Good news from the Spanish property market

Propert sales improve in Spain and Tenerife especially prime property by the coast

At last some good news from the Spanish property market , foreign investment is up strongly on last year. Foreigners invested 1.3 billion Euros in Q2 this year, up 16pc on the first quarter and 37pc on the same time last year, according to figures from the Bank of Spain.

Foreign investment is still some way (32pc) from the peak it reached in Q2 2003, when it hit 1.9 billion Euros, but there has been a clear improvement in the last 2 quarters.  Sales to foreigners have picked up as prices fall, showing how price-sensitive foreign demand for Spanish holiday homes is.

Certainly prime property on or near the coast in Tenerife is attracting greater interest once more.

Opportunities to purchase properties at low prices in Tenerife and Spain

Property bargains available in Spain, Tenerife and the islands

During the last three decades, hundreds of thousands of Britons have purchased property in Spain. Nonetheless, a surplus of villas and apartments has spawned due to mortgage defaults from British buyers. By noting the declining property prices during the month of June, according to valuation and consulting firm Tinsa’s latest General IMIE (Spanish Property Market Index) report, one can see the opportunity to purchase Spanish property at a low price. This is why British investors are continuing to invest in the Spanish real estate market.

Along the Mediterranean coast, the Balearic and Canary Island archipelagos are amongst the most popular tourist and investment attractions in Spain. The Balearic Islands feature Mallorca, Menorca, Ibiza, and Formentera. With its Opera House, Mallorca offers a stately and elegant experience, while King Juan Carlos’ castle sits in Palma. Menorca offers a drier climate than the aforementioned Mallorca, in addition to cool breezes. Menorca has also garnered fame for its production of leather goods and gin. Ibiza has recently improved its reputation from years past, and Formentera offers an intimate and secluded getaway.

The Mediterranean Coast offers numerous overseas investment opportunities.

From the bright lights of Benidorm to the opulence of Moraira and the resorts towns of Javea and Denia, the Costa Blanca offers a smorgasbord of options. The Costa Blanca is serviced by Alicante airport, now supplemented by inexpensive flights to Valencia on the northern Costa. This enhances tourists and property buyers’ access to the Spanish region during the year. The Costa features the Mediterranean highway, which runs alongside the coast for virtually the entire length of the Costa Blanca, enabling easy travel.

Tenerife and the Canary islands, firm favourites over the years with the British has property available at prices not heard of during the last five years. Maybe this is the time to bag that bargain?

Spain still a top destination for holidaymakers

Spain remains one of the top destinations for holidaymakers around the
world, as tourist numbers and property enquiries both increased this
summer.
Figures released by the Frontier Tourist Movement reveal that Spain has
received 7.4 per cent more international tourists this year compared to the
same time in 2010, proving that the country’s beaches and culture are still
attracting visitors.
Around 32.3 million international tourists visited Spain between January
and July of this year, with July alone welcoming 7.5 million tourists. Up
to July 2011, Spanish airports received nearly 36.5 million passengers. The
busiest budget airline was Ryanair, which experienced a 25% increase in air
traffic to Spain.

Unsurprisingly, visitors from the UK led the way with 7.4 million
passengers (35.8 per cent), while Germany and Italy followed with 4.2m (20
per cent) and 2.2m (10.7 per cent).

The biggest rise to Spanish shores came from Swedish visitors (40.8 per
cent), who are purchasing an increasing amount of property in Spain. France
and the Netherlands also saw their number of tourists grow. Estate agent
Spanish Hot Properties comments: “Of all the tourists who chose to holiday
in the Costa del Sol, around 72% said they were attracted mainly by the
prospect of sun and sand which will come as no shock considering the
region’s exceptional climate.”

Spain continued to attract foreign interest in August too, Robin Brayne, Commercial Director of the overseas property portal, comments: “Once again, Spain is head and shoulders above the rest of Europe. People remain attracted by the country’s sunny coast and relaxed lifestyle, and further interest has been fuelled by the glut of repossessed & distressed properties being sold on by Spanish banks, offering homes at
superb value.”

Of course the Canary Islands, perticularly Tenerife remain popular for sales and purchase of propertyand holidays. As Spanish tourism soars this summer, the property market is looking increasingly sunny.

Average prices have declined say TINSA

Average house prices have declined 6.6pc over 12 months to the end of June,according to the house price index published by Tinsa – one of Spain’s leading appraisal companies.

Holiday homes have led the fall, with prices on the coast down 8.7pc in 12 months. The market on the coast is struggling to digest a large helping of second homes, made more indigestible by the disappearance of British buyers.

After the latest falls, prices are now back to where they were 6 years in 2005, but even that means that prices might still be too high.

Peak-to-present, house prices on the coast have fallen the most (-28.8pc), followed by cities (-23.4pc), suburbs (-22.9pc), and the islands (-20pc). On average prices are down 20pc since their peak at the end of 2007

 Tinsa state a fall of -7%  for the Canaries and Balearics, however the market appears to be improving again in Tenerife.

Tinsa price index

Prices for property in Spain fell by 6.6 per cent last month compared with June 2010, new figures have revealed.

The latest General IMIE (Spanish Property Market Index) report from valuation and consulting firm Tinsa also revealed a monthly decrease in house prices compared with May.

Overall, the largest drops were recorded on the Mediterranean coast, where values fell by 8.7 per cent over the previous year. Large cities saw a 7.3 per cent decline, while the Balearic and Canary Islands registered a seven per cent negative movement.

