Spanish property price trends and opinions thereof

As we near year-end, a round up of “expert” opinions on Spanish property price trends

Juan Enrique Varona, a professor at the University of Cantabria, says prices are between 15pc and 20pc off the peak, and need to fall to 35pc off. “Prices have not fallen as much as they need to,” given the market situation he says. “Demand is very low,” whilst supply is “out of all proportions.” As a result, “we still don’t know what the market prices for housing will be.”

Angel Cano, a director at BBVA, one of Spain’s top-2 banks, says prices will fall between 5pc and 10pc over the next 24 months, but not to the same extent all over the country. Some areas might even escape falls.

Nicolás Llari de Sangenís, a director of property consultants CB Richard Ellis España, says that the housing market will take “5 years to return to normality, which doesn’t mean there are no good business opportunities now.” He sees the best opportunities as primary residencies in Spain’s main cities. He points out that “you have to be clear that not all properties are falling equally (in price). Banks won’t offer these financing terms for ever, so take advantage of them now.”

Ratings agency S&P say prices will continue downwards, with no recovery in 2012.

Carlos Ferrer-Bonsoms, Director of residential property for agents Jones Lang Lasalle, says prices have already fallen 35pc to 40pc since the peak, and could fall another 15pc in areas of over-supply before they bottom out. “There are many areas with over-supply where house-prices will fall and lenders will have to offer very good financing.” Prices will not fall any further, however, in some areas where there is a shortage of sought-after homes, for example parts of Barcelona and Madrid.

According to the international firm of auditors Ernst & Young “Any significant recovery in Spanish building activity looks far off, because house-prices are still probably over-valued and we expect them to continue falling for at least the next 3 years.” They believe Spain is already in recession and won’t start growing again until 2012.

Property prices in Madrid have fallen 44.8pc since the peak in 2006, according to a new study by Spanish estate agents Tecnocasa. Most experts agree that prices have fallen more on the coast than in Madrid, so the price of holiday-homes on the coast has probably fallen by 50pc or more.

On the subject of land values, Mikel Echavarren, head of Spanish property consultants Irea, does not expect prices to fallen any further because they have already reached zero. “The market for land has disappeared. There are almost no transactions between genuine investors. Land has reached a market value of zero, or even below.” Below zero means you would have to pay someone to take the land off your hands.

Comments

comments

10 thoughts on “Spanish property price trends and opinions thereof”

  1. jimmy kames

    The one major issue that also caused the demise of the Spanish property market and will be it’s continued downturn that all the experts in this article fail to mention is the flawed planning laws, corruption and illegal building by developers.
    This still plays a major factor in the buying decision process.

  2. Paul Williams

    There is an incredible amount of nonsense around about prices in Spain.
    It’s down to the huge gap in aspirations (for example some bank balance sheet valuations) and actual selling prices.
    We are selling property at 50%-60% below 2007 prices. That’s the price and that’s the drop. Not 20%. 50% or more then it sells.
    You have to measure price falls from actual selling prices, not perceived valuations by the banks. There are a lot of banks out there that need to wake up. Those that have are selling and in that area the market is buoyant.

  3. Vernon White

    I only wish Vendors wou;d wake up and smell the coffee !!
    Prices still at crazy asking rates and yet another year on those houses we like are still unsold but still the same price !! Utter greed or just plain madness , either way nothing now is going to sell unless its priced to sell and not bump up some sados Pension !!Uk Vendors are the worst, even Spanish Vendors have woken up , meanwhile we wait and hope that one house we like will, in the next few months be re-valued correctly and the Vendor will have a sale , I mean to say , after 3 years one would think that perhaps the asking price was a tad on the high side ?

  4. Graeme Harrison (prof at-symbol post.harvard.edu)

    Vernon, you suggest that a particular house you like MUST come down in asking price, after not being sold for three years.

    Your comments make me query if you truly understand markets. Averages may come down. But an individual vendor, with no pressing need for cash may well keep an unrealistic asking price on a property till the market improves in five years. Average movements will not dictate what an individual must do.

    Better to have a more flexible approach and look at any one of a wider class of properties and then cherry-pick a steal from a pressured vendor. The owner of the one property you like may well decide to ‘ride out’ the whole recession without ever selling.

  5. TONY HARRIS

    I lived in Spain for 12 years throughout the 80s and early 90s. During that time I saw european (many english )painters , plumbers , etc ( and a butcher ) become overnight estate agents. They would simply set up an office , put on the standard white shirt and smart trousers and start conning.The trick was to ask the property owner how much they wanted ( being sure to also find their cheapest sale price )and then virtually add on any figure they wanted to choose.Over a period of time obviously prices became inflated having paid too much originally, Fortunately Spanish law has stopped this sort of selling but some of the agents are still out there…….BEWARE

  6. J.B. DeWeerdt

    I have been looking to buy an apartment or townhouse on the Costa del Sol for the past three years. Considering the in my opinion generally low quality, bad insulation and architecturally faulty designs of the odd 150 properties I visited, I would say a price of 800 euro per m2 would be more than enough to offer. If sellers do not adjust their prices, they will find out the grapes will turn sour within this year and they will be stuck with their property and rising taxes for many years to come.

  7. Paul Wentworth

    As my wife and I have viewed many property’s in all the Costas over approx 5-6 yrs I would second your comments J.B regarding the questionable build quality of many of the new builds, and perhaps quite a few of the old ones as well.
    During the boom building years we observed many new house/villa constructions beginning on fresh ‘infill ground’.
    For those not familiar with the building industry, this is where the Construction firm has cut into the slope of a hill or mountainside and used the removed spoil to make a larger flat area to build a property on.
    It is well known, certainly within the UK building Industry, that you cannot start any new build on built up ground for at least seven years to allow for settlement.
    I think this could explain some of the alarming structural failings now evident in a lot of new builds on the Costas.

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.