

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