TPF Andalucian property market report 2010 – 2011

I think there are just two questions potential property buyers in Andalucía should ask themselves in 2011; first, have prices hit the bottom? and second, is the market still on the way down?

Confusingly, the answer to both questions is yes and that’s because the property market in Andalucía is not performing in a uniform manner across the region. If anything, the differences between the best and worst areas and between quality and inferior product are even more pronounced in 2011, with the prime areas running perhaps two or more years ahead in terms of activity compared with peripheral locations and the worst on offer may never recover at all. Unless the market is broken down into its constituent parts meaningful analysis is impossible but unfortunately for buyers trying to find out what is going on many commentators persist in talking about the Spanish property market as though it is one entity, obscuring huge variations between provinces and within provinces.

So, for example, while activity in the prime coastal area of Marbella, San Pedro and Puerto Banús increased from the start of the 2nd quarter of 2009, and continued to develop very satisfactorily through 2010, less desirable parts of the same province of Málaga and in other provinces within Andalucía have yet to show any signs whatsoever of the market coming back to life. So statistics from the valuers TINSA at the end of 2010 giving an annualised 24.4% drop in prices since 2007 on Spain’s Mediterranean coasts mean nothing; apart from being way too low even for the best locations it is just ludicrous to lump all Spain’s coastal regions into one when there are clear differences between regions and even between locations as little as 25kms apart. And the same is true in rural areas. The best country locations are moving along nicely while the less desirable and those with legality issues are stagnant.

More Silly Statistics
I suppose it is just possible that one day I will write one of these Market Reports without the need to comment on rubbish statistics churned out month after month but it’s not this year. Ministry of Housing statistics, based on registered prices, continue to mislead because they are distorted by under declarations in the past so what may look like a 20% drop between the price paid in the boom and the price achieved now is much more likely to be a disguised 40% fall because the declared price was 20% lower than the true amount paid. And that’s being conservative; 20% under declaration was common and it was often more. I give it another 5 years before any credence may be attached to these stats but I believe they do influence sellers to maintain inappropriately high asking prices as I am sure they would much rather believe that prices have dropped only 20% from the top of the market, rather than 40% and more, and pitch their asking prices accordingly, i.e. way too high.

Valuations from companies such as TINSA and Valtechnic are also suspect because they are based on subjective market appraisals but they are regularly quoted as meaningful. And it would seem that some valuers actually do believe the Ministry of Housing figures for Andalucía, with bizarre results. In summer 2010 a duplex penthouse went on sale 100 metres from the beach at San Pedro de Alcántara and walking distance to Puerto Banús. It was a bit tired internally but in an outstanding position, with a private roof-top swimming pool. At the peak of the boom it would have made getting on for €1 million and it quickly went under offer at €585,000, somewhat less than the seller had paid in 2008. A TINSA valuer, evidently residing on another planet, put it at €900,000, leading the buyer to wonder if he might be able to improve his mortgage offer with a different bank. He did get a better offer but the second bank uses Valtechnic for valuations, which came in at €550,000, resulting in one very confused buyer. I can understand how two valuers can look at the same property and disagree by €10,000 or even €20,000 but €350,000 is unbelievable. One of the biggest fears facing property buyers in Spain in 2011 is overpaying and confusion on this scale from the ‘experts’ is unhelpful. Even counting the number of transactions done, which is what the Property Registry figures record, is not that helpful because we can’t know how many are attributable to banks swapping debt for property although against all the other confusing data Registry transaction numbers probably come the closest to reality. If they are right then it seems that transactions numbers hit the floor in the 4th quarter of 2009 and have been rising slowly since then.

It is easy to dismiss Spain’s property market statistics as a bit of a joke and just something we have to put up with but I think they do real damage. They confuse both buyers and sellers and undermine confidence in the market, without which there can be no recovery. But remember that statistics only record what has happened, they neither explain nor predict so while it would be good to have accurate ones they still wouldn’t tell us anything about where the market is going in 2011.

Unsold Stock
One statistic rolled out with tedious regularity is the number of unsold units in Spain’s property market, with estimates ranging from around 700,000 to 1,500,000 units, depending on who is doing the counting. Even if it’s the lower number no one can dispute a lot of property needs an owner but as raw data it doesn’t clarify anything. This is important because buyers look at this figure and convince themselves that prices cannot be anywhere near the bottom and they should hold off making a purchase, perhaps for several years. I have not seen any serious attempt to put that figure into context; it just gets trotted out without any reference to the complexities of the property market in Spain. Most commentators seem to be saying that until this glut of unsold properties is removed no recovery can take place but I think they are wrong. My take on the unsold units issue is that it is perfectly possible to have 1.5 million unsold units while at the same time certain sectors of the property market recover.

