Property prices starting to rise in certain areas of Spain

January 10, 2010 – 12:23 pm

Property prices on the rise in parts of Tenerife,Spain and the Canary Isles.

Property prices on the rise in parts of Tenerife,Spain and the Canary Isles.

 

Property prices are starting to rise in some parts of Spain, according to a new report from one of the country’s largest savings banks. These include the Canary Islands,Cantabria, the Basque region, Asturias and La Rioja, says the report.

The much awaited real estate recovery is underway in locations where there is no glut of property such as  the

‘House and land prices have touched bottom in some cases. The adjustment is almost over, if not already,’ said Eduard Mendiluce, head of Caixa Catalunya’s property division Procam.

Indeed the report points out that there are between 660,000 and 1,040,000 homes on the market. This represents between 2.6% and 4.1% of the country’s housing stock. They expect the glut to fall slightly to between 640,000 and 1,070,000 in 2010, down to between 2.5% to 4.2% of housing stock.

The Caixa Catalunya report estimates that there will be an annual demand of 220,000 homes between now and 2015, almost half the level of 300,000 to 450,000 estimated by developers. At this rate it could take five years for the market to digest the glut.

But there is more good news for the luxury end of the Spanish market with one  buyers agent  reporting that transactions in prime areas around Marbella were increasing as early as the first quarter of 2009. ‘Secondary areas lagged behind with the first green shoots only appearing about nine months later and the worst locations are still in total paralysis in 2010,’ she said.

Currently the typical person looking for property is a cash buyer, buying for their own use, with a medium to long-term perspective, not dependant on rental income and only interested in buying in prime locations, she explained.

‘And those that require a mortgage need a maximum of 50% relative to value. In other words, the right purchasing parameters are in place again. Spain’s property market managed very well without a mass market before the boom of the Noughties and will do so again, returning I hope to the stability and long-term growth that held for four decades but this time going for quality rather than quantity,’ she added.

She also points out the uselessness of official statistics. ‘The official Ministry of Housing figures, based on registered transaction prices and supposedly objective, are distorted by under declarations of the sale price in the past and only once we have had several years of full price declaration will this distortion be washed out of the system, while the oft-quoted TINSA stats are based on subjective market appraisals. Either way, they are unreliable and, therefore, are meaningless,’ she explained.
‘There is only way to get good information about what prices are doing in 2010 and that is to talk to someone who is actively involved in putting deals together right now. When I’m asked about price falls, if they have hit bottom or if they have further to go my reply is that it all depends and there is no one answer but it seems to me that there are two main factors influencing outcomes: location and how badly the seller wants to sell. I would say there is a shortage of top quality properties in the best locations at the right price level for 2010,’ added Wood.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized, Weather | Tagged , , , , , , , , , , , , , | Comments (0)

Expats and problem tenants in Spain

November 3, 2009 – 5:14 pm
Problems with tenants in Spain and Tenerife may be reduced by using an agent

Problems with tenants in Spain and Tenerife may be reduced by using an agent

According to Paragon España , part of the Paragon Advance group of companies offering tenant referencing and rent warranty in Spain, reluctant landlords in Spain are increasingly experiencing problems with bad tenants hit by the economic downturn.

It is claimed that the number of defaulting tenants and evictions have tripled in the past two years and many of the landlords who are experiencing problems are expats who moved to Spain for a better lifestyle and then became reluctant landlords. They have been forced into letting out their homes in order to be able to pay the mortgage and, for those investors who jumped on the Spanish property market, buying off plan, only to see it go into freefall before they could offload their investment, they have had their fingers burned and are having to let long term and ride it out.

Many expat landlords are unaware of the different mechanisms in place to secure rental income and often fail to implement them in their rental agreements which can leave them unprotected if the tenant does not, or cannot, pay the rent, according to Paragon España. This is where the use of a rental agent pays dividends and Tenerife is no exception to this rule.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , , | Comments (0)

Less mortgages approved in mainland Spain

July 2, 2009 – 12:36 pm
Mainland Spain's property market struggles whilst Thhe market in Tenerife appears to be on the up

Mainland Spain's property market struggles whilst The market in Tenerife appears to be on the up once more.

The volume of new mortgages approved in Spain in April dropped by 42 per cent to 50,288, compared to the corresponding month in 2008, illustrating the extraordinary fall in demand for property in Spain, according to data compiled by the country’s National Institute of Statistics (INE)…

On a monthly basis, new lending fell 4.1 per cent between March and April, while the average value of a new residential mortgage has fallen by 18.4 per cent to £98,324, possibly to reflect the fact that Spanish property prices have fallen, while buying budgets have unquestionably dropped.

