Despite the recovery of the market, there are still some huge differences between what was loaned in the good times and the market value of the property now.
Building activity is increasing. Many new individual villas, though the financial rationale of those is uncertain as there are still so many available for sale, with those having had the choice of the best sites in the past.
New flatted developments are also being created with the developers presumably been reassured by the appropriate percentage of reservations off plan.
Older ‘skeleton’ developments that were not completed during the last boom are being acquired and completed by new developers.
‘No sign of housing market overheating’, says Bank of Spain. Generally, that is probably the case. However, in certain popular areas there must be a risk that everything is proceeding along a very similar course to before the last crisis.
There is increasing demand from many nationalities, with the Nordic buyers still prominent. However, the statistics show that there has been a significant drop in acquisitions by UK buyers, presumably linked to Brexit.
Having said that, we have noticed no reduction in the number of building surveys that we are being requested to carry out by UK potential buyers. These are almost exclusively of existing properties, some of which are in good locations. Buyers report that they are still able to negotiate reductions from asking prices and we refer you to the statistics below.
With Easter marking the start of the main tourist season, it is to be expected that the authorities will be working strongly to enforce their rental licence requirements, which exist now in the majority of Spain. Properties that have a rental licence should have an increased value, but yet we are not seeing many being marketed with that as an asset.
- Average values of asking prices, buying prices and Valuations were all higher than the last quarter.
- The average of all the properties inspected was 2,503€ euro/sq m, which is much higher than the previous quarter.
- The % difference between Asking Prices and actual Buying Prices this quarter is 6.94%, which is lower than the last few quarters.
- As before, we have also noted a number of properties where optimism by owners and agents has encouraged them to increase asking prices.
We are also still noting that new build properties are being sold at significantly higher prices than similar existing property nearby, especially regarding apartments. That must lead to the buyers experiencing an immediate significant drop in value as, if they have to sell, they will not have the marketing power of the developer and may even be competing against that.
Despite the significant reduction in demand from British buyers, they are still by far the largest individual sector of the expat market. Strong interest from Nordic countries is seen, but their population is limited and therefore is bound to reach a level where the majority of demand has been satisfied. Strong Belgian demand has been noted recently, which we understand may be due to tax changes within the country.
All in all, the market appears to continue at a steady pace with the gradually recovering Spanish economy beginning to bring in more buyers and those from Scandinavia, Germany and France making up for the reduction in British demand.However, Brexit and all the other political happenings within the world are likely to keep a continuing uncertainty as to future prospects.
First published in Olive Press 29th April 2017 http://www.theolivepress.es/spain-news/2017/04/29/building-confidence-spain/