“As regards variations by areas, it should be highlighted that all of them showed greater year-on-year falls than in the previous month,” Tinsa said in its report.

British still buying in Spain and the islands

  • Tenerife and Spain are  still  favourites  with British buyers.

    The price of free-market housing in Spain has dropped on average by 15.4% (more than 20% in real terms and as much as 24% in some provinces).

  • In municipalities with more than 25,000 inhabitants there has been an average 25% decrease, while in certain coastal towns the drop has been even greater. Such is the case in Marbella (40%), Torrevieja (31%) and Ibiza (29%), for example.
  • In 2010, property purchases by foreign residents in Spain increased by 20.8% over 2009.
  • In 2010, the British accounted for 23.4% of all property purchased by foreign residents in Spain.
  • In 2010, 491,000 property sales were recorded, 6% more than in the previous year and the first increase after three years of downturns; 60% of sales were in the Mediterranean coastal regions and in Madrid.
  • The number of empty housing units stands at less than 700,000 units in 2010; 61% of these are concentrated in the Spanish coastal regions.
  • The volume of finished housing has fallen by 60% in 2010 compared to the peak year of 2007, while newly constructed approved housing has fallen by 90% in 2010 from its 2006 high.
  • At present, the construction of subsidised housing (VPO) accounts for 50% of all new housing. As a result this type of housing now accounts for 11% of all residential real estate in Spain.
  • 1/3 of Spain’s more than 25 million houses are holiday homes.
  • Certainly in Tenerife and the Canary Islands the housing market is showing signs of improvement once more and their are good quality prime property bargains to be had at present.

    Less stays in owner properties says IET

    Less owners staying in their own properties in Spain and Tenerife say IET

    Visits to Spain by British owners fell by 17pc, whilst visits by German owners were down 11pc, reveals a new report by the government-sponsored Institute of Tourism Studies (IET).

    The drop in the number of tourists staying in their own properties was much more pronounced than the fall in the number of hotel bookings, which, in the case of British tourists, were down just 0.6pc last year.

    The study also found that British tourists staying in their own holiday-homes spent 55 Euros/day on average, compared to 111 Euros/day average for hotel guests. Spaniards staying in holiday-homes spent an average of 21 Euros/day.

    30% of Spaniards stayed in holiday-homes in 2009, compared to just 8.6pc of foreign visitors.

    Holiday-lettings also fell in 2010, -13.5pc in the case of British tourists, and 13.4pc in the case of Germans. Bad news for landlords on the coast.

    The decline in the number of tourists staying in holiday-homes coupled with the crisis means that “the purchase of a holiday-home is at present far from a priority for the average family,” concludes the report

    Standard and Poor’s property ratings

     

    Standard and Poor's ratings of Tenerife and Spanish property.

    Standard & Poor’s, a ratings agency state that prices  are to continue falling over the next 12-18 months but not dramatically. Transactions  are expected to continue their modest recuperation. They say it will take “several more years to completely absorb the excess supply.”

    BBVA, a Spanish bank: Price falls of 10pc on average in 2011, on top of falls of up to 50pc already accumulated on the coast. BBVA say holiday-homes on the coast fell 20pc in value last year.

    The Valencian Institute of Economic Research (IVIE): Price falls of 12pc on average in 2011, on top of a fall of 20pc accumulated since 2008. Spain’s chunky glut of homes and rising interest rates will keep prices going down for the time being, argue this Valencian outfit.

    Illustrating IVIE’s point about prices falling more in real terms, the ups and downs of prices since 1985, in both nominal and real (inflation adjusted) terms. After inflation, prices are back to where they were in 2003 / 2004, but they still have further to fall.

    Estate agents surveyed throughout Spain for their views on the property market.

    Property sales increase in Tenerife, especially in the prime property market.

    During February Idealista surveyed 400 estate agents all over Spain for their views on the property market today. They found that 30% of vendors accepted up to 10% lower, 43% accepted between 10 and 20% lower, 19% between 20 and 30% less, and 7% more than 30% less.

    The change in stock of properties for sale since the end of 2010 resulted in a 58% of agents reported an increase. 88% of vendors were more open to offers than a year ago . The main reasons why sales fall through is that vendors were asking too much in 26% of cases, buyers offering too little in 40% of cases (remember, this is all in the opinion of estate agents), and banks not giving finance in 34% of cases.

    Although there have been af fall in  enquiries so far this year, falls up to 20pc or more say 51%, whilst 24% say an increase of up to 10%.So life is not all bad in the property sector.

    In sales so far this year, there have been falls of up to 20% or more say 71%, whilst 19% say an increase of up to 10%. The expectations for the first quarter of the year (compared to same period last year) are  47% say worse, 27% say the same, 26% say better and for the year, 33% say worse, 28% say the same, and 38% say better.

    I wonder who will be correct? Certainly current  property sales in Tenerife indicate a brighter future for the sector, especially sales of prime property in good areas and by the coast.

    Tinsa price index latest results

    Tinsa index now shows positive signs for the property market in Tenerife

    The Tinsa Spanish House Price Index for February (change over 12 months) is  as follows:

    National average -4.5pc
    Big cities – 5.2pc
    Mediterranean Coast -6.7pc
    The Balearics & Canaries -0.8pc

    Peak-to-present:

    Mediterranean Coast -27.2pc
    Capitals -20.6pc
    The Balearics & Canaries -17.5pc