WTF Chart Of The Day: Spanish "Recovery" Edition

Tyler Durden's picture

The following chart of Spain's housing market really speaks for itself, and certainly conflicts with Rajoy's promises that not only is the recession in the country over but it is recovering.


And for those unconvinced, here are some additional thoughts from SocGen:

Since the housing bubble burst in late 2007, housing prices in Spain have fallen by almost 40%. Six years later, the debate is about whether the bottom has been reached. Our view is that there is still room for a correction in 2014, despite the encouraging macro economic conditions. Pressure on prices will continue due to the current level of household income, household debt servicing and the oversupply of housing stock. We foresee equilibrium reached at an additional 10% to 15% drop in housing prices. Despite the ease in financial markets, we do not expect household access to funding to improve massively. We therefore expect construction to be a drag on growth in 2014 as the sector is far from recovering.

Demand for dwellings in Spain is frozen

The supply/demand gap in the housing market has been widening for the last five years. Considering the current level of real wages and the high level of unemployment, household income is not expected to see any significant growth. Combined with current house prices, the aforementioned conditions should translate into low demand in the housing market. In addition, hikes in home purchase taxes began in 2013 and will not end until 2015 at best. The Spanish housing rental market suffers from a lack of experience and represents less than 8% of total stock, despite the government’s efforts to boost it, so there is no real potential for absorbing excess stock in housing.

Quest for a fair price: prices likely to drop further

A normalisation process still has to take place in the housing market before prices stabilise. Demand is mild at the moment; however, bids are lower than asking prices.A report prepared by one of the major real estate portals in Spain ( notes that of a sample of 0.5m bids since 2010, the prices offered were 24% lower than the bids (as of August 2013). As anecdotal as this might sound, the key message behind the statistic is that Spanish households are indeed waiting for a correction in prices.

Household solvency has been negatively impacted by the worsening labour market in recent years. We also note deterioration in household housing wealth due to falling house prices.

Looking at the price to income ratio in chart 5, we see that Spanish prices must fall 12.6% to return to their long-term average, which coupled with the oversupply in stock, points to further corrections. The price to rent ratio is also a harbinger of the same overvaluation vs the longterm average of 20%. We believe that the same  scenario has been happening in Ireland, which compared to Spain, has a more severe ongoing price correction.

Average household income no longer reflects a household’s ability to acquire a house at current prices. Our baseline scenario for Spain assumes little to no growth in real wages this year, further undermining the ability of households to access funding.

Demand is not expected to increase massively for the current year, as real wages are not expected to grow – despite the positive economic outlook. The debt burden on households is around 15% due to income contraction, which is high compared to other countries that have lived through a housing crisis.

All in all, should the economic recovery in Spain follow its current trend, our estimates indicate that housing prices should fall by another 10% to 15% before they stabilise. The IMF’s latest report on Spain indicated 15% overvaluation, in line with our estimate. Evidently, if the market were to endure any further shock, this time frame for correction would expand. Recovery in the housing sector in Spain hinges on an improvement in employment and access to credit, both of which are prey to uncertainty.

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Winston Churchill's picture

Looks just like an average day on the Harare bourse ,a few years ago.

Richard Chesler's picture

I see there's strong support at zero.


Pool Shark's picture



Talk about WTF: Who wants to own a house in Barcelona, when you'll be fined up to $100,000 Euros if it's not occupied:

Great time to be a renter; horrible time to be an owner...


Nobody For President's picture

My favorite line from the article illustrates another great Rajoy move:

 hikes in home purchase taxes began in 2013 and will not end until 2015 at best. 

With a government this stupid, no wonder Provinces are working at bailing out.

Groundhog Day's picture

BTFD MF'er's.  Nothing can stop the freight train from hitting 2000 on spx

sarc off

Save_America1st's picture

3 words:  Plunge Protection Team

And the antithesis of the PPT in gold and silver:  The S.P.T. or Spike Protection Team

We can't have those pesky PM's gettin' all "uppity" now, can we? ;-)


Pool Shark's picture



Wouldn't that be Spike Prevention Team?


