Posts Tagged ‘House prices’

 

May 6th, 2010

A new generation of British buyers are entering the Spanish property market – lured by cheap homes. UK agent sales are up on this time last year, with more Brits choosing investment properties in locations such as Turkey and Egypt. But buyers who were putting off finding holiday homes during the recession are also returning to traditional destinations such as Spain.

Holiday-home buyers in Spain and France still dominate the market – and many have decided now is the time to buy. The two countries made up two-thirds of UK based broker Conti’s overseas mortgage business last month.

Enquiries for Spanish properties make up 92% of the current demand, compared with 50% just two years ago. Two-thirds of our clients have been registered with us for over a year. Most people have thought about buying before – Spain isn’t a new destination for them. But there’s been some recognition that maybe prices won’t go down further.

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April 30th, 2010

Asking prices for resale properties fell just 0.9% over 3 months to the end of March, according to data collected by Idealista.com, a leading Spanish property portal. The table above gives price changes for selected regions.

As a result, the average asking price of property in Spain finished March at 2,387€/m2, with wide variations between regions. The Basque Country has the most expensive property (3,482€/m2), followed by Madrid (€3,282/m2) and Catalonia (2,828€/m2). Regions at the other extreme, with the cheapest property, are Extremadura (1,437€/m2), Murcia (1,506€/m2) and Castilla-La Mancha (1,627€/m2).

Changes in asking prices are an important market indicator, as vendors tend to raise or drop their asking prices in response to demand. Nevertheless, they are not an accurate guide to transaction prices.

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April 21st, 2010

A surge of foreign lifestyle buyers and investors has split the Spanish property market. Sales are up 200% in some regions compared with 2009 – despite the Bank of Spain claiming that last year was the worst in a decade for foreign property investment in Spain.

Parts of Spain are doing really well at the moment but there are two completely different markets. The split has seen lifestyle buyers choosing less built-up areas such as the Axarquia, where prices are at their most affordable level for years. Meanwhile, investors are looking for distressed bargains in over-developed locations such as the southern Costa Blanca.

Building restrictions in the Axarquia over the last few years have kept stock levels relatively low, while a glut of homes has emerged in other destinations on the Costa del Sol. In areas like the Axarquia and Colmenar the offer is quite limited already. The British know Andalucia is a premium location and are taking advantage of interesting current prices.

Story from OPP

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April 20th, 2010

Buyers are back looking for holiday homes. Mortgage broker Conti Financial Services, which specialises in overseas mortgages, reports a big increase in mortgage applications and the busiest month for over a year.

The foul winter in the UK has probably helped concentrate buyers’ minds on that place in the sun and mortgage applications rose by 48% in March compared with the previous monthly average.

European banks have not suffered as much from the sub-prime crisis as UK mortgage lenders and Conti says that overseas mortgage providers have money to lend to foreign investors. ‘Falling property prices across many European destinations – in some instances by as much as 50% – mean that the chance of owning a place in the sun may never be better, and historically low interest rates mean it’s become even more affordable for British buyers,’ says Clare Nessling, Conti’s operations director.

‘The most popular destinations amongst our clients are still France and Spain, both of which come with easy access and good rental opportunities,’ she says.

Nessling reports bargain hunters out in force in Spain where oversupply of properties and fears about planning permission have left the banks holding repossessed properties which are being sold off. ‘Confidence is definitely growing, but there’s also an element of buyers snapping up bargains in traditional hotspots while they have the chance.’

So where will you find a bargain? ‘Those European countries yet to record their first quarter of growth since the credit crunch include Spain, Denmark and Ireland where an oversupply of stock is holding back prices,’ says Liam Bailey, head of residential research at international estate agents, Knight Frank.

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November 28th, 2009

I recently read an interesting interview with Mikel Echavarren, head of Irea, a Spanish real estate consultancy, talking about the state of the real estate sector in Spain. As an experienced professional in touch with many different companies in the sector it is worth listening to what he has to say. Here is a selection of comments from his Q&A with Idealista News, the news section of the property portal Idealista.

Do you think there are any good investment opportunities in Spanish real estate today?
I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

So you think there are opportunities in a residential sector because the adjustment has already taken place?
There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.

Has the price of housing and land touched bottom?
House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. We work with close to 28 property companies that have been restructured, and you see that valuations are down 30% in 2 years, and then banks buy those assets with discounts of 10-15% off valuations.

Do you think there is any residential property that will never sell?
What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrials, parts of Almeria, Murcia and Alicante. There is an overdose of land that will lie in the warehouses of banks for many years. On the other hand, the stock of finished property will be absorbed sooner.

Is there any real demand for housing at the moment?
Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.

How does one get the Spanish property sector to recover?
The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

Story from Idealista News

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September 19th, 2009

The sharp housing correction that has sent Spain’s economy into a tailspin is bottoming out, Housing Minister Beatriz Corredor told parliament Wednesday.

“Recent indicators show a trend toward stabilization in the housing market,” Corredor said.

Spain’s once-buoyant housing market collapsed last year as the global financial crisis worsened a correction that was already underway after years of overbuilding and spiraling house prices.

