Latecomer's Lament

The Spanish Ministry of Housing releases a wide variety of property-related statistics on a quarterly basis. Many of their studies, particularly those that claim to represent price levels, are useless beyond description. Supposing, however, that they cannot mess up too seriously a time series consisting solely of the number of transactions involving raw land, we have graphed our index of this measure, on the left.

The blue line shows the numbers for all of Spain, up in the last period but not showing any real change in a general downward trend. The red shows the same for the Autonomous Community of Madrid - the capitol and surrounding areas. After bottoming in Q3 of 2008, land transfers there have returned approximately to 2007 levels.

Note also that the above figures for Spain and Madrid dropped precipitously over the course of 2005 - a roundabout way of confirming that nobody made any money at this game with investments made after 2004 - buying the low volume top, as it were. One could also make the possibly far-fetched assumption that many builders and promotors knew by then that the game was over. These may have not made out so badly but for the continued entry of suckers and true believers.

Thinking of this last group, the yellow line on the graph shows the same stats for Castilla-La Mancha, the community which surrounds Madrid on three sides. The region apparently kept the raw land ball rolling right into 2008. We guess it comes as no surprise that Caja Castilla-La Mancha is the only Spanish financial institution to date taken over by the Banco de España. Under government management, CCM still sports a 12% overall loan default rate on a book 40% devoted to funding the real estate trade - this not including individual home mortgages.

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