Market Changes

Market changes

While talk of recession ‘crisis’ in Spain is a permanently in the news, people are still buying property and many of these buyers are getting some great deals. It seems that while the bargain hunters have held back over the last couple of years, this buyer group has now returned, showing interest in properties of all types from large detached villas to small golf apartments. So what is all the fuss about?

It is certainly a clear fact that newbuild developments have suffered and many remain uncompleted and unsold, while developers go into receivership and banks simply say ‘no more’. Other recently completed units (often purchased off plan by investors) are also very difficult to sell on at or above the original price, and often communal facilities and local amenities remain incomplete, with no positive signs of termination in the near future. I have mentioned for some time in past articles that there really is no need to buy new, when there is such a choice of resale property on the market, and from a structural point of view, buying a established ‘honest’ property that has stood the test of time, can be a safer bet than investing in something that looks OK now, but has yet to face it’s first very dry or wet season, earth tremor etc. Building control is poor in Spain and a newbuild is not necessarily structurally better than an older property, with 10 year ‘builders’ guarantees being notoriously difficult to claim against if things go wrong.

While some Brits appear to be playing a rather risky waiting game due to exchange rates, others are having difficulty at selling their property in the UK. Despite this, the number of Brits wishing to purchase abroad is at an all time high, (the credit crunch simply delaying the realisation of their dreams). At the same time Irish and Dutch purchasers are taking advantage of a true buyer’s market and picking up great value properties, representing a sound long-term investment. Russian buyers are also active, often casually buying higher value luxury properties at well over 1m.

Some recent examples of observed deals within August include:-

Renovated 5 bed ex bull fighters finca on 20,000m2 plot with luxury bathrooms, pool area and scope for further accommodation, snapped up for €360k by the same person that offered €495k 12 months ago (having  had the original offer declined by the same vendor).

2 bed Polaris World penthouse, as new, originally purchased by off plan investor for €250k, snapped up as resale by holiday home seeker for €155k. (Resort finished including school).

3 bed penthouse/duplex (La font) with very large terraces, decked large  Jacuzzi/plunge pool, lift to both levels was 370k, purchased for 270k. (The block and area is finished to a high standard, but the developer is desperate and has a half finished block up the road which is now on stop).

Numerous vendors are now reducing prices and a desperate vendor may well see a 400k detached villa with pool go for 100k less. This off course does not mean that all vendors are in a hurry or prepared to reduce their prices and many are happy to ride through the downturn, using a long-term strategy. Some people re-purchasing within Spain may be happy to accept a price drop as they are purchasing for less elsewhere and some buyers may need a house with ‘x’ number of bedrooms in a certain area and hence be willing to pay top money.

Interestingly, I am seeing most purchasers within two price brackets, the under 250k’s and the over 600k’s with sales in between less frequent. This points to two main market groups i.e. those that can’t or won’t stretch themselves and those that are wealthy enough to invest in an up market larger property. Both market groups may or may not be dependant on a bank decision but nonetheless when the bank is involved they are likely to favor lower amounts of borrowing or the wealth proven client. This means that there is a little more buyer competition in these two price bands (though prices may still be 20-30%) lower than a year ago. At the same time the middle ground e.g. of 300-500k properties (of which there are many) sees more vendor competition and hence potentially better deals.

The numerous buyers that I have observed since talk of the ‘crisis’ have all been very happy with their savings and most are seeking life style improvement (the off plan investors seem to have disappeared). All the above-mentioned properties  (even those on large golf developments) are finished, as are the communal facilities and all have the benefit of established functional facilities nearby including bars restaurants schools etc. It is important as ever to independently check out the structural condition of the property whether new or old, all legal issues and not to be blinded by bargain price alone.

I would still strongly advise buyers to focus on:-

Established, functional and attractive localities.

Finished developments and resales, rather than newbuild.

If newbuild is a must, then opt for some unique qualities e.g. outstanding views or the penthouse apartment, rather than a ‘run of the mill’ purchase of which there are many clones.

NB:- Information for advice purposes only. Proper legal procedures should be followed for all purchases.

Information provided by Mark Paddon BSc Hons Building Surveying. MCIOB. Property purchase advice and structural surveys throughout the Valencia region. Free 17 page buyer’s guide available via www.surveysspain.com   T: 962807247 M: 653733066

Free initial advice is available by e-mailing :- This email address is being protected from spambots. You need JavaScript enabled to view it.

Copyright Mark Paddon 2008

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