An analysis of factors influencing accuracy in the valuation of residential properties in Spain

This paper is concerned with assessing how valuations for mortgage purposes reflect market evidence. Differences between the value obtained through the analysis of comparables and the final assigned value are analysed. The study is undertaken for the Spanish housing market at the peak of the house price boom. High levels of accuracy are apparent but with a tendency to over- rather than undervalue properties. Physical housing variables are shown to have a relatively homogeneous effect, whereas factors relating to the environment and location lead to wider differences between valuations. The effect of characteristics is shown to vary substantially between cities. There is no evidence from the analysis that the property bubble in Spain was driven by inaccuracy in valuations.