Falling second home prices in the Pyrenees and the Costa Dorada

Posted on August 10, 2009 by Mark
Filed Under Catalonia, Costa Dorada | Leave a Comment

Altafulla, a nice bit of the Costa Dorada

Under the title ‘Summer Crisis’ an article today in the Heraldo de Aragon, a regional daily in Aragon, discusses the market for second homes in the Pyrenees and the Costa Dorada, both popular holiday home destinations with Spaniards living in Aragon, and in particular its capital Zaragoza. Though delightful in places (but awful in many, thanks to mindless development), the Pyrenees and the Costa Dorada don’t get much attention from English-speaking media, so I thought I would give you the gist of the article (in bullet points), just in case any readers are interested in property in these areas.

Buying a second home today in the Pyrenees or the Costa Dorada will cost you a minimum of 20% less than last year.
For sale signs are everywhere, and the stock of property for sale has exploded. In some parts of the Pyrenees, up by 400% in a year.
That’s good for buyers, but it’s also a good time for people looking to rent. The selection of rental properties has swollen, and rents are down.
You only have to pay 300 to 500 Euros rent for a week on the Costa Dorada. In the Pyrenees, rents are down 100 Euros to 400 to 500 Euros per week.
In the Pyrenees, vendors are accepting offers as much as 60,000 Euros below asking prices, compared to just 3,000 to 6,000 Euros off in recent years. 3-bed flats have gone from 270,000 to 210,000 Euros, and 2-beders are down to 150,000 Euros. (Given the situation, I can’t help thinking that those prices are still way too high. But if people are foolish enough to buy at that level, that is their choice).
The few buyers there are “don’t want to know” about off-plan, says one local estate agent. Only finished homes are selling.
In the Pyrenees “the stock of property and the average time it takes to sell will increase, causing prices to fall as much as they did in the last 6 months,” says the latest report on the property market in Aragon, prepared by a local bank.
“I’ve never known a crisis like this, going months without selling anything,” says a salesman for a local developer with 30 years experience, who admits that his firm is offering discounts of 20% minimum. “We are dropping prices to get rid of stock,” he explains.
The same developer is selling newly built 2-bed flats in L’Ampolla, on the Costa Dorada, for 123,500 Euros, and all prices are “negotiable”.
Banks are tight about lending. 2 years ago they lent 100% or more, now just 80%, and of valuations that are 50% lower than before.
On the coast, people who are struggling to pay their mortgages are trying to rent out their homes themselves, driving down rental prices to 300 to 400 Euros a week, “without tax” complains a local agent. “If you ask more than 500 Euros you won’t rent out.”
An appraisal company says property prices on the Coasta Dorada are down 4%, and are expected to keep on falling. (4% is so far from reality it doesn’t bear commenting on).
No turnaround expected this year. Buyers are there, but waiting for prices to fall further.