Middle Class Market Slowest to Recover

holiday rentals in llafranc cataloniaWhile wealthy foreign buyers are scooping up undervalued luxury homes in Spain, the middle of the market continues to suffer from the remnants of the property crisis, a new report suggests.

The majority of sales in recent months have been either luxury sales above €500,000 or homes at the other end of the scale, priced below €100,000, reports Alfa Inmobiliaria, an estate agency.

Alfa says sales have picked up in the last six months, but only in specific sectors. Most are cash buyers or buyers who need little financing and can move quickly to take advantage of low prices.

But with financing still difficult to find, the middle-class can’t buy in their traditional price bracket. Ironically, it’s easier for wealthy buyers to arrange financing, even though they may not need it, thanks to their healthy balance sheets and creditworthiness, the agency notes.

Sales are also picking up in houses priced below €150,000, where small investors with cash see real estate as producing better yields than cash deposits in banks. Over the long term, these small investors view property as a safe bet that has always delivered good returns to those who buy at the bottom of the market, the agency says.

The hardest properties to sell are priced between €250,000 and €500,000 and range between 100 and 200 square metres in middle class urban areas, due to the supply overhang and the difficulty of getting financing, the agency says. With many homes on the market, buyers can’t get financing, and sellers are unwilling to reduce their prices to a level where there is demand, the agency reports.

But Alfa sees improvement in the market and believes the recovery is starting to impact the middle of the market, as more international funds and investors move back into the market.


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