Signs of recovery emerging in Spanish
property market, reports show
Wednesday, 06 January 2010
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.
The much awaited real estate recovery is underway in locations where there is no glut of
property such as Cantabria, the Basque region, Asturias and La Rioja, says the report
from Caixa Catalunya.
‘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
But there is no good news for those wanting to sell in popular areas such as the southern
coast where there are many new and holiday homes that are not selling.
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 buyers agent
Barbara Wood of The Property Finders, 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.