Clouds on Spanish Property Market May Have Silver Lining

Along with the UK and Ireland, Spain experienced an unprecedented property boom between 1997 and 2007. Again like the UK and Ireland, property went into freefall in 2008 and (again in common with the UK) the market is not expected to recover until 2010. Yet although recovery is not yet on the horizon for sellers, falling property prices mean that Spain could be back on investor’s radars.

Consult anyone involved in the Spanish property business and all report falls in prices and a slow market. However, exact figures differ widely depending on who is producing the statistics. For example, according to the Spanish Housing Ministry, property prices fell by 3.2% in 2008, the first annual drop since 1993. One of the largest Spanish real estate appraisal companies, TINSA, found year-on-year prices had fallen by 8.8% in December with the biggest decreases seen on the Mediterranean coasts (-14.3%) and the islands (-9%). Developers claim properties have lost considerably more over the last 12 months and some cite figures as high as 20%.

Whatever the exact statistics though, the ‘for sale’ signs decorating most façades in Spain, the closures of estate agents and the fact that several major developers have recently gone bust are sure signs that the property market is suffering. The National Institute of Statistics found that the number of sales made in November registered a year-on-year decrease of over 21%.

But while the storm clouds are gathering thick and fast for sellers, the same clouds may well have a silver lining for the buyer. For the first time in years, bargains have now made an appearance on the Spanish property scene and many sellers are more than happy to consider an offer. €50,000 price slashes are reportedly commonplace at the lower end of the market with €1 million coming off properties at the very high end of the luxury market.

Most experts believe that 2009 is the time to buy and many claim that recovery is probable in 2010. As James González, Market Analyst at Obelisk, points out, “Spain might have an oversupply of property, particularly cookie-cutter 2-bedroom apartments, but the country offers 3 factors that mean recovery for property is almost a given”. According to James, Spain’s ticket to property market improvement comes from the weather – on most of the Mediterranean costas and the islands it is second to none in Europe, its easy accessibility and the high quality of life, which ensures that Spain remains one of the world’s top relocation and retirement destinations.

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