Ah, the dark art of long-term forecasting.
Well it’s very unlikely that anyone will turn to me 15 years from now and accuse me of having been horribly wrong so I’ll have a go.
Long-term I’m very optimistic about the Spanish property market. Let’s face it Spain’s comparative advantages are quality of life and climate. Changes in Europe (integration, labour market mobility, English as the linga franca, disappearing borders, etc.), changes in travel (low cost carriers, regional airports, high speed train links), and changes in technology (internet and other communication technology) will unleash Spain’s comparative advantage and mean that many more people from the North can live and work in the South. It’s no secret that many people who live in the North want to move South, but for many reasons that tie them to the North they can’t. I think these barriers to movement will drop, for the reasons given above, and in the long-term that will deliver a huge pool of buyers to Spain. In the long-term many of the North’s wealth creators will move South, and Spain will be the biggest beneficiary of this trend. And they will all need properties to live in.
There are some variables that could knock this theory for six, for instance:
– Europe falls apart.
– Energy crisis that undermines the ease of travel
– European welfare states can’t cope with pension obligations
– Government ineptitude
– Etc, Etc.
So much for the long-term.
In the short-term I take a very different view. I am in a unique position in that I both research and study the macro figures whilst at the same time many individual buyers contact me with their experiences and opinions (just in case anyone is wondering I have absolutely nothing to do with selling property). This unique position gives me a unique view. My feeling is that there will be choppy waters in the short-term, though it will not affect all areas of Spain to the same extent. The biggest problems will be in those coastal areas that depend upon second home buyers (2nd homes are a luxury, 1st homes are a necessity) and where housing starts have exploded. The property market in those areas could hit a wall, and maybe even fall.
It’s a bit like the internet boom. In the short-term there was boom and bust due to over speculation. But in the long-term who doubts that the internet is going to be huge? I can see similarities in the Spanish property market.
But I could always be wrong! And you could grow old in the cold and rain trying to second-guess the Spanish property market.