Upmarket house prices to fall as much as 30pc in coming months, forecasts agent

Illa del Mar, Diagonal Mar Barcelona, in the Sant Marti Poblenou district, where foreign money has had a big impact on house prices
Diagonal Mar Barcelona, in the Sant Marti Poblenou district, where foreign money has had a big influence on prices

The upmarket real estate agency Barnes International, with offices in Spain, forecasts that house prices will fall as much as 30% in coming months as a result of the coronavirus pandemic.

First established in France, Barnes has Spanish offices in Marbella, Madrid, and Barcelona, where it started it’s expansion in Spain. In Barcelona, deals done in September were closed with discounts of 10% to 15%, report Barnes, based on their own sales. Prices at the high end do not go above 7,000 €/sqm in current market conditions, they say.

“Price declines are inevitable in the next few months, given the context in which we are living,” says Emmanuel Virgoulay, from the Barnes office in Barcelona, quoted in the Spanish press. “In fact the only way in which Barcelona in particular, and Spain in general, will become attractive again [to foreign investors] from the perspective of housing is if prices decline, adjusting to the current reality of the market, and the financial capacity of demand.

Barnes are arguing that prices in upmarket segments of locations where foreigners make up a significant share of the market, for example Barcelona, Marbella, and the Balearics, will have to adjust to reality without foreign investors, at least until the Covid-19 pandemic is behind us. That will have a depressing influence on high-end prices in those areas.

Virgoulay points out that “primary home buyers will not pay above market rates, whilst investors are waiting for bargains that have not yet emerged.”

Thoughts on “Upmarket house prices to fall as much as 30pc in coming months, forecasts agent

  • An agent who thinks it is news that “primary home buyers will not pay above market rates” doesn’t appear very switched on. Who pays above market rates anywhere?
    On the other hand to for at a drop in prices (primary residence prices? Second homes?) of 30% is simply irresponsible, without the slightest evidence to back what he is saying.

    • Evidence is clear, hundreds of overpriced resales everywhere, been on for years, no one being realistic , the market will dictate what prices are reasonable, as in UK, house prices can and do drop, those that are overpriced don’t even get viewings here so what makes vendors think Spain is different 🙄🙏

  • All Agents are well aware asking prices are ridiculous, just look at asking prices in for resales in say, Archidona, and around Andalucia in general, same places on market for months if not years , no one waking up & realising that no one with a brain , common sense or a serious buyer is going to pay for grossly overpriced houses !
    Until Agents stop letting vendors actually believe the prices are all unrealistic the market will continue to wither and eventually only sensible offers to those who are serious vendors will prevail.
    We have seen and continue to see same tired properties month on month, year on year with absolutely No reduction, those that have are small reductions on what was originally a crazy and, let’s be honest, a sheer greed asking price.
    What with unfettered Squatters Taking over holiday homes and no Govt action against them the market will continue to fall, it’s only just begun, so, you vendors, get real , no one is going to come to your rescue and pump up your pensions, your property will simply remain unsold, tired to the point no one will even contemplate an offer, so many are at least € 50- 90000 over priced.
    Sit there and wait, your obviously not in a rush or serious to sell , take your places off the market and stop clogging up the Agents windows, they too are in denial , more photos in their windows make them look busy , they only have to sell one or two a year anyway, they’re not doing you any favours, give you inflated prices and then vendors think they’re being screwed when Sensible offers are made , Catch 22 !

  • I agree with Christopher C, but would go so far as to say the person from Barnes hasn’t got a clue what he is saying really , he obviously believes in his own publicity but with nothing to back that up.

    • I live and work in Tenerife, and we have not seen any great reduction across the board in asking prices, which may be surprising to some, although when looking at the property market in the UK, property there is in a similar position and prices in many areas have actually risen during the pandemic as opposed to going down.

      Having said that, there are some properties available for purchase, where the asking prices have been reduced to levels that make them very attractive for an investor, but this is the same in a normal market.
      Currently, there is a great deal of pent-up demand from people who wish to buy a property here in Tenerife where the total deaths from Covid-19 since the beginning of the pandemic are less than the UK is currently experiencing on a daily basis.

      This demand should not be underestimated, and although travel restrictions and continuing worries about the coronavirus are stopping people from travelling in any great numbers, sales are still being made right now, and in six to twelve months’ time, the demand from all those people who wish to buy a property as a bolt hole in a safe haven away from the cares of the rest of the world, will keep prices stable, and may even push them higher.

