12/08/2004 00:00
TW
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Staff Reporter OVER the past five years, the price of housing in Spain has gone up 18 times more than the purchasing power of the nation's home buyers. According to reports from the National Institute of Statistics (INE), this means specifically that the average price of housing rose between 1999 and 2003 by 80.25 percent.


From a square metre of constructed property costing 792.29 euros, it rose to 1'428.16 euros at the end of last year.
Judging by the information gathered by INE, salaries increased by an average of 18.5 percent, with year on year accumulation of 2.3 percent in 2000 in respect of 1999; 3.5 percent in 2001; 3.9 percent in 2002 and 3.8 percent in 2003.

When the effect of inflation and general price rises is deducted from salary increases, it can be seen that in real terms, such rises fail to boost aspiring home owners buying power.

Given that accumulated inflation during the last five years stood at 14.2 percent, the buying power of people in Spain didn't go up by 18.5 percent but much rather by 4.3 percent.

This means that while housing rose in cost by 80.25 percent between 1999 and 2003, the buying power of Spaniards only rose by 4.3 percent, 18.6 times less.

In its latest report, the National Institute of Statistics described the increase in price of housing over recent years as “disproportionate” and points out that (the rise) “is making it difficult for a large section of the population to afford their own homes, thus becoming one of the country's widest social concerns”.

Nevertheless, one notices a wide variability in house prices according to location, to such an extent that the average cost in Madrid is 74 percent higher than the national average and 4 times greater than the prices in Extremadura.

Examining house prices over the country as a whole at the end of last year, it is clear that the prices were greater than the national average in Madrid where a square metre of property cost 2'485.08 euros; the Basque Country (2'140.99 euros); Catalonia (1'850.92 euros); Balearic Islands (1'724.66) and Navarra (1'454.33 euros).
In the remaining regions, prices were below the national average, although the lowest were claimed by Extremadura (615.98 euros per square metre); Castilla-La Mancha (780.17 euros), Galicia (864.11 euros) and Murcia (892.69 euros).

Furthermore, there are substantial differences in price according to age of property, although they are gradually being eroded: in 2002, the difference between new ones (which is more expensive) and homes which have already had one or more owners stood at 21.4 percent, but at the beginning of this year registered only 18 percent.