The Overall Market – There continues to be concern at the apparent reduction of buyers’ interest. However, as with the number of agents, there are now so many developments to choose from that though there may appear to be a reduction in the number of buyers, when all are totalled, the actual numbers may not have reduced significantly.
- Let’s get Brexit out the way
As this is being written, we still don’t know if there will be a deal or not. The treatment of UK passport holders in Spain will mirror the treatment of Spanish resident in UK. Fortunately, we do not see the xenophobia in Spain that is reported in UK, but we still may be penalised for it.
Every time there looks like being a deal, the exchange rate ‘improves’, to the benefit of holders of sterling. The ‘rollercoaster’ still has many more rises and falls, and it’s gone up by 5% in the last few days! Many buyers and sellers will be delaying until they know more of what’s happening. Brexit affects many economies throughout the EU and beyond. Its effects will be felt by the world economy, when indicators are already showing the possibility of another recession.
- Cataluña Politics
The situation there is troubled, with the sentencing of the politicians who led the unconstitutional vote. Barcelona has a history of anarchy and there is still a strong influence now, all to the harm of Spain’s national economy.
- Spanish Central Government Politics
The egos of the politicians will not let them govern together. (Does this sound familiar?) Sunday, November 10th will see the fourth election, with cooperation and compromise required thereafter. Politicians of all countries and regions have not been showing in a good light. Property will be affected whichever way it goes.
- Short-term Leasing Control – why is it needed?
Hotel lobbyists have been pushing for restrictions on private lettings. However, neighbours are outraged by tourists behaving in wild, noisy and often offensive fashion at all hours. One lot leave exhausted, and then another party arrives to start all over again. It’s good money for the owner, who ‘price out’ the ‘locals’ from buying, and reduces the number of properties available for longer-term rent needed by those who work in the area. It will lead to the breakdown of services in the tourist areas, as nobody can afford to, or want to, live there.
- Local Authority Control of Rental
The Supreme Court has ruled that Local authorities can –
- Limit the frequency of tourist rentals, preventing them from being all year round.
- Require an identification sign at the entrance.
- The property must comply with minimum standards.
- There must be a 24-hour helpline.
- Owners to provide rental reports.
- Effects on Property Prices
Many second home properties are bought depending on rental, while not being used by the owner, paying the costs of ownership. However, high priced pure investment buying, and costly regulation compliance, make this finance model in danger of collapse. That will see fewer buyers in the middle price level, as lower prices can be bought by cash and the upper market from bonuses or the like.
- New Builds ‘Stuttering’
There is so much of all types of property being built that it is bound to exceed demand. Prime locations always attract buyers. There has been considerable development in secondary locations, as permissions were difficult to obtain elsewhere, and the promoter had money to spend allocated funds.
Now, there is a gradual recognition that there is overbuilding. Difficulties, or desperation, to sell is seen in agents’ commissions to rising to 10% plus 5,000€ euro to the individual introducing the buyer.
Some construction is frenetic, as the contractor wants completion before the finance stops. Others slow down, where finance is linked to sales
- Climate Change – Life must Change for us all
Too many are avoiding thinking about this, as changes will be radical. How will we cope? Flights severely curtailed; beachfront gardens often below the sea; less rain and costs of desalination means expensive water; not enough power to charge the cars and other equipment after the change from oil, gas and our beloved log fires. Governments will charge higher taxes to compensate for lost fuel tax; etc, etc.
Change must be within 10 years. Certainly, as valuers, we are having to consider how the market will change.
- The Good News
Despite the uncertainties and inability of individuals, families and businesses to plan, the sun still shines and warms. This is the climate and lifestyle we enjoy. The world, physical and economic, will change radically, but we will handle them and continue to ‘live the life’.
While it is true that the hotel lobby wants to see this regulation, so do neighbours. I purchased my unit in a residential building, not a hotel and the one remaining legal tourist rental in my building, which was grandfathered, is still a nuisance, as were the other illegal tourist rentals that we managed to get rid of. Sadly, Barcelona and much of Spain is a magnet for drunken tourists, many from the UK, who are disrespectful to neighbours, litter to common areas, vomit in the stairwells and worse. One time the police were called and ejected 70 people from a raucous party in one tourist rental in our building. That was enough to make our mostly elderly and conservative neighbours into activists. With a little cooperation from the websites that make money from tourist rentals, such as implementing a “neighbour hotline,” this could have been prevented. But those companies have been terribly uncooperative and I’m glad that regulations are in place. And in Barcelona, I don’t think you can find one person who says that we need more tourists.
Part II to follow.
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