House-hunters making offers in Spain today should use the price of 1999 to 2000 as guide to current values, argues Juan Fernandez-Aceytuno, a property market bigwig
That means that Spanish house prices have given up pretty much all the gains they made in Spain’s runaway real estate boom from 2000 to 2007. They are back to where they were fourteen years ago in nominal terms, and even more in real terms (adjusted for inflation).
Fernandez-Aceytuno, head of Sociedad de Tasación, one of Spain’s biggest appraisal companies, advises serious vendors to drop their price by 15pc to 20pc from current market asking prices to make a quick sale, adding that equilibrium prices are around that level. “That would be close to what I consider to be the punto of equilibrium,” he said in comments to the portal Finanzas.com.
According to Fernandez-Aceytuno this is a time of opportunity for bargain-hunters, especially those targeting the portfolios of banks such as Bankia, La Caixa, and the Sareb – Spain’s so-called Bad Bank.
With prices near the bottom, this is the time to buy before a recovery starts to push them up, he argues. “If funds believe this is the time to invest, it’s because they can see there will be a recovery,” he said, referring to a recent spate of big investments by foreign funds in portfolios of properties sold by banks and the City of Madrid.
During the interview with Finanzas.com he also defened the record of appraisal companies during the boom, saying their only mistake was “not warning that those prices were unsustainable.” Others would argue that the appraisal companies charged inflated fees to do whatever their paymasters the banks told them to do.