The coronavirus price discount forecasts from the property industry in Spain have been pretty modest so far. This one, from the President of the Remax real estate agency network, talks about a coronavirus discount of up to 20% this year.
Javier Sierra, President of Remax in Spain, a real estate agency franchise with more than 150 offices around Spain, forecasts that both sales and house prices will decline by between 10% and 30% in 2020. Banks are typically forecasting a decline of around 6%.
This is one of the most negative forecasts from someone in the industry I have seen since the crisis began, and comes from a player who can draw on a large network for information.
In an interview with the Spanish property portal Idealista, Sierra makes the point that price discovery takes longer in the real estate than other markets, which delays the price adjustment needed to bring together buyers and sellers.
“We mustn’t forget that the real estate market takes time to adjust because sellers need time to find out at what price they should sell at, and the same happens to people who need to buy,” explains Sierra. “But in the end, in the medium term, what will happen is that this year there will be fewer transactions, between 10% and 30% less, and therefore house prices will adjust according to [local] markets; at present we expect an average fall of between 10% and 20% this year.”
The lack of price transparency in the Spanish property market means that you can find some spectacular bargains in a crisis, alongside a lot of properties that are priced to never sell. Overall, however, risk-averse buyers and sellers take a long time to adjust their expectations because nobody really knows what the market prices is. This drags out the distress, and means the Spanish property market takes longer to come to terms with reality than other more transparent property markets where buyers and sellers can check actual sales prices online for free.