All the good property is going, going, gone says Alberto Prieto, the new head of Knight Frank in Spain.
Increasingly, all that’s left of Spain’s property glut in places like Madrid is the “difficult to sell stock because technically they are the worst homes and they will have to drop prices to sell,” said Prieto, quoted in the Spanish press.
The best time to buy was a year to a year and a half ago, thanks to a “combination of prices and supply,” says Prieto.
Almost all new developments are now in the hands of banks, who tend to price to sell. “When a bank decides to sell a promotion it tries to do so as quickly as possible to avoid competition from other banks, so it applies a big discount hoping not to have to adjust the price again,” explains Prieto. “If the discount isn’t good enough to sell, the risk is sales get paralysed by another bank selling cheaper.”
Prieto forecasts it will take another 2 to 4 years to sort out the financial crisis, and that home sales will not recover this year “because the product being left behind is commercially unviable.” The only way to increase sales is to start building again, argues Prieto.