Spanish Property Price Guide report

This price report is updated and published every month to evaluate the advertised prices of 50,000 Spanish properties for sale with a total value of 20 billion Euros.

The report is not perfect, but gives a good indication of current property values achievable, broken down by area and number of bedrooms. It is not however possible to differentiate between apartments and other types of property, but can be a valuable tool to predict property values when used in conjunction with other data. We use this type of information ourselves to calculate investment potentials.

The report is categorised by number of bedrooms and Spanish province giving you the option to find, for example, the median price of a three-bed property in Almeria. On the same page you also learn how many properties were used to calculate this 'median' and how this type of property in Almeria compares to the 'national median'.

The property price calculations contained within this report are based on a 'median' instead of an 'average' calculation, here's why.

Average property pricing
Average property pricing is calculated by adding up the individual property prices and dividing by the number of properties.

As an example, lets assume that we advertise nine properties at the following prices (I have removed the last three zeros to keep it simple - 100 means 100,000).

135, 185, 220, 240, 250, 300, 350, 400, 900

When you add these prices up it comes to 2980 and, since there are 9 properties, we divide 2980 by 9 to get the average - 331.

Here's the problem with averages. If you look at the figures you can see that one property, advertised at 900, has significantly increased the average. Without this property, the average would be 260, a decrease of 21%.

In a similar way, the property priced at 135 reduces the average disproportionately. Without this property, the average would be 355. Without either of these properties, the average would be 277.

An average calculation is significantly affected by a few properties at the extremes of the price range that are not representative of the price range in general.

The median property pricing
The median property pricing is calculated very simply by listing all the prices in increasing order and selecting the one in the middle. The middle of the above list is 250 - that's the median.

By definition it is the point where half the properties advertised are below that figure and half are above. In this example, looking at all nine properties, the average is 331 and the median is 250 - quite a difference. 250, however is much more representative of that range of prices than is 331.

You can see that the median is quite close to the average calculation we did when we removed the high and low prices. When we did this, the average was 277 compared to the median of 250 - much closer. The median calculation is simply an automatic way of 'adjusting out' a small number of non-representative prices, wherever they occur in the range.

Median is more of a 'proportional representation' way of calculating prices and is commonly used in property valuations because it takes into account the number of properties being offered at any given value while minimising the effect of a few properties at the extremes of the price range.

Although the median is a better way of understanding 'normal' property pricing, it also masks what's going on at both ends of the property market. For example, a crash at the top end of the market will have little effect on the median since properties around the middle price range are not changing.

Similarly, if the availability of properties at the lower end of the market dries up, the median will hardly be affected for the same reason.

What do the numbers mean and where do they come from?
The median prices in the report are generated from the advertised property prices on kyero.com. Approximately 40,000 properties are actually used to calculate the median prices because a weeding out process automatically removes-

What are the numbers good for?
There are three main ways that the report can help you-

What should you watch out for?
Statistics are only useful when you know their potential weaknesses and these are the key ones for this set of data-