Spanish property among best priced in Europe, OECD finds

Property prices in Spain are among the fairest in Europe, finds an OECD study

An authoritative study by the Organisation for Economic Co-operation and Development (OECD) assessing the valuation of housing among its 27 member nations has found that Spain has one of the best-value property markets in Europe…

Findings from the study revealed that property in the UK is overvalued by around 30 per cent, while the housing markets in a number of Anglo-centric countries – such as the USA, Australia, Canada and New Zealand – are also overvalued to varying degrees.

Conversely, the housing markets of Germany, Japan, Ireland and Greece are undervalued, according to the study. Researchers at the OECD reached their conclusions on the basis of two different measures of valuation. Average wages in a country were pitched against the long-term property price average. Any measurement of 100 would indicate a steady average. A score of 130 would be 30 per cent above average – which is what the UK scored.

On this metric, Spanish property reached a score of 104, suggesting the market is overvalued by approximately five per cent when based on Spanish wages, which are lower on average than British wages. Hence, a Brit hoping to buy property in Spain would actually be able to agree upon a fair purchase price.

The other measurement looks at property prices versus rents, which is intended to evaluate homes as though they were businesses – a measurement that is used to predict longer-term economic growth. On this measure, Spain has improved on last year, when it scored 115, reaching 107, which is an indication that the economy has headed in the right direction since 2013.

“House prices and housing investment are now rising in over half of the OECD economies,” read a statement released by the OECD. “In Europe, strong house price growth is continuing in Germany and Switzerland, and has also resumed in the UK, even though prices there are already above longer-term norms relative to rents and incomes. Markets remain softer in other parts of the euro area, reflecting weak income growth and tighter financing conditions.”

Compared to last year’s study, Spanish house prices have ‘corrected’ by 4.9 per cent. In Australia, prices have risen on average by 6.6 per cent in the past 12 months, which is the same as the US. Property in Canada is 5.2 per cent more overvalued this year (scoring 131 and 166), while homes in France – although cheaper this year than last – are still overvalued by approximately 30%, scoring 129 and 128.

With scores of 104 and 107, no other housing market in Europe gets as close to the 100 average as Spain – an indication that not only does the country boast the most dynamic property market on the continent, but the fairest priced, too.