Foreign demand for second homes on the Costa del Sol has been strong this year, finds a new report on coastal property markets by Aguirre Newman, a real estate consultancy.
Foreign investors see Costa del Sol property as a bargain after seven years of price falls, and 90% of them can afford to buy without financing.
Local demand, in contrast, is hamstrung by a continued lack of mortgage financing in Spain, and discouraged by the ongoing economic crisis with high unemployment and economic uncertainty. 75 per cent of Spanish buyers need a mortgage to buy a detached home, and whilst 85% of Spaniards buying flats need financing, say Aguirre Newman.
On the supply side, Aguirre Newman conducted a study of 266 new developments on the Coast, 207 of which were actively being sold, 26 were stopped, and 33 were sold out during 2013. They found that 41 per cent of new developments for sale were controlled by banks or the Sareb (Spain’s so-called ‘bad bank’), rising to 54% if the developments where work has been halted were included.
There was a slight increase in the number of new developments being started on the Costa del Sol, reveals the study by Aguirre Newman, with four new developments being started in 2013. Not a single new development was started in the preceding three years.
However, the number of new homes for sale fell by 18% in 2014, from 18485 to 16,508 homes, and 30 per cent of new homes on the coast remain unsold.
The average new flat for sale on the Costa del Sol has 2 bedrooms and 127 m2, and costs €196,956, whilst the average single-family homes has three bedrooms and 279 m2, and costs €393,520. That means prices have fallen 5.7 and 9.7 per cent respectively in a year.
Looking forward, Aguirre Newman forecast that holiday-home prices in the best areas close to services and amenities will stabilise in 2014, but continue to fall this year and next in less attractive locations, thanks to the excess inventory and weak demand from local buyers.