This is our 7th Quarterly Report.
- Continuing from the last two quarters, we are of the opinion that properties in prime locations are seeing increases in asking prices throughout the Spanish Costas, with competition ensuring that any significant discount requested by the buyer, is unlikely to be granted by the seller confident that in a rising market they will achieve a sale without doing so.
- The continuing availability of mortgages, both in Spain and in many of the buyers’ home countries, the supporting demand and there is undoubtedly more construction work being carried out throughout most areas.
- This is also reflected in the interest of investors/contractors/DIY enthusiasts in buying properties that short while ago nobody would have looked at because of their dilapidated condition and/or secondary location. These properties are benefiting from the ripple effect from the prime areas and also in the confidence of their purchasers in that the received increase in demand will soon give rise to significant increases in value.
- The Spanish government has announced within the last few days that there is to be a general election on 20 December of this year and thus it can be anticipated that they will be encouraging as much good news and positive impressions over the next three months. The balance that, of course, the opposition parties will be pointing out how terrible everything is in reality! The ‘truth will out’ sometime during the first quarter of next year.
- As we predicted by as more than two years ago when energy efficiency certificate were initiated in Spain, in the last few days the government has announced that local property taxes are to be discounted for properties with better energy ratings. The lower two ratings F and G, which is by far the majority of buildings we encounter, receive no discount nor do those of course that do not have a rating assessed as yet. We foresee that the lowest rating properties are likely to be penalised in the near future as a further incentive to upgrade the efficiency of the property (and raise money!). Owners will now be more encouraged to balance the energy and tax savings of improvements of the property against the cost of those improvements.
- Survey Spain is recording asking prices, actual sale prices and valuations throughout our Network.
Value per sq m for this quarter.
- Analysis of all the Asking Prices, Buying Price and Valuations over the period from the start of our record in 2014 has shown a steady decrease in the differences between them and currently indicates the following –
o The % difference between Asking Prices and actual Buying Prices –
- 3rd Quarter 2014 -15.80%
- 4th Quarter 2014 -11.41%
- 1st Quarter 2015 -18.64%
- 2nd Quarter 2015 -10.73%
- 3rd Quarter 2015 -8.72%
o The % difference between Asking Prices and our Valuations –
- 3rd Quarter 2014 -20.65%
- 4th Quarter 2014 -19.43%
- 1st Quarter 2015 -16.55%
- 2nd Quarter 2015 -17.09%
- 3rd Quarter 2015 -14.26%
o We are pleased to note that the over the entire period our valuations average 97.6% of the Buying Prices, which is well within the accepted valuation variation.
We are of the opinion that the above two records showing the difference between asking prices and buying prices and valuations are the most significant information relating to the market. On the face of it, it confirms that buyers are less able to obtain significant discounts from asking prices, combined with the probability that sellers are becoming more realistic in their prices in order to see a sale. Again, we are of the opinion that the falling values overall in the international market in the Costa areas of Spain has come to an end.
- A change has occurred within the last few days that could have a significant long-term effect upon the market, with the Spanish government indicating that its imminent budget announcement will include a clause whereby local property taxes (IBI) will be discounted by up to 20% according to the energy rating of the property.
- The national telephone company has announced that it is to make a substantial investment in Andalucía in the provision of fibre-optic connections with the intention that 97% of properties will be connected by fibre-optic within the next four years. Up until then, the speed of Internet connection will still be a significant deciding factor in buyers’ location decisions, especially if they are intending to be resident for the majority of the year and/or operated business from the home.
- It is also reported that in the Balearics, owners who are not permanently resident, but who make their properties available for rent all year round will receive property tax credits, while those who fail to do so will be punished by similar mechanisms.We consider that this could cause a number of potential owners to reconsider their purchase there as not everyone wants their property to be occupied by others. It is certain that other regions will be watching the effects, hopefully on the market as a whole and not just on the income it can achieve!