Insight into the Spanish property market, guides to help you make informed decisions, and a directory of real estate professionals and home service providers from a source you can trust.
This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
When you buy or sell property in Spain the sums of money are large, perhaps one of the biggest financial decisions of your life. The high transaction costs you will face like taxes and commissions only make the decision more important to get right. And when you own property in Spain you face a host of extra challenges to manage, and costs to control. Unfortunately, the Spanish property market is opaque and full of pitfalls, and notoriously unprofessional. Buying and selling property in Spain is not a decision to be taken lightly, and you may find it much easier to buy than sell if you don’t take care. In this market it is crucial to do your own research, and don’t rely exclusively on people who are trying to sell you something – let’s just say they might not have your best interests at heart. Spanish Property Insight is the only independent source of information and analysis of the Spanish property market. Don’t even think about buying or selling property in Spain without subscribing to Spanish Property Insight.
Spanish property prices were 30% over-valued, but have only fallen 10% so far. Ergo they have to fall another 20% before the correction is over. That’s pretty much the conclusion of the latest report on the housing market by BBVA, Spain’s second largest bank.
But prices won’t lurch down by 20% in one go, which would be the best thing for the market. Nope, the pain will be dragged out over the next 2 to 3 years. Prices will fall by 7% this year, 8% next year, and 5% the year after that. Prices won’t stabilise until 2012.
Even by historical standards today’s correction in prices is less than half way through, points out BBVA. After the last property crash in the early 90s, property prices fell in real terms for 21 consecutive quarters. This time around prices have only been falling for 6 quarters. If the past is any guide then we still have some way to go, at least another 8 quarters according to BBVA.
BBVA mentions another key reason why the fall in prices is far from over, namely the high level of house prices to annual disposable income (something I wrote about here last week). This ratio (house prices / annual disposable income) rose to 7.7 years at the height of the boom, and has now fallen back to 6.6 years. But that is a long way off the historical average of 4, not to mention the 3.5 it has fallen to in the US.
The biggest price falls will come where they built the most, where there are lots of unsold homes. That means around Madrid and Mediterranean provinces like Malaga (Costa del Sol), Castellon (Costa Azahar), and Tarragona (Costa Dorada). In contrast prices will fall the least in Orense (Galicia), Navarra, and The Balearics.
Banks must drop prices by 50% in some cases
Meanwhile, and new report from BNP Paribas Real Estate, the real estate arm of French bank BNP Paribas, argues that banks in Spain will start having to offer discounts of 50% in 2010 to shift some of their stock of property.
Banks are now Spain’s biggest property companies, having repossessed property as loans went bad. They claim to be offering discounts to buyers but BNP Paribas Real Estate says not big enough to make sales.
Everything you need to know about property in Spain
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