Save_America1st's picture

yeah, good point! lol  Either way, those bitchez were definintely camped out waiting to strike once shit went slightly parabolic this morning.

gold easily would have blown through 1300 on the way to 1350 had they not intervened.  I wonder how many naked shorts it took to slam things back down that fast?

FLETCH's picture

More interesting news out of Europe:


blacked out in USA... why no Zerohedge Coverage?

Pool Shark's picture



C'mon Tyler[s], link this!


Gief Gold Plox's picture

You really should have put "Latest Snowden Interview" in your text.

GCT's picture

Fletch thanks for the link.  Very informative. 

nink's picture

Thats just the POMO of the day chart watch it spike up at 1:30 to 2pm today. Dow will spike to 15,500+ and tumble back down to 15,370 to close

Nobody For President's picture


The PPT could NOT keep it green. Down a monsterous .03%, but hey, the MSM can say it "Closed Flat". 

syntaxterror's picture

Do whatever it takes motherfucker. And get to work mr. chairman. Buy the fucking dip.

BandGap's picture

I could run away to Spain,

But I'd just get tied again.

I could run off to Jamaica,

If this bondage I could break of.

LawsofPhysics's picture

Until all those unfunded liabilites are seriously cut back, the earth will continue to "beat expectations", all the way down...

Frank N. Beans's picture

hmm, might be a great place to retire


q99x2's picture

US markets have returned to the bull profile of being down in the mornings and up by the close.


Winston Churchill's picture

Not even with your money.

Double POMO day and it can't stay in the the green.

Fools rush in ....

ParkAveFlasher's picture

We have a fight in progress!  Finally, one that can be resolved by 4pm!

BandGap's picture

More like oscillating for the past ~2-3 hours.

Wonder if someone is holding the boat steady so the rats can leave. Wouldn't be surprised to see this nosedive starting around 2PM EST.

Winston Churchill's picture

When we had markets , it was called the after lunch evacuation.


foxenburg's picture

I live in Spain. You have to live here to appreciate the scope of the endless, endless tracts of unsold newbuild houses and apartment blocks. The smallest village has fifty unsold newbuilds. Middle size towns have thousands. Big towns have tens of thousands. In Madrid, hundreds of thousands. Plus, there is the shadow inventory of second-hand houses that the owners can't afford to keep because they've lost their jobs. We are probably talking a couple of million "spare" homes in total. Where are the buyers going to come from? The young Spanish are unemployed, or if they have  job are terrified they might soon be unemployed. They are not going to commit to buying a house. As for the large number of spare houses/apartments on the Costas which were designed to be bought by foreigners, (anyone's guess, maybe 500,000) the Brits/Europeans aren't buying any more in numbers because the economy is far from fixed in UK/EU. Those Brits that bought would now like to sell but there aren't any buyers. And why would anyone buy when this is a renters paradise? Long term lets of 3 bed/2 bath townhouses anywhere in Spain for €400 a month. Why try to catch a falling knife? Finally, Spanish banks can't mark to market and auction off these properties because they are carrying housing inventory on their books at make-believe asset value. Better carry on pretending than face reality and bankruptcy. Most of these houses are in fact worthless and will fall down in disrepair before they are sold.

Irishcyclist's picture

Here in Ireland we have similar problems, but a government agency has taken over many of the unsold commercial and residential properties, and is attempting to prevent the property market from collapsing.

marathonman's picture

Ireland housing bust is over, no?  Bargains long gone?

Irishcyclist's picture

There has been some house price inflation in a minute section of the Irish property market.

However the number of house purchase transactions is tiny throughout 2013 in Ireland.

In the meantime the vast majority of property valuations throughout Ireland continues to fall,

marathonman's picture

Do you have a suggestion where an American could cash out MyRA and pick up a nice Spanish casa?  Ain't never been there.  They tell me its nice...

foxenburg's picture

North coast is wonderful: Gijon, Santander, Bilboa, San Sebastian

Treason Season's picture

IMHO Costa Brava or Costa Blanca