Data Tuesday from Spain’s national statistics institute showed the number of houses sold in Spain rose 4.7% in July, their third consecutive month-on-month gain, though they were down 20% from July last year.

Falling housing prices and interest rates are helping to improve the affordability of housing, Corredor added, saying this should stimulate demand.

The government has offered incentives to convert unsold homes into rental properties or to sell them to qualified buyers in social-housing programs. It has also said it will limit current tax incentives on home purchases from 2011 in an attempt to bring forward decisions to buy.

In a note to investors Wednesday, Citigroup economist Giada Giani said the rise in July home sales points to an improvement in Spanish property demand, but noted that housing construction indicators continue to “decline sharply, depressed by the huge amount of unsold inventories.”

Story from Nasdaq

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September 17th, 2009

UK based Almanzora Group says that there are signs that in some sectors the market is improving, after it announced that it has sold properties worth almost €5 million in the Almeria region of south-east Spain in the past three months.

‘Over the years, the property market in Spain has proved to be extremely cyclical, much more so than it is in the UK. This recent market activity suggests that the wheel is turning again, at least for the better quality, more individual, properties in new and progressive upwardly mobile locations,’ said sales and marketing manager, Simon Coaker.

‘Prices have been at their lowest for six years but are bound to start rising again if sales of such properties continue at this level. No matter how great the oversupply of poor quality, mass built apartments, in secondary locations around the old tourism centres, the actual supply of good quality individual properties in relatively new, less developed, locations which are the future of residential tourism in Spain remain in short supply,’ he added.

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June 16th, 2009

Last month’s House Price Index report fell a little flat because of the hope it would show that the decrease in house prices had reversed. Actually, both the March and April reports showed that Spanish property prices had remained at a relatively stable 10% down on an annual basis. While this is far from exciting – and a far cry from a complete turnaround – the data does suggest that house prices in Spain have bottomed out.

For the past four months, the House Price Index has been steady, 10% down Y-O-Y. Compared to the dramatic decline measured between the middle of 2006 and the start of 2009 -a 28% decline from peak to trough-, that’s quite a significant change in trend.

Even if the House Price Index for the rest of the year shows the Spanish property market bumping along the bottom at the current levels, many people will be relieved to have actually found the bottom – rather than worrying about how much worse things can get.

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May 28th, 2009

According to the latest house price analysis from Knight Frank, the Spanish property market isn’t faring too badly compared to some other countries.

Just focusing on countries which have experienced a year-on-year decline in house values, Spain is far from the worse affected.

At the bottom of the chart are Dubai and Latvia, both with whopping 30+ percent annual decreases in house prices.

Faring worse than Spain are Norway, Ireland, Denmark, Poland, Hong Kong, Estonia, UK, United States, Singapore, Dubai and Latvia with annual decreases between 9% and 36%.

Spain’s modest loss of almost 7% is nothing to shout about – except that, looking at some of its neighbours – it could be a lot worse.

Even though the Knight Frank report sees little reason to be cheerful, countries such as Israel and the Czech Republic actually managed a 10% increase in house prices comparing Q1 2009 with Q1 2008.

The bad news for Brits wanting to buy property in Spain is that over the last 12 months, UK house prices have slumped 10% more in the UK than in Spain. To make matters worse, Sterling is now worth 16% less in Euros than it was at the start of 2008.

A year ago, selling a UK home for £200,000 to buy a property in Spain would have yielded approximately €270,000 of buying power in Spain. Today, that same home would sell for 16% less – £168,000 – and translate to just €190,000.

However, due to the fact that Spanish property also reduced by 6% in value over the same period, that €190,000 would have a purchasing power of €201,000 when compared to 2008. Even so, that represents a drop in real terms of €70,000 or approximately 26% in just 12 months.

Data from Knight Frank

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April 21st, 2009

A recent Reuters housing poll of Spanish and foreign-based economists found that on average prices were expected to fall 32 percent from their 2007 peak. While that won’t much of a comfort to people who bought a Spanish property at or near the 2007 peak, most other property owners wishing to sell sooner rather than later know what they need to do. To sell their property, they just need to take 32% off its peak value in 2007.

An example: You pay €210,000 for a Spanish property in 2003 and it increases in nominal value to €395,000 in 2007. Most vendors wanting to sell that property today would be tempted to advertise it at around €320,000 – but that won’t work. Most people won’t bite at that price. Instead, advertise it at €270,000 and you’ll have a queue forming outside your front door. Hopefully, you’ll find more than one who is serious – and you can stick resolutely to your asking price.

Clearly, not every Spanish property owner is able to take this kind of ‘hit’ when selling – but many can. The reality of the situation today is that property prices in Spain won’t recover for a good few years – and it will take even longer for the highs of 2007 to be reached again – if at all. Vendors can either sell now at a realistic price or wait a long, long time for their ‘ideal’ price to be realistic again.

There is no shortage of people ready, willing and able to complete on a Spanish property – they simply need to be convinced it represents good value. Despite the lack of reliable official data about the Spanish property market, despite the gloom and doom of most news stories in circulation, vendors have all the tools they need to be able to price their Spanish property to sell – and sell quickly.

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