Holiday home sales on the Costa Blanca (Alicante Province) have been particularly hard hit by the Spanish property crash, in part due to a heavy reliance on British buyers. Last year developers in Alicante province sold just 702 homes to non-resident European buyers, down by 83% in 2 years (4,233 sales in 2006), according to a recent article at the Spanish news website Información.es (quoting figures from the Ministry of Housing).
The Costa Blanca is suffering the consequences of relying too heavily on British buyers, explains the article, giving a number of reasons why British demand has collapsed.
Firstly, rising unemployment and an economic crisis at home is sapping British demand, whilst the credit crunch ensures that buyers can’t get financing.
“Many English mortgaged their homes to pay for the second home they bought here, but now that is impossible, they can’t get the mortgages,” explains Ramón Jerez, President of the Business and Construction Federation (Fecia), quoted in the article.
The weak pound is another reason why the British have stopped buying in Spain. Britons used to pay around 90,000 Pounds for a property costing 150,000 Euros. Now they have to pay around 136,000 pounds for the same thing.
Then there is the constant stream of property scandals and injustices, recently excoriated in the Auken report to the European Parliament, which have played a big part in turning off British buyers. “This has seriously damaged our reputation,” admits Ramón Jerez.
Interestingly, Jerez also concedes that Spanish developers might share some of the blame for the current mess. He calls for a halt to over-development, and suggests that developers should make more of an effort to understand the demands of their British, German and Scandinavian customers. “Before we start building again, we should get out to sell and understand what it is they want from us in each country,” says Jerez.
This is enlighten stuff, coming from someone in the Spanish building sector. Market research may be standard procedure in most industries, but Spanish developers have never given it much thought. If you have any doubts just look at what they did to the Spanish coast in recent years.