The key factor is that the majority of what is built in Spain is for the internal Spanish market and comprises properties in the cities and suburbs which are bought by Spanish families. Anyone who has travelled around Spain in recent years cannot fail to have been astonished, or should that be appalled, at the amount of new building in cities, towns and villages; it makes development on the coasts appear almost moderate by comparison. In reality, Spain has two property markets running in parallel but independent of each other, one aimed at Spaniards buying first homes and the other at overseas buyers, either buying a first home for full-time residency or a second home for holiday use, with very little crossover between them and where there is crossover it is down to a relatively small number of Spaniards buying coastal holiday homes. In consequence, the majority of the unsold units currently available in Spain are of absolutely no interest to the overseas buyer. However, I regularly see bulletins, blogs and media comment aimed at the overseas buyer quoting the unsold units figure and linking it with today’s much lower number of overseas purchasers to support the argument that it will be years before the overhang of unsold properties is mopped up and the market recovers. I agree it will be years, but will be more a function of the internal Spanish market than the numbers of overseas buyers; even at the peak of the bubble in 2006 non-Spanish buyers, including both foreign residents and non-residents, accounted for about 10% (90,000 approximately) of the total number of transactions in that year and for sure the majority of that 10% were being sucked into the lower end mass market. It would have been a relatively small number that were buying into the quality sector in prime locations. So the major players in getting rid of the overhang of unsold units will be Spaniards, not foreign buyers. In fact, in normal times, when people buy one unit to live in and not multiple speculative units, about 350,000 new households are formed each year in Spain and about 50% of those buy so over time well-located properties close to amenities with good transport links and at the right price will find a buyer. The biggest problem will be disposing of hundreds of thousands of units in satellite suburbs of the big towns and cities and even villages, virtually deserted developments, vandalised and falling into disrepair. Why anyone thought a tiny dot on the map like Yebes needed 250 new houses, or Valdeluz, a marginally larger dot needed 8,000 new units, seven schools and a commercial centre when there are only 1,500 registered residents at the town hall is frankly beyond me but clearly the town planners and architects all thought it was a good idea, not to mention the banks who financed it all.

As regards the amount of unsold units that are aimed predominately at the overseas market the stock is made up overwhelmingly of units built between 2000 and 2010, a period which I describe as a ‘manufactured’ property market which arose mainly due to the availability of cheap credit. Pre-2000, Spain had managed very well without a mass market and over forty years a stable property market had developed, albeit with the usual cyclical ups and downs, with the majority of purchases made in a relatively few prime locations on the coasts and inland and, in most cases, without mortgages. Unfortunately, most of the unsold stock is not well-located and nor is it quality but regardless of whether the seller is a bank, a developer or an individual they are all trying to sell the same thing, a property built between 2000 and 2010, a holiday home in a high density development in a secondary location. But the mass market has vaporised so why commentators keep harking back to this phase as though it was a golden era I really don’t understand. The idea that we will return to overseas buyer numbers at 100,000+ per annum is delusional and nor would it be a good thing; those numbers were only possible because Spain was building lots of rather unpleasant property in dodgy locations at relatively low prices on which banks were prepared to lend to people who couldn’t really afford it.

So comparing the numbers of overseas buyers in the market now with the high point of 2006 and wailing about how they have declined doesn’t make much sense to me. The market that supported the high numbers doesn’t exist anymore and it is not coming back. Today we are dealing with predominantly cash or mostly cash buyers, discerning individuals focusing 100% on the traditional prime locations who couldn’t be less interested in bog-standard holiday homes in the secondary locations; in other words, a market just like it was pre-2000. In fact, I think it would be much more interesting to compare the numbers of overseas buyers in 2011 with the numbers in 1996 when the market was recovering after the severe downturn between 1990 and 1994 and I suspect the numbers would not be very different. So I maintain that the fact there may be as many as 1,500,000 unsold units in Spain in 2011 is irrelevant to what is happening in the quality market.

