Rainbow model: housing cycles
- Color range interpretation ➞ Red = strong overprice; Orange = slightly overprice; Yellow = neutral; Green = slightly underprice; Blue = strong underprice.
Interpretation and observations
This is an experimental indicator, open to improvements and corrections.
Must be read as an informative indicator, not a scientific measure.
The rainbow curve describes a demographic channel, which, overlapped with the real price, evaluates the stage of the price cycle. A few notes and considerations:
- The real price data is derived from an alternative formula, real price notes.
- The demographic curve has been price-adjusted, generating the rainbow curve.
- The equation from the rainbow curve is derived from the demographic curve (quadratic function).
- The yellow line is the reference line, adding two levels up and two levels down.
Equations chart:
Full dataset chart, from 1964 to 2070:
Data sources
- Housing prices, from 1964 to 1984, have been extrapolated using the apparent cement consumption: Link
- Housing prices, from 1985 to 2006, according to Sociedad de Tasación (Access to data is under request, but can be seen in the linked publication): Publication, Link
- Housing prices, from 2007 onwards, according to the notaries (Grupo 5 > Acto 501 - Compraventa inmuebles > Inmuebles en fincas urbanas, viviendas): Link
- Inflation data (Table: average inflation Spain (CPI) - by year): Link
- Population and projections according to INE (range of used population was that between 25 and 50 years old > Data used is from January 1st of the current year): Population consolidated, Population projection