New research in the US by the real estate portal Zillow.com on the relationship between asking prices and lenght of ownership reveals that vendors who bought since the bubble burst are asking the highest prices – useful information for bargain-hunters.
Zillow found that vendors who bought in 2008, after the housing crisis had blow up and prices began falling, are asking 16pc more than vendors who bought before 2006.
The blue line in the chart above shows, by year of last purchase, how much asking prices are above market prices. Vendors who bought around the market peak in June 2006 or before have the most reasonable expectation. But vendors who bought since , especially in 2009, are asking much higher prices for similar properties.
The green line shows the difference between the current asking price and the former purchase price, in other words, the profit or loss. It reveals that vendors who bought between 2004 and 2009 are prepared to sell at a loss, whilst those who bought from 2009 onwards are trying to make a profit, asking higher prices.
“Sellers who bought during this period are pricing around 20% above market rate,” explains Zillow. “Not only are these sellers ignoring the losses they have taken since purchase, but they’re trying to claw back all of their closing costs too it seems!”
“Sellers who bought post-bubble seem to think that since their home purchase occurred after the peak of the market, and thus home values were already significantly discounted relative to the peak, the seller escaped the worst of the bubble. The problem is that “The Bubble” didn’t pop so much as steadily deflate for the better part of 5 years now, and current home values now represent what they were worth in 2003. Said differently, assuming your market followed the national trend, unless you bought your house before 2003, you should be selling it at a loss now. The closer to 2006-2007 you bought, the bigger that loss should be.”
If the same were to apply to Spain, you would have to look for a property that last changed hands back in 2003 or before, preferably from a British vendor likely to benefit from the weak pound.
The problem in Spain is you have to have cash, as you would struggle to get financing from a bank to buy a resale property from a private vendor. You are more likely to get a bargain buying from one of the banks or cajas, which are keen to shift some of their growing stock of properties, much of it built at the peak of the boom.