Yes, the market has bottomed
In the best areas, providing the seller was serious and the property was problem-free, cash buyers started re-entering the market during the first half of 2009 and since then they are typically achieving reductions of around 35% below what that property might have reasonably been expected to make at the top of the market in 2006. With this level of discount the number of transactions increased steadily throughout 2010, still with cash buyers predominating but mortgage finance became more available for overseas buyers as the year progressed, capped at around 60% LTV, subject to status, although it should be remembered that the quality market is not overly dependent on finance. I think one mistake that buyers tend to make in market downturns is to assume that all sellers are financially distressed but the reality is that in respect of quality property in the best locations the less likely it is that the seller will be heavily mortgaged, and many will have no mortgage at all. The key point is that since market activity returned in 2009 prices have not had to fall beyond an approximate 35% to tempt buyers into a purchase and all the signs are that this will continue through 2011. In my opinion, buyers can be confident that if they enter the market in a prime area and buy a quality property at roughly 35% below what they would have paid at the peak they are buying at the bottom of the market. Buyers who hope for further falls will be disappointed.

Yes, the market still has further to fall
But the majority of unsold stock in Andalucía is located in secondary areas, well away from prime locations, and consists of product that was aimed at the mass holiday home market which was off-plan, speculative and mortgage dependent. As already mentioned, this market no longer exists. The sellers are a mix of banks, developers and individuals all of whom are guilty of failing to confront the full horror of their situation until now but during 2011 I think we will start to get an idea of just how low prices are going and without question, in this sector of the market prices have much further to go with the end result being considerably worse that the 35% average reduction we have seen in the prime locations.

The banks will have a major influence on what happens next because it now looks likely many will clean up their balance sheets in the near future by divesting themselves of their toxic liabilities, lowering prices to a level at which someone actually wants to buy. This will leave developers and individuals overwhelmed by a tsunami of falling prices. The problem until now is that the banks have tiptoed around the situation and who knows, maybe they also really believed the nonsensical statistics from the Ministry of Housing – why else would they offer properties at pathetic discounts of 20%? But now, product is starting to be offered at 50% ‘below market rate’ although I would like to know how they have established what the ‘market rate’ is – they haven’t been selling anything so how do they know. While some units may look right at this level of discount I maintain that banks are in for a shock as they find out that much of their inventory is so badly located and so hideous that there are no buyers for it at any price. I predict price falls in this sector of the market will gather speed in 2011 and the worst product will go way beyond 50% reduction.

I’ve said all I am going to say about the sub-prime property sector in Andalucía in this report. Andalucía had a perfectly sound property market of quality property in quality locations prior to the manufactured boom and shows every sign of returning to that state over the next couple of years and everything I have to say from here on in refers to the quality end of the property market.

Sellers and asking prices
In my opinion, the biggest drag on the market in 2011 remains sellers and their unrealistic asking prices. There is no lack of potential purchasers but many are very confused and confused buyers tend not to buy. The number one problem is that asking prices are still all over the place; some are about right, some are way too high and others are somewhere in the middle and I think estate agents have to shoulder the blame for the fact that, even in 2011, properties are still coming onto the market priced way too high. Many are reluctant to value, preferring to ask the seller what they want to achieve then add their commission on top and most will opt to list an over-priced property and wait possibly years for the price to drop rather than risk not having a property on their books in case the eventual buyer walks in their door. In contrast, as I am working for the buyer I have the luxury of being able to tell a seller than I won’t even recommend their house for short listing, much less actually show it, if the price is off the scale. But the best agents are being much tougher with sellers than before and some refuse to waste their time showing over-priced properties and I hope that trend continues.

The most common reason sellers give for pricing high is that buyers can always make an offer but they don’t seem to realise that a sky-high asking price often acts as a deterrent to view so no one sees the property anyway. But what they forget is that although they may be prepared to accept a low offer if their asking price takes the property way beyond the buyer’s budget the very person who might have bought the house never gets to see it. An asking price should act as an indicator of what the seller is willing to accept, not deter viewings, and in my opinion should be no more that 10% above that level. I think the reason is that many sellers do not need to sell and it is unfortunate that their properties clutter up agents’ listings. We remain, and will remain for some time to come, in market conditions where a seller must have a serious and motivating reason to sell and accept that prices have fallen back by at least 35%. If a seller does not fall into this category then they would be doing us all a big favour if they got out of the market for a few years. As I have already mentioned, buyers should remember that very few sellers in the best locations are financially distressed. A few will be but the majority are not and assuming that they all are is a mistake. There will be other reasons for sale, such as serious illness, bereavement, family breakdown, downsizing or upsizing and relocation but whatever it is, there has to be a reason. It is from these sellers that buyers will secure the best deals, not from those who have put their property on the market on a whim just to see if they get an offer.

