“Talk of a slump (in prices) is no longer fitting” said an official from the Housing Ministry yesterday during a press conference for the Ministry’s latest quarterly housing market figures. National average prices have fallen 8% over 12 months, from 1,780 Euros/m2 at the end of September 2008 to 1,634.7 Euros/m2 today. In real, inflation-adjusted terms, prices fell just 7%.

Anunciación Romero, head of architecture and housing policy at the Ministry, said the trend has turned towards prices stability and urged buyers to get back into the market to benefit from lower prices and interest rates.

Not everyone agrees. “This annual drop was a surprise as we were expecting prices to begin falling by double-digits before the adjustment had ended,” Felix Lores, a consultant at financial analyst house AFI, told Reuters. The IMF forecasts even bigger falls to come.

A Reuters housing poll of Spanish and foreign-based economists found that on average prices were expected to fall 32 percent from their 2007 peak. So far they have fallen just 7% in nominal terms, according to the Ministry of Housing’s figures. In real terms they have fallen just 6% since their peak.

In the USA, where arguably there was less of a bubble than in Spain, property prices have fallen some 30 to 35% from the peak, so the adjustment in Spain has been trifling in comparison.

Look at the chart at the top; prices may have been cooling since 2005, but they only turned negative this year. Given the severity of Spain’s economic problems – 20% unemployment, a monumental housing glut, and a credit crunch – does it make any sense for property prices to turn around so quickly? Is there even one good reason why prices have fallen far less in Spain than other comparable countries like the USA, the UK, and Ireland?

In reality, prices may have fallen by more than 20%, and still be falling, the explanation lying in dodgy official figures. Who knows? But for what they are worth, here are the latest official price figures for a selection of regions popular with foreign buyers. Note the big annual falls in Murcia and Malaga (Costa del Sol), but the quarterly increases in Alicante (Costa Blanca) and Almeria. It’s hard to believe that prices are actually rising in Alicante and Almeria, home to some of the worst over-development in Spain.