Is the bottom behind us?

LAST UPDATED: 8 Mar, 2014 @ 12:50
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Is the bottom behind us?

WITH average house prices across Spain now close to the same level they were a decade ago, the jury is still out on whether the property market is still suffering or slowly recovering.

According to Spain’s Ministry of Public Works, house prices nationwide have fallen by 29% from their all-time high, making today’s average per-square-metre price for homes, currently around 1.500€/m2, about the same as back in 2004. Other sources estimate the drop to be as much as 50% since the bubble burst in 2008, leading many to wonder how much lower they can go.

Some experts are now cautiously expressing optimism 2014 may be the year that Spain’s real-estate market starts to turn around. While national demand remains stymied by the difficulty in obtaining finance, uncertain economic prospects, and the fact that average prices are still beyond many Spaniards’ reach, foreign buyers – both on an individual and institutional level – are making up a growing share of sales.

Over the last year, overseas investment funds snapped up the real-estate divisions of some of Spain’s biggest banks, such as Banco Santander, La Caixa, and Bankia, and now plan to sell their portfolios by ensuring prices are as competitive as possible. At the same time, foreigners accounted for more than 15% of all sales nationwide in the third quarter of 2013, a jump of four percentage points over 2012.

A report released by Bankinter, the country’s tenth-largest bank, in December forecast that, after a particularly bad year in 2013, sales should start to pick up in 2014 and 2015, although prices could still fluctuate. Premium areas, like Madrid, Barcelona, and the Costa del Sol that have limited supply and attract affluent cash buyers will likely be among the first to recover.

In the areas we cover, like Marbella, Estepona and Sotogrande, we have started to see signs of a recovery, at least in terms of activity. Viewings and transactions by foreign buyers are up and some vendors, especially in sought-after areas, are becoming more confident about achieving their asking price. As the sales cycle of a second-home market is slow, it will take at least another 12 months to see if this constitutes a real trend.

Spain’s fortunes have never been a reliable barometer of property values or of the market in prime locations, especially Marbella. Most of our clients hail from Northern Europe and many are not dependent upon a mortgage to buy a home in the sun. They are looking for properties that offer the kind of lifestyle they want, whatever happens with Spain’s economy – which, according to the government, grew by 0.3% in the last quarter of 2013, for the first time in six years.

If the market in the Costa del Sol continues its current trend, we may look back in a couple of years’ time and see 2013 as when the bottom was reached. Without the help of a crystal ball, however, we shall just have to wait and see.

29 COMMENTS

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  1. I’m sure many readers of O.P. would appreciate expert opinions on real-estate values/prices. But is an estate agent/agency the most appropriate “expert”? Might not he/they have their own axe to grind? Admittedly it’s difficult to think of a disinterested “expert” but perhaps a pinch of salt might go well with this latest idea?

  2. “They are looking for properties that offer the kind of lifestyle they want, whatever happens with Spain’s economy”

    Nonsense. So people are still going to purchase in Spain, even if taxes rise and laws become even more stricter? The economy very much does affect buyers, and it affects rich buyers even more, since they have more to be taken away by the government and tax authorities. All of these fools from Russia and China purchasing in Marbella with a “golden visa” are falling into a classic trap. Estate agents who only use one area, i.e. Marbella, as a property barometer know nothing about Spain’s property market as a whole lol.

  3. Articles led by agents always have to viewed with a very large pinch of salt in Spain.

    A strange headline article ‘Is the bottom behind us?’ well yes our bottoms are always behind us, should have been worded ‘Is the bottom of the market behind us?’ Lol

  4. I have not read the entire article above but when you see the prices that some properties are going for I think they are at or around the bottom. Having said that Spain has a big problem with all their bad news of knocking houses down, land grab etc so even when there is more money to spend will people be coming to Spain to buy their holiday homes? I doubt it, France, Portugal maybe, not Spain.

  5. In your dreams. Yet another case of wishful thinking from someone who needs to get real. The main news headline coming of out of the Spanish property market is EXPAT HOUSE DEMOLITIONS – small matter of. This is going to hang over the Spanish property market like a very bad smell and until the Junta de Andalucia engage their brains and have a full amnesty, prices and demand will continue to plummet. Spain needs to get its act together fast because Portugal is cleaning up in terms of tourists and property investors.

  6. Yeah right. Wait until “Inside Out” hits the TV screens on BBC1 (East) next Monday at 20.30. It’s yet another TV programme that features some of the thousands of expats whose houses are on the verge of/have already been demolished. It doesn’t matter that these condemned houses are “inland” and not coastal, it still puts people off Spain full stop. These bad news stories are all over the UK press and no doubt Chinese and Russian newspapers as well. Great stuff Junta de Andalucia, keep it rolling.

  7. Nothing will ever change until/unless the central government finds the wherewithall to demand from the regional Junta’s that they get their respective houses (no pun intended) in order.

    I live in the campo and even now, after all the issues of illegality have been splashed around the media, I see houses still being openly constructed. And it is patently obvious they have no permission. Agents from the Junta de Andalucía drive by almost every day and completely ignore these builds.

    Five years ago, a local goatherder gained permission to build an animal shed in a prime location overlooking mountains with south facing views. This ‘goat shed’, now has a swimming pool, extensive landscaped gardens, satellite tv and solar panels. I happened to mention it to the local mayoress one day. Her response?. “No tiene nada que ver conmigo”.

    Some naive ex pat will come along in a couple of years flashing the pasta thinking that because Spain is in the EU somehow British property laws apply here. And so the merry go round continues.

    So despite Rajoy’s declaration on Monday night on Antena 3 that “hemos salido de lo peor”, nada ha cambiado Sr Rajoy.

  8. Why don’t unhappy British ex-pats simply leave Spain, and leave Spain to their problems. Repatriate to their beloved United Kingdom haven.

    Also answer this; Why can you tell who’s Spanish and who’s British a mile away?

    We are so uncultured. A total embarrassment.

  9. Julie, not everyone wants to be defeatist like you are. Some want to complain and demonstrate, and fix Spain’s problems. After all, we are taxpayers, so are we not entitled to complain? What Spain really needs is for people like yourself to depart asap because you will just sit on the fence and change will never come.

  10. So you’re proactive but you tell people to give up and go back? That’s really proactive lol.

    People who have moved to Spain have made a considerable investment in terms of their time and money. It is not always a matter of “simply” going back to the UK. People have homes, businesses and other comittments e.g. children in school, legality issues, taxes and many other things, and yet your supreme logic says they should just “simply go back”. Don’t make imbecilic comments Julie and please lose the chip on your shoulder about Brits.

  11. What part of demolishing people’s houses