Market Report – 4th August 2023
PART 2 – AGENTS’ AND PROFESSIONALS’ OPINIONS
We’ve selected a spread of professionals for opinion, and not solely Estate Agents.
The fears of failure of the market, expressed in the report of October last year, have not come to pass, with demand continuing and limited supply keeping prices rising. What was expressed as the post-Covid factor, where a wave of pent-up demand washed onto the market, has now settled, but continuing demand from Eastern Europe and elsewhere, is keeping the market steady. At higher levels of prices, there is always somebody making money somewhere and they then seek a home and investment in the sun.
Respondents were asked – Give your opinion on how the market has been, is now, and how you think it should be over the next few months. Also, WHY the market is as it is especially if political and/or legal changes have affected it.
Architect – Sotogrande area.
We have noticed a marked change in the market here in Sotogrande since Covid.
Initially, it was the purchase of plots by people who wanted a change of lifestyle and did not want to be trapped in a city if there was ever another lockdown.
That has morphed into families coming to Sotogrande to make a new life here, not just coming for a few weeks a year.
A big part of that is having an International School with a good reputation. The children can go to school here and the parent(s) can travel to wherever they need to be for business as and when. The need to be in a fixed place of business is now gone.
Not only has this given a huge impetus to prices of villas, but it is also giving a year-round economy and I can see no sign of this abating in the near future.
Yes, building costs have risen and continue to rise but my feeling is that this will be self-regulating as clients will start to pull back from these high prices.
Project Manager – Western Costa del Sol
From our point of view the market keeps steaming on with lots of work coming including sorting out people’s problems they have with construction companies. They may be good at social media, but no idea how to run a building site!! The problems we could show you wouldn’t believe!!
We do not see any slowing down in the market at present. In fact we have clients moving down here from the UK as they have had enough there!!
I think what the PP are doing in Andalucia is only helping to attract people here!!
Survey Spain reply – We also see the results of poor construction supervision when we inspect properties for buyers. Frustrating as we can see that with a bit more thought, care and minimal cost in the construction, they could have avoided the expensive repairs and destruction of owners ‘living the dream’.
Architect – Marbella
The luxury housing market is buoyant in the Marbella area. Niche projects of smaller urbanisations are popping up everywhere and clients from the northern European countries seem to be interested. It would also appear UK buyers are searching and buying, unperturbed, accepting the living/buying restrictions imposed from being non-Europeans.
The developers Otero went into bankruptcy earlier in the year, which all thought was a sign of recession, but it has been confined to this group and doesn’t seem to have had further repercussions. We had a client who reserved a villa with Otero in Estepona, La Paloma. We advised our clients to pull out of the reservation after months of lengthy negotiations, which went round in circles. We would conclude Otero’s demise seems to have been due to internal management and procedures.
Meanwhile, housing for workers in Marbella is very hard to come by due to Landlords or owners favouring Airbnb short term holiday lets. The Ayuntamientos are aware they need to limit the amount of Tourist Licences so that housing availability is put on the market for long term renting, etc but it doesn’t seem to have taken affect. Workers are being pushed further inland.
Estate Agent – Marbella
The properties that are selling well and reasonably quickly are the fairly newly built in contemporary style – not the square boxes or all white houses, but either modernized and fully furnished in exquisite style or modern with some wooden and stone accents…again fully furnished and gorgeous. These properties are flying off the shelf at outrageously high prices ….of course top-loaded with toys…..
The market has been extremely buoyant this year with people buying quite quickly ….some to obtain a Golden Visa or Nomad Visa ….another encouraging feature is the first 1m free and then only 1% inheritance tax deal in Andalucia….and others as they are still making millions on crypto and such and so don’t want the cold towns where they’ve traditionally lived …in fact much younger people are buying …it’s certainly no longer the retiree town that it was.
Having said that, the last 3 weeks everything has slowed a bit, but that’s normal as different people come down…more nationals in fact.
September usually picks up again and depending on how long this summer weather lasts, the last few years has lasted at least till late October …so life will go on a fast pace….I feel.
Project Manager/Home Inspector – Mijas
Prices are not going down by what I’m seeing (I continue to search for a BBB house “Bonito, Bueno y Barato” without luck for now😊) and one agent said that the sales after the COVID are starting to decrease.
Valuer – Western Costa del Sol
Developments are proceeding all along the Western Costa. Campo properties appear to be raising values again, perhaps due to the high prices on the coast and the acceptance, easier availability of DAFOs. Previous valuations we did were during or just after Covid. Now the change in attitudes to home working and desire not to be trapped in urban settings is encouraging buyers to look more at rural locations. Also, speculators are back, with people buying for future profit and sellers seeing the prices increase so they are prepared to sell now. However, agents still report a shortage of some properties.
Architect/Home Inspector/Registered Valuer – Costa Blanca North
The Costa Blanca property market has been very buoyant with foreign buyers since the last Market Report. International political and economic situation seems to reinforce the idea of investing in Spain, especially for those citizens directly affected by the conflict in Eastern Europe or those countries close to it. In terms of which foreign nationality buys the most properties in Costa Blanca, it is still the British, they buy more properties than any other foreign group. However, the importance of British buyers in the Spanish property market is the lowest it has been for many years. The regions where foreigners buy are still the main holiday hot spots, these being Valencian Community, Andalucia, and the Island Communities. There are some significant areas within these regions where foreign buyers make a large proportion of the total sales lead by Alicante (42.80%).
