Sep 182011


A very interesting graph relating to the cost of living in Spain was produced by a Spanish financial site a couple of weeks ago that is well worth having a look at.  As you can see below, it shows comparative prices of some major items between 1981 and now (2011) based upon the Spanish Consumer Price Index.

The two vital factors to see are, of course, Spanish salaries (which have barely moved in 30 years) and house prices in Spain (that have risen tenfold during the same period) – which goes some way to explaining why Spain is in such a disastrous economic mess now.   It also brings into question (yet again!) the competence of Spanish state economists who should have been screaming blue murder as they saw the massive disparity growing between salaries in Spain and Spanish property prices.


Generado por: Actibva

Surely, it was not ‘rocket science’ to see that ‘something’ was going (and latterly had gone) way out of kilter?

Incidentally, the graph mentions a flat in Paseo de la Castellana as an example of a Spanish property that has gone up by a factor of 10.  At first sight this may seem a rather extreme example as the Paseo de la Castellana is one of the main arterial roads through Madrid with prices, in some parts, rivalling Mayfair in London.

However, within my own coastal town of Gandia in Valencia Province you could have bought some (pretty poor) flats in 2003 for around 10,000 Euros.  By 2007 these same flats were selling for 100,000 – 110,000 Euros and so had risen tenfold in price.

Of course, not every property in Spain had increased in price by a factor of 10 by 2007 but a significant number had and most properties in Spain (particularly along the coast and in the big cities) had gone up by a minimum of several hundred percent.  Land prices for building in Spain had certainly rocketed to ridiculous levels and this included much agricultural land that had the possibility (not always ever realised) of being re-designated as building land.

Needless to say, the current Spanish property crash is re-adjusting property prices radically with prices of Spanish property having fallen dramatically since 2007 – in some cases by as much as 40% (despite Spanish state statistics to the contrary).

What the graph does not show, sadly is the incline of Spanish property prices over the past thirty years which, with some ups and downs, really only took off in a truly massive way from around 2000.  So the thirty year time period is probably grossly distorted by the last ten when it comes to Spanish property prices.

The worrying thing for anyone Spanish during the past thirty years, needless to say, has been the effective freezing of the purchasing power of Spanish salaries.   This has made the cost of living in Spain increasingly expensive as shown, for example, by the cost of the SEAT car in the graph.  Whilst bread, milk and ham may have dropped in price, this has not been the case with many other essential commodities such as fuel and gas.  So, many Spaniards, for a long time, have been trapped between a ‘rock and a hard place’…

For us foreigners, however, the cost of living in Spain, for many years, has generally been very much cheaper than for our home countries (if from Northern Europe or the US) – although, since the introduction of the Euro, for Britons, much has depended upon the strength of Sterling at any given time.

Certainly, now, from a UK perspective, Spain is providing reasonably good value for money.  The cost of living in Spain is markedly less for a number things including eating out and Spanish property rates although general shopping prices are probably not greatly different.  However, the radical drop in Spanish property prices is now once again making Spain a tempting place in which to buy – with Spanish property prices finally providing value for money for the first time for a number of years.

Incidentally, if any of you are economists – I should be very interested in seeing a graph like the one above for the UK and the US!


The Spanish Institute of Statistics (in English) 

 ‘How to Buy a Spanish Property and Move to Spain – Safely!
(The ultimate guide to buying property in Spain and moving to Spain)


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  3 Responses to “The cost of living in Spain, the lethal difference between 1981 to 2011”

  1. Nick

    one of the most interesting monetary comparisons I’ve ever seen was the relative earning power of racing drivers Stirling Moss and Michael Schumacher. This was done using Rolls-Royces as the ‘currency’.

    As in most things, wage-inflation in the world of motor racing has been rampant. As I recall, Mossy, in the ’50s the first racer to really exploit his commercial potential, could have bought 5-6 Rollers/pa, Schumi, at Ferrari, in the high teens!

    What was 1s 6d in pesetas in 1962? That’s how much a bottle of Vino de Malaga cost, drawn straight from the barrel in the bodega in Estepona. The question of how come me and my mates, aged 11-12, were buying bottles of a 17% abv wine is another story – and a good one.


  2. Absolutely – anyway how many Rolls does one man need?

  3. Well, one can only drive one at a time but back in the ’70s, the average Indian superstar guru, like the Maharishi Mahesh Yogi [of Beatles fame] had dozens. His followers kept giving them to him. As far as they were concerned, it was the most valuable currency they could think of.

    The late Barry Sheen, champ motorcyle racer, did things more elegantly. He had a new Royce every year. When he took delivery of that year’s R-R, he placed his order for the next.

    As for comparisons in spending power, it is interesting to note that, as in most things, London is on another planet. They do things differently there. I recall being on a bus going down Park Lane with a couple of lads from out of town in a nearby seat. They were counting the number of R-Rs they saw. Park Lane is only about 1/2 mile long. They saw 12.

    I’d never seen an Aston Martin Rapide before last week. The Rapide costs from £140k/$200k [note the from]. On getting off the coach from Bristol at Earl’s Court, after too long away in the sticks, I saw two in the first 90 seconds.

    As Woody Allen said, on being asked whether he liked being wealthy, “Ummm. Well … yes – if only for financial reasons.”

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