Optimism returns to Tenerife and Spain's property market
The price of re-sale property in Spain and the Canary Islands increased in January for the first time in 24 months, according to figures and other reports suggest there are tentative signs that part of the country’s battered real estate market is coming back to life.
Prices rose by 0.6% on average, with the regions of Cataluña, and La Rioja seeing the greatest recovery in price at 4.6% and 4.5%, according to figures from the real estate portal fotocasa.es.
Property prices also rose in the regions of Comunidad Valenciana, up 2,2%, Asturias up2%, Baleares with a 1,9% increase, Aragón up 1,4%, Galicia up 0,9% and Madrid up 0,7%.
While another index shows that overall Spanish property prices fell by 5.5% over the 12 months to the end of January. However, these figures from appraisal company Tinsa are based on their valuations, not on actual selling prices. Activity in the real estate market is still very depressed.
The latest figures from the National Institute of Statistics shows that year on year the market shrank by 27% in volume terms to 372,000 transactions in 2009. They have fallen 48% since 2007 when there were 715,000 sales.
December 2009 had just 28,669 home sales, the second lowest level of monthly sales on record. But compared to December last year, sales were down just 1%. ‘That’s because by December last year, the market was already deep in crisis.
From now on, annualised comparisons won’t look so bad, and won’t give any indication how far the market has fallen,’ explained Spanish Property Insight.
‘When the market hit the skids, resale transactions collapsed much quicker than new builds, which outnumbered re-sales throughout 2009. In normal market conditions, it’s the other way around. As 2009 went by the two started to converge, and in 2010 re-sales may once again overtake new builds, though it does depends on whether banks are prepared to lend to resale buyers,’ he added.
Whilst there’s little doubt that life is returning to the Spanish property market, it still remains utterly price sensitive, according to Chris Mercer, director of Mercers real estate agents. ‘We are making it our business to find realistically priced property from motivated sellers for serious buyers who are in a genuine position to make a purchase. The reality is that decent investment properties are out there, whatever the market, it just takes some expertise and effort to find them.’
If your property is overpriced you won’t sell and you’re wasting your own time and our time, whilst also giving the buyer an unrealistic view of the market. If you’re a motivated seller able to accept a realistic price for your home, we’ll find a buyer.
He also believes that for investors renting to local people can prove fruitful. ‘If you’ve got a 20% deposit then the rent will comfortably pay the mortgage and as you’re truly buying at the bottom of the market, you have an asset that will certainly appreciate in years to come.