Architect/Home Inspector – Costa Blanca South and Murcia
The residential market of new or second-hand houses in the Costa Blanca has been very active after the Covid alarm period. It was thought that this crisis would affect prices and purchases in the area, but it has been quite the contrary. Prices have been rising from 2021 an average of 8% approximately. Depending on the area, this rate is even higher. Even despite the Ukraine war, started in February 2022, prices have kept going up until now. However, for the next few months previsions are less optimistic due to inflation, so prices are expected to grow at a slower rate (3%) or even decrease, depending on the area and characteristics of the dwelling, by 1%.
Valuer – Almeria East
Here the market is still lively. Talking to agents, prices are not going up, but not going down either! As a largely non Spanish (or at least not local) market, the political situation has not affected us much and Brexit hasn’t had much affect either, as most of our buyers can get a visa of one sort or another. Mojácar is definitely going more up market now, judging by the number of higher end restaurants opening. Still very liked by the Madrileños too, so looking pretty good for the immediate future!
Registered Valuer/Home Inspector/Architect – Barcelona
Sales:
The market is keeping active, but cannot increase much at moment, as during recent years the Municipality has introduced laws that require 30% of the dwellings in a development to be allocated to social housing.
With this law, many developers have preferred to wait for a change of current municipal government, which has led to a shortage of new housing (Obra Nueva) in the city.
The new municipal government from last elections is going to change this law, but it has not yet been specified, so the situation remains on stand-by.
These measures have caused developments, especially renovation ones, to be sold quickly and at exorbitant prices, and have made used housing, the only housing available, be increased the price.
Currently there are almost only transactions of luxury housing or high price and quality and basically it is foreign investors, since the local market cannot access these prices, and also due to bank interest rates (foreign investors are not using mortgage).
This has caused an increase of promotions in the surroundings of Barcelona, especially in adjacent cities such as Hospitalet, Sant Adria or Badalona, that have increased their prices, now reaching values close to Barcelona and with a large number of promotions, which caused an excess of supply due to the low demand at these prices, and banking rates.
Cities further away from the centre, but that are part of the area of influence of Barcelona, such as Sabadell, Terrassa or Mataró, had a demand that has already purchased and now there are many promotions without sale due to lack of demand.
Rents:
As for renting, with the new Spanish and previously Catalonian housing laws, many landlords have taken apartments off the market to rent and have earmarked them for temporary rental (from 1 to 11 months maximum), easier to manage in case of non-payments and with a much higher rent, which has distorted the market in many areas of Barcelona, making conventional monthly rent higher.
The rent offer has decreased and the current offers are at very high rents, which means that although there is a lot of demand, transactions are not carried out due to the high price.
Costa Brava:
New laws to protect the coast and the natural environment have greatly restricted the possibility of new second home developments along the Catalan coast.
For this reason, there is not much on offer at affordable prices for the local market, in addition to the high bank interest rates, so there are mostly transactions of luxury or high priced homes that can be purchased at these prices and without mortgages.
This market is mostly foreign, with the national or local market being very slow.
The pace of sales has slowed, but prices keep high.
Architect/Home Inspector/Registered Valuer – Balearics
The real estate market on Mallorca and Ibiza is much more stressed compared to the mainland. All variables, which influence the market, are under pressure. Remarkably high demand, lack of land to build, logistics and the tendency in focusing on luxury or high standards are the characteristics that define the current situation.
Architect/Home Inspector/Registered Valuer – Balearic Islands – Menorca and Mallorca (Not Ibiza and Formentera):
Majorca had one of the highest price increases in Spain last year; especially the Calviá area with an increase of more than 25%.
This increase in transactions was due to the post-covid crisis and especially the crisis in Ukraine, which added to traditional buyers from the area such as the UK or Germany, the Nordic countries, and the USA as a novelty. It caused a price increase due to demand, especially in luxury homes and high prices.
This year prices have been maintained, due to the contagion effect of last year, which has caused mid-price properties to also appear on offer, which have also increased their price due to this contagion, but destined for another type of market that is not prepared/able to pay these prices. There is currently a large amount of this medium product available, and the demand for luxury housing has already decreased, so there are fewer sales, which should cause prices to adjust to normal levels in the medium term.
On Majorca and Minorca, the offer of housing aimed at local buyers as their home is scarce on all the islands., The new developments that come onto the market with affordable prices sell quickly and, on the other hand, the new developments aimed at local buyers, but with better quality and higher prices can take a long time to sell and especially now with bank interest rates so high.
In this case, too, there should be a downward price adjustment in the medium term as the local buyer cannot afford these high prices.
Contributors
Thank you to the business leaders, for giving your time and thoughts – in alphabetical order –
McLundie Architects – Guadiaro
Renson Management – Sotogrande
Survey Spain Network Valuer – Costa del Sol
DVD Arquitectos – Marbella
Susi’s Choice – Marbella
MADE – Marbella and Mijas
Survey Spain Network Valuer – Almería
PPMQuilES – Arquitecto – Costa Blanca South
Rimolo & Grosso Architects – Costa Blanca North and Balearics
Barcelona Investment & Management – Barcelona, Costa Brava and Balearics