The low new lending figures further demonstrates the weak nature of the Spain property market but the latest reports suggest that Tenerife may be over the worst as the pound stregthens against the Euro and prime property is available at bargain prices on the island

INE’s figures suggest that the housing downturn in Spain may still have some way to go on the mainland until the market eventually bottoms out.

The data further shows that the average mortgage interest rate agreed in April to buy a property in Spain was 4.7 per cent, owed largely to low Euribor base rates.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , | Comments (0)

Brits top Spanish property market

May 8, 2009 – 1:38 pm

Brits top the property market in Tenerife.

It’s no secret that the British are important players in Spain’s property market, but it is a shock to see quite how important. The British completely dominate the expat market for homes in Spain, much more so that many  thought. This could have implications for the property market, now that the weak pound and other factors have hit the British demand.
Estate agents  always realised that British demand led the expat market. In one of the most comprehensive studies of the expat property market in Spain, British demand was estimated at 34% of the expat market in 2001, falling to around 30% in 2008, on a par with the Germans.

 Spain’s property register has  started publishing figures that breakdown property transactions by nationality, and  the British are far and away the biggest buyers. 

Property transactions by nationality show that  the British were 58% of the European expat market in 2008, with 11,485 new title deeds registered, down from 63% in 2006.

The next biggest group – the Germans – were just 10% of British demand in 2008, with  1,534 properties bought. The Germans, and all other European nationalities combined, only added up to 70% of British demand in 2008. Only Russian demand was rising in 2008, but even that may now change in the light of the economic crisis.

British demand in 2009 is likely to have fallen dramatically, thanks primarily to the weak pound and the economic crisis, but even if British demand falls by significantly more than other expat groups, we expect that British will still be the biggest buyers, and that the market won’t recover fully until they are back in force. However the lack of expats buying clearly means opportunities and bargains for those with cash available. Sales of property to non-residents fell to just 3,691 last year, down 60% on 2007, and 80% on 2006.  if correct, these figures suggest that the expat holiday home market imploded in 2008, to almost insignificant niche levels for some of Spain’s most popular coasts, though not Tenerife. There are several good reasons why these figures don’t tell the whole story of British buyers in Spain, but it does give us a good idea of the trend for expat holiday home purchases in Spain, of which the majority are bought by the British.

Several conclusions can be drawn from these figure but the main one is that the market won’t recover fully until the British are back. It’s a pipe dream to hope that the Germans, or Scandinavians, or some other group, are going to step in to shore up the market now the British have gone. I have no doubt that, one day, the British will be back in force. When will that be? Certainly not before the pound recovers, until then those with cash and a keen eye for a bargain may be in a position to make a lot of money in the future!

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife | Tagged , , , , , , , , , , , , , , , , | Comments (0)

Signs of recovery in Spain and its islands says El Mundo

April 24, 2009 – 1:28 pm
Signs of property market recovery state El Mundo

Signs of property market recovery state El Mundo

An article in ‘El Mundo’, one of Spain’s leading news papers, suggests there may be signs of recovery in the Spanish property market, in one of the first positive articles on the outlook for the market since the crisis began.
“It appears to be the beginning of the end of the worst period for property sales since the crisis began,” says the article.

Pointing to encouraging signs that real estate markets may have bottomed out in the US, the UK, and France, the article suggests that Spain may be part of the trend.

The optimism also comes from a new report by Gonzalo Bernardos, a property market expert and professor of economics at the University of Barcelona, who argues that Spanish property market will come back to life this year, after a dismal 2008.

“There are five key reasons for saying that there will be more home sales in 2009 than there were in 2008,” writes Bernardos in his report. “Interest rates are lower; house prices have fallen back to their 2003 levels; banks are lending more; investors are coming back; and many people who were thinking of renting have decided to buy.”

Demand for housing is tempered by the cost of mortgage borrowing. With interest rates declining, Bernardos expects sales to pick up.

“There is a fundamental variable,” explains Bernardos. “People buy homes in response to mortgage costs, which have gone from rates of 6.25% in September to 3.25% today. We are talking, in general terms, of a fall in mortgage repayments of 40%.”

There is, however, a flaw in this argument, which the article in El Mundo does not pick up. Euribor – the base rate normally used to calculate mortgage rates in Spain – may have fallen rapidly to historic lows, but the average interest rate charged on new mortgages is actually rising, and credit terms getting tighter, making it more expensive for new borrowers to buy homes. Falling Spanish mortgage rates are only benefiting existing borrowers, who already have a home.

Another positive sign, says the article, is that housing starts picked up in the last quarter of 2008, rising by 7% compared to the previous quarter.

The recovery is already underway, suggests Bernardos, who says that, so far this year “sales have been between 25% and 40% higher than in the same period last year.”

Think Positive

So the market bottomed out in 2008, goes the argument, when house sales fell by 28.8% (13% for new builds and 41% for resales) whilst property prices fell by 5.4%, all according to official figures. On the question of prices, Bernardos doesn’t believe the official figures. “The fall in prices hasn’t been less than 20%, and in some places much more,” says Bernardos.

Another real estate expert cited in the article say that sales rates at new developments have picked up significantly. “In many developments they have sold more in the first quarter of 2009 than in the whole of 2008,” he says, also arguing that “prices have already bottomed out.”

“Banks didn’t know where the bottom was, now they do and they are giving 80% mortgages because the feel the market has bottomed out,” he goes on, whilst also warning that “nobody should expect bargains at 50% discounts. That’s not going to happen.”

Whilst Bernardos expects the market to return to life this year, that doesn’t mean he expects prices to start rising soon.

“Sales will start to rise in 2009, whilst prices will stop falling in most places by the end of 2010,” writes Bernardos in his report.

But if Bernardos is right, and prices continue to fall this year, that will encourage people to delay their purchase decision, and reduce the number of sales. The article does not pick any holes in his arguments.

And at no point does the article mention  the second home market, which operates differently to the primary housing market. Given the present state of the economy, with unemployment rising across Europe, it’s not hard to imagine that it may take a while longer for sales of holiday homes to pick up.

By Angela | Posted in Economy, General, Miscellaneous Articles, Property, Tenerife | Tagged , , , , , , , , | Comments (0)

Opportunities abound for even the smallest of budgets via distressed sales of property.

March 31, 2009 – 11:07 am
Distressed sales equals bargains in Tenerife's property market

Distressed sales equals bargains in Tenerife

Whilst investment banks have been busy snapping up distressed Spanish assets for millions since the credit crunch first darkened our doors, there is also an opportunity for those on smaller budgets to benefit from distressed properties, especially in Spain and Tenerife where there is also a wealth of them…

Last year, investment banks, including the now defunct Lehman Brothers, were desperate to get their hands on distressed Spanish assets.

The credit crunch meant that big discounts were on offer for investors who would take on troubled assets or companies and the banks took full advantage, buying up million of pounds of distressed senior bank debt. Lehman Brothers also bought stakes in a defaulted senior bank debt agreement and other non-performing loan sales.

Why Spain?

Spain quickly became the central focus for banks, who viewed the Spanish market as full of opportunity. Whilst the Spanish economy was faltering after ten years of boomtime, with house prices stalling after years of meteoric rises; food and oil prices rose, meaning many Spanish and Canarian locals were in trouble, businesses were shutting down and homes were being repossessed. This meant that distressed assets were ten-a-penny.

Individual buyers eye repossessed properties

Spain and Tenerife has long been the number one European destination for British buyers and hundreds of thousands of Britons happily already own property here. But, due to the decade long property boom having come to an end, the property market is now saturated with apartments that won’t sell and developers that are desperate to offload them.

Some off-plan property investors have a desperate need to sell before completion as either their circumstances have dramatically changed or they exchanged/completed on properties they could not financially keep, with the sole intention of flipping.

Thus, they have a choice. They can either sell the property for far less than market value, which is a distressed sale, or they can have the property repossessed by the developer or bank and forgo their original deposit.

Either way, they are in trouble and with trouble comes opportunity. Many estate agents claim distressed homes currently represent the ‘best value’ in the country for those looking to buy a home abroad.

Distressed properties can come with discounts of up to 40 per cent and there are many available in sub-prime hotspots, where developers have been faced with a glut of unsellable apartments.

Duquesa on the Costa del Sol and Torrevieja on the Costa Blanca are two such areas. Spanish savings bank Caixa Catalunya has estimated up to 500,000 newly built properties remain unsold. In Tenerife, Adje has some great bargains at present and Arona generally has opportunities if you are prepared to look.

If you want more information, why not check out agents such as Tenerife Prime Property or visit the Tenerife Property Guide for up to date news on all the available properties, whether domestic or commercial, for sale or  rental investment. Many of the issues involved with buying “distressed property” and what to expect from such a sale will be explained, and relevant Spanish real estate terms and common sources of distressed property will be knowledgeably covered by a reputable agent or property portal such as these mentioned.

By Angela | Posted in Economy, General, Holiday, Miscellaneous Articles, Property, Tenerife, Weather | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Comments (0)