But getting the asking price right really produces results. At the end of 2010 I viewed a superb little property on behalf of a client, two one bedroom houses within the same plot, two minutes from the beach and with a sea view which, before the crash, I would have expected to have had an asking price of at least €300,000. At €225,000 it was clearly priced to sell and I highly recommended it for viewing but within a few days it sold at €198,000 and my client wasn’t fast enough. Now there was a seller who, for whatever reason, really needed to sell and indicated so by their asking price. The buyer has a great deal and can have every expectation of capital growth in the medium term.

In another example, a client of mine was the first person to view a property following a price reduction but had the property remained at the earlier higher price he wouldn’t have seen it – it looked way beyond his €500,000 budget. The seller had bought in 2006 at €620,000 and spent a further €80,000 on upgrading. Originally for sale at €750,000 it had been reduced several times but never by enough until finally it came down to €525,000. At that price the seller was flagging that she was serious about a sale and I short listed it for my client. It was a three bedroom house, in excellent condition in a top urbanization, with one of the best panoramic sea views towards Gibraltar and Africa I have ever seen. The price reduction brought renewed interest from previous viewers but my client was first past the post with €485,000 accepted after more negotiation and money was on the table only three weeks after the price reduction.

I think these two examples show quite clearly that a good property with an asking price around 10% above what the seller will accept, providing that represents a 35% drop, will find a buyer and probably quite quickly. I hope they also show that when I talk about quality property I do not necessarily mean just the super-expensive stuff. There are lots of interesting possibilities for more modest budgets.
Prices, whether sellers like it or not, are back to 2003 levels and they just have to get over it. On a positive note, there are signs that more inventory is now priced to sell than was the case in 2010. Thinking back to the market correction of the 1990s it did take about five years before sellers gave up the struggle and inventory was correctly priced and as we are at about the same stage in the cycle now I am confident that we are moving in the right direction in 2011.

Relative prices
I want to see much more attention being given during 2011 to relative price levels and this issue has to be confronted before transactions will pick up in secondary areas. As I do property searches anywhere in Andalucía it is easy for me to notice the differences between areas and at the end of 2010, which for anyone doing deals in the best locations around Marbella was a very satisfactory year, activity levels dropped significantly as soon as I moved any distance away from that hub, beyond Estepona or towards Fuengirola, for example, or to the east of Málaga. When I ask agents how business is in these areas the standard reply is that they are still quiet, albeit busier than 2009, but it is very obvious that they are not experiencing anything like the activity levels of the prime locations.

There are several reasons for this. After any downturn, recovery always comes first to the best areas and ripples out from there. And with the price falls in and around Marbella people who were priced out of that market previously now find that they can afford it and they don’t need to look further afield. This will give secondary areas a real problem as long as there are lots of excellent deals available in the prime areas and it may even get worse before it gets better as more property is marketed at the right asking price during 2011. And then something strange happens to price differentials in good times, they seem to get a bit out of kilter and the dividing line between the very best addresses and those in the second rank are blurred. I think this happens because buyers come into an area with a budget which doesn’t quite stretch to the top rank but they finish up spending the same amount, not quite where they wanted to be and without ever discovering that they should be paying 20% less. In a buoyant market it seems that areas become a bit elastic as buyers are driven by high prices to widen their search area and what is thought of as prime stretches but when the bubble bursts it shrinks back to its smaller, original zone, leaving many properties outside the prime area.

But I see lots of good properties in perfectly nice locations but outside the very best, with prices that seem not unreasonable until you relate them to what a similar property would now sell for in the best areas of Marbella, which I use in the widest sense to take in Los Monteros, Nueva Andalucía, Sierra Blanca and the Golden Mile, San Pedro and surroundings etc. If prices are too high in secondary areas relative to the most expensive areas then sales won’t happen. The problem with getting relative prices re-established after a market collapse on the scale we have just experienced is that while no deals are being done in the best areas it is impossible to know where to pitch prices in secondary ones.

But now we do know. Since 2009 enough deals have been done across the board, all types of properties for all budgets, to establish what the baseline is. And this is where it can get painful for some sellers who will be facing price falls of somewhat more than 35% to get their relative price right. For example, a seller with a two bedroom apartment for sale in the Mijas Costa or Estepona areas has to take account of the fact that brand new two bedroom apartments at San Pedro beach have been selling during 2010 and are currently still available for between €320,000 and €350,000 with cash back for furniture. As long as the developer refused to budge off his €480,000 list price he sold not a single unit but since he changed his position, in mid-2010, he is selling several units a month. So sellers of similar properties in other areas have to pitch their prices below this, and by some margin, to have a hope of a sale and if that means more than a 35% drop then so be it. We just don’t operate in a market where a property in Mijas Costa will ever sell for more than a similar property walking distance from Puerto Banús. And it is madness for two bedroom apartments on the edge of Estepona to be priced at €480,000 when less money will buy a similar property round the corner from Puerto Banús but it is still happening.

There are still too many properties priced for somewhere they are not and until they are reduced to a level that reflects their position in the location hierarchy they will struggle to find a buyer. And it is worth remembering that when the market recovered from the 1990-1994 downturn property in Andalucía had fallen 40% on average but that average obscured the fact that properties in the very best areas lost around 20% while those in secondary areas had to fall a lot more and in fact, they were still falling when prices had already moved off the bottom in the top locations. And it will be no different this time.

The Rural Market
Much of what I have already covered is also applicable to the rural property market in Andalucía, particularly with reference to renewed activity levels in prime areas such as Ronda and Gaucín, Coín and Alhaurín el Grande, Antequera and Tarifa and Medina Sidonia while much of the remainder is still comatose. Likewise, pricing is critical and the deals that have been done in the last 18 months indicate that 35% is also the minimum reduction necessary to attract a buyer. In 2010 clients of mine bought a fabulous country estate near Ronda that had languished on the market for three years at €1.5 million. That was way beyond their budget of €850,000 so we did not short list it initially but when it was reduced to €1.1 million we decided it was worth a shot. Although they weren’t the first to see it at this new price they were the first to get their act together finally securing the property for €850,000 and this is another excellent example of how the wrong price can deter the eventual buyer from viewing.

But while much is similar there are some important differences between coast and country and it’s these I want to focus on. It should be remembered that people have been buying in the Andalucían countryside for years, focusing on a few special places, and in general it was a niche market at the top-end with people making a very deliberate life-style choice to head for the hills. It also helped to have an adventurous streak and a lot of patience. Then a couple of factors came together, starting around 2000, which really changed the rural market. Firstly, improved road infrastructure made access easier and the market opened up to many more buyers and secondly, prices were rising so fast on the coasts that many were left with no other option than to buy a wreck in the country and do it up. Either way, this sudden influx of buyers was irresistible for many local authorities and we know the result; building licences flying around like confetti at a wedding, such a shame that the majority were illegal and we now know that we are not talking about a handful of properties, tens of thousands are involved.

The outcome is that corruption on an industrial scale was uncovered in town halls across Andalucía and the rest of Spain and while a lot has already been disclosed there is still more to come. Dozens of mayors, councillors, planners, architects, lawyers and builders are either a) in prison, b) held on remand or c) out on bail. So I was not pleased to read an article in the UK’s Daily Telegraph newspaper at the end of 2010 talking up the rural market in Andalucía as a cheaper option to Provence and Tuscany, three times less expensive according to them, with the possibility of snapping up a remote ruin at €80,000. It gave me a real sense of déjà vu. All that was said in respect of renovating ruins was the recommendation to take ‘professional legal advice and use a reputable local architect. Oh, please. I think, if they had bothered to ask, they would have discovered that the majority of those owners of rural properties threatened with demolition did take professional legal advice and used local architects but it didn’t help much. I thought this article was verging on irresponsible and made the whole process sound like a doddle: just wander into the countryside, buy a ruin and do it up but it’s just not like that anymore; in fact, it never was but many buyers just ignored the rules or never even bothered to find out what they were.

So what do potential buyers in the countryside need to know? Firstly, right across Andalucía local authorities have been ordered by the regional government, the Junta de Andalucía in Seville, to adhere to the existing planning regulations to the letter, no exceptions, or face the consequences. In broad general terms this means that no building is allowed on raw land other than agricultural buildings on land that is farmed. This type of licence has always been available but many people, Spaniards and foreigners alike, flouted it and what was meant to be a shed suddenly sprouted doors and windows during construction. Existing buildings may be renovated but may not be extended beyond the square metres already registered and most Andalucían ruins are tiny, often under 100m2 so are no good for a four bedroom family house. In addition, some town halls are now making any building licence for renovation dependent on the land being brought back into use as farmland. And if there is no existing swimming pool, and Spanish farmhouse ruins tend not to have them, you will not get permission to install one, other than a temporary above-ground type. And buyers mustn’t think it will all go back to the ‘anything goes’ attitude sometime in the future, it won’t. If you are in the Andalucían countryside and notice helicopters overhead, they are not out on a jolly, they are doing aerial photography to ensure that in future there is a record of what is actually there.

In short, many rural town halls in Andalucía are in a state of suspended animation. In those cases where corruption has been uncovered and investigations are on-going you can assume that no licences for anything will be granted until the courts are finished and new planning laws, PGOU, are in place. Allow several years. Other town halls are in the process of revising an existing PGOU and nothing will be forthcoming until that is complete and that may take a couple of years, start to finish. Others are fine and providing what you want to do is allowed within the regulations you will get a yes, anything else will be refused. Break the rules and you can expect fines and demolitions or even a prison sentence. One notable town hall that does have its new PGOU in place is Iznájar which, because of the nearby lake, Antequera close by and great access to Málaga, became one of the most popular destinations for rural buyers and now it knows what it is doing it is quite safe to buy there again.

So, in my opinion, if you want to be in the country you should ignore any media hype about ruins and renovations and look at existing, well located and well renovated properties with title deeds that are fit for purpose. I don’t see any significant increase in housing stock in the country in the future as I firmly believe that the renovation sector is, apart from a few rare exceptions, dead and buried and there is no over-supply of stock now. So with prices having unwound back to 2003 levels, more or less where they were before the bubble started, buying now in the country could be a smart move.

Who is buying
One of the real strengths of the property market in Andalucía is its broad international appeal and it is not dependent on any one nationality for recovery. I do accept that the rubbish end of the market was dominated by the British and the fact most other nationalities didn’t want anything to do with it in the bubble and most certainly don’t now is yet another reason why an eventual recovery is problematic at that end of the market. But in the case of quality property in the best coastal and inland locations overseas buyers come from a wide range of countries and during 2010 Russians, eastern Europeans, Scandinavians, Germans, Belgians, Dutch and even the British were all well represented and I see no change in 2011. And although many commentators still bang on about the £/€ exchange rate being a big deterrent in respect of the British market I can honestly say I have not had a single British client even mention it as an issue in two years. It is what it is and people seem far more focused on reduced prices than currency movement.

I think there is evidence that some buyers are hesitant because of the state of the Spanish economy. They are concerned that it will drag the market down still further and while I agree that the Spanish internal property market is very exposed to issues such as unemployment, tax rises, loss of mortgage tax relief and what the banks are up to I don’t see the connection as far as the quality overseas market in Andalucía is concerned. Surely, it is more pertinent to consider how the economies from where the buyers come are doing and as the better end of the market has never been overly reliant on mortgage finance it is largely irrelevant whether the banks are lending or not.

Marbella – the final chapter?
The corruption scandal that kicked off in 2006 has finally ended, more or less. The trial of those involved, including three ex-mayors, any number of councillors, planners and lawyers got under way in Málaga in 2010, with a total of 95 people in the dock. The revised PGOU was ratified in January 2010 and operational from May 2010. In the end, 16,500 properties were legalised retrospectively and by the end of 2010 the first few hundred had actually been granted the first occupation licence. Hopefully, the process will speed up somewhat in 2011 but is dependent on the developers concerned paying their fines and there is still uncertainty about what happens if they do not. The deadline for payment is May 2011. Over 1,000 properties remain illegal, the most noteworthy being the occupied apartments at Banana Beach and Casablanca and it’s anyone’s guess what happens to these.

Conclusions for 2011
My conclusions are broadly similar to a year ago when I was quietly confident about the year ahead which in fact it turned out to be even better than I was anticipating. There are good numbers of buyers of various nationalities for quality properties in the best locations and if more sellers price to sell in 2011 rather than price to sit on the market unsold for four years then I expect the number of transactions to rise. Most buyers are cash but the banks are lending to overseas buyers again, subject to status. The lending criteria are what they were before the bubble; 50% or 60% LTV to borrowers who can afford to repay them and who will not be relying on rental income to service the loan. I am absolutely convinced that the market has bottomed in the best locations and although I have heard about one or two quirky transactions, where the buyers wanted a property so badly they paid the seller’s price, i.e. too much, I anticipate prices flat lining for at least another year. I am equally convinced that prices of low quality, poorly located properties, i.e. the majority, have a long way to go yet and that the reductions on offer, already 50%+ from some banks, will gather pace during 2011. Happy house hunting.

© Barbara Wood, The Property Finders