      I agree that it is irresponsible to talk the market down at this moment in time, as that serves no useful purpose and what people need right now is some optimism for the future and not pessimism.

      • Not irresponsible to correct market, more irresponsible to allow vendors that all is well, it’s clearly not , putting ones head in the sand simply because you can’t accept that a very overpriced market is stagnating is not helpful to anyone.
        Agents are to blame , promising unrealistic prices to over ambitious vendors who bought years ago , in a boom, it’s simply unsustainable, one can lose out in house prices anywhere but more so in a country where the reliance on making huge gains is now well and truly over .
        I’m not talking prices down, as in UK if over priced it won’t sell, of course, if not in a rush or really serious one can of course sit and wait for years , but beware, Internet can clearly show those same houses for sale year on year , then one thinks, apart from price what else could be wrong with it as hasn’t sold for so long ?
        For information, now in UK prices after few weeks are seeing reductions, haven’t seen Any reductions in Andulcia , instead more overpriced and in quite a few instances , overpriced absolute rubbish .
        Dream on Expats , it’s reality time, the days of selling for huge profit are over , no one is going to help you scuttle back to UK or increase your Pension pot , Those Days are well and truly Over 😱

      • I don’t know if it is responsible or irresponsible for an expert to give his opinions but cannot agree with the fact it serves no purpose. People may look for expert opinions in order to make their own and act accordingly. When you say people “need right now some optimism and not pessimism”, I believe that people for you is equal to owners/sellers rather than buyers. As a potential buyer who plans to seek for some property in Spain, this expert’s opinion makes me rather optimistic.

  • It’s going to upset anyone already living in Spain but the fact remains vendors are being totally unrealistic in they’re asking prices , who with any common sense would not realise after many months or years that possibly the asking price is rather over ambitious?
    Of course house prices are going up in UK but it’s a much smaller but over populated island , unlike Spain which has thousands of unsold properties laying empty because of over supply which has been and still is going on !
    Many expats rally to defend prices etc only because they have been used to buying and selling in the good old boom years, now that reality has begun to set in they simply refuse to accept the fact the easy money has stopped , and for quite a while to come !
    A fact, a house we wanted to buy just over a year ago was sold to others , we had flown out specifically to view as the ‘Agent’ knew , called us in the afternoon that house had sold, we weren’t even given the consideration to be asked if we wanted to counter the offer of the full asking price which we wouldn’t have anyway as over priced.
    Now, that same house is back on market for €8000 more than over paid just 18 months earlier , needless to say it will languish on the market for a long time .
    So, another silly expat pays over the odds only to try to sell for more in less than two years for more money , that’s what buying in haste does, easy to buy, not so easy to sell !
    They’re welcome to it, when prices drop to sensible levels and ‘Agents ‘ remove their 5+ % commission maybe, just maybe houses May sell ?
    We love Spain, visited countless times, many friends there , like coming home when we are there but it’s simply greed of agents and vendors that have put us off 😞🙏

  • Diane Dewhirst says:

    Agree with comments above….this article is scaremongering at best and serves no purpose given the current anxiety levels of the population in general. In my area of the CDSol property is holding it’s own particularly for properties with outside space, gardens, pools etc brought about by the Lockdown and people’s desire to find homes with more space etc in these uncertain times. Two agents I spoke with confirmed buyers are out there and keen to purchase and no immediate price drop as suggested by this article.

  • Its is interesting to read the comments from Vernon about Estate Agents not pricing the properties correctly, I am an estate agent in Fuerteventura and we do not take over priced properties on , we actually value the property for the owner and if their expectations are unrealistic , we simply tell them that we cannot sell the property for that price. Most owners take our advice.. Our approach is simple there is no point in having a property that is unsalable.
    As Bruce mentioned from Tenerife the market is relatively buoyant at the moment given the current circumstances regarding COVID and restrictions on travel , we actually have clients who have purchased over the phone with personal video meetings in the properties , we have not had a rush of owners who are selling coming to us to reduce their properties because there is no need .
    The person who made the comments about a 30% drop in the market I do not think has studied the market very at all and considered the drivers nor wa he around in the last financial crises I do not believe otherwise he would make more statements of fact.
    Here is why i believe we are not going to see huge drops in the market.
    Firstly many today are looking for lifestyle changes and to get out of big conurbations and looking at properties that offer more space , COVID has made people evaluate their lifestyles.
    The most important point stems from the last crises when the property prices were driven by the need for the banks to obtain liquidity, they had no money , they had repossessions coming out their ears both private and commercial and developers .
    This stemmed from over lending at 100%+ LTV they repossessed so many properties through non payment and inability to pay, they sold them at huge discounts just to get money in .
    Then they addresses their lending criteria and max people could generally get was 60% LTV and the buyer had to fund the purchase costs etc.
    So basically the people that purchased these properties bought them cheap and most without loans but even if their was a loan the payments / borrowing was low, so today there is no pressure on the sellers like there was in the past . Last crises if someone wanted to sell / needed to sell they had to match the lowest price in the market.
    So the dynamics of this COVID driven question is totally different from the last crises, they are just not the same .
    I have simplified this answer otherwise I would be writing all afternoon and before you say a but you are not going to get sales at a full price.
    I know some owners are going to discount because of personal circumstances and of course wriggle room just to get a sale over the line, but this is normal trading .
    We are not going to see huge drops across the board in pricing not at the levels described in the article.

    • Vernon White says:

      Not wishing to be offensive but at my age I’ve probably watched the market close up over quite a few years, more than likely far longer than you’ve been an Agent .
      I can tell you that over those many years , looking at Mijas, Iznajar, Denia, Archidona, and other places most interested in, because friends in all, that the most overpriced and No reductions in years in most cases has been Archidona, Iznajar and around Denia .
      Possibly as only one Agent who seems to have a monopoly on two of those particular areas.
      Our experience is that ask any pertaining questions re any property and the ‘Agent’ never seems to have any answers, don’t appear to know much about property they’re selling .

  • I’m not sure about the other parts of Spain, but here in Barcelona, it’s crystal clear that there’s a huge amount of unrealistically priced property. Outside the city there are homes that have been on the market for over 5 years without a significant reduction. Now there seems to be a bit of a wake up call, and some people are coming to their senses and realise that it’s going to be now or never.
    BTW I’m a data scientist, and recently did some analysis of the Barcelona property market to look at the possible price effects of differnt types of facilities in each area. Perhaps someone will find it interesting https://gulliverhandley.com/data-science/barcelona-property-analysis/barcelona-property-market-analysis-is-the-bar-on-the-corner-affecting-property-prices/

    • Mark Stücklin says:

      That’s fascinating Gulliver. Thank you for that link.

      Why are there so many unrealistically priced properties on the market? I’ve written about this several times from different angles, though I might tackle it again head on. It all flows from the lack of price transparency because the Spanish authorities don’t allow sales prices to be published as in other countries. When buyers and sellers don’t have a good anchor on prices, asking prices start detaching from market realities. It’s terrible for the market, increases risks and costs, and ultimately has a huge negative impact for Spain. On the other hand, the lack of transparency is good for those with better data. It makes information very valuable, and can give you a big advantage. This website is all about information.

      • Yup, that makes a lot of sense.
        Do you think there’s any desire for more transparency from above?
        I guess that greater transparancy in sales would also make the crazy over supply of property in less desirable areas even more apparent. I guess a smart government could take advantage of the move towards remote working to incentivise people to perhaps choose larger properties further away from cities – which would probably have a large impact on people’s quality of life – BUT at the cost of city prices.
        However, I think from the current talks with the government and the unions, it looks like they’re looking just to push people back to offices and try and keep things how they were.

        • Mark Stücklin says:

          Do I think there’s resistance to transparency from above? I doubt it. I think it’s just typical incompetence and inertia in the system. The legislators in Spain are too low grade to work out the problem or do anything about it, and anyway, they won’t win more votes campaigning for more transparency in the housing market. At the same time left wing populists like Ada Colau & Podemos aren’t interested in solutions, just in finding scapegoats, and keeping the poor dependent and grateful. There’s no strong lobby for greater transparency, so we just have to live with it. I’m not sure remote working will be such an opportunity in Spain, because the economy is lower down the value chain.

          I might write a short post drawing attention to the article you wrote. Hope that’s okay with you.

      • Vernon White says:

        Yes, that and the obvious fact a lot of Agents give the impression to vendors that they’re properties are worth a damn more than is at all realistic , then after no views they still stick tight , thinking that any more realistic offers are not realistic themselves , as one comment re Barcelona states, totally unrealistic asking prices but vendors simply don’t understand, that , or in the case of a lot of Brits , need they’re Pension pot topping up or looking toward Care home fees of the future, or of course as in most cases, simple greed 😱

  • Oh for Transparency!
    As I said earlier , it’s only because I keep a very close eye on the market that I found a house we liked sold 18 months ago only to be back on market €8000 more, have prices suddenly jumped in Archidona or simply just another taste of greed!

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