Why Are Housing Statistics Inconsistent?

18/09/2014 – Cinco Dias

The July real estate statistics document published by Spains General Association of Notaries implies, that the seventh month of the year saw by 17.4% approved mortgages for home purchase more than in July 2013. Also, 31.973 properties were sold, representing a 9.8% year-on-year decline (7.5% corrected). What is more, in the Notaries opinion, housing prices continue to drop, marking -10% in July.

However, last week the National Statistical Office of Spain (or INE) made public a report saying that property sales advanced by over 10% during that month and values increased 0.8% on year-on-year basis in the second quarter of 2014.

Are the data contradictory? Yes, and no. The reason for the obvious discrepancies is that each of the statistical information providers draws their data from different sources. The INE employs sales numbers from the property registers which refer to entries from the previous months, whereas the Notaries rely on their own database.

Another question is that whether it is possible for the mortgages to shoot up while home sales are descending. Well, it is, provided that during the recession over half of all the signed contracts did not require a mortgage loan, i.e. the properties were purchased in cash.

The slump in prices, limited access to financing and intensified saving in Spanish households allowed some to acquire a house without needing a mortgage. Now banks start to lend again, above all for their foreclosures acquistion, and even if their sales are not faring well, they have approved more mortgages.

In terms of prices, the reason is not so clear. Can values taper down one month and then go up the following? Yes, in line with the number of transactions sealed in each period of time and their development a year earlier. And if that was not enough, the Ministry of Public Works comes up with its statistics based on appraisers data which represent the asking prices, not the final ones.


Original article: Cinco Días (by Raquel Díaz Guijarro)

Translation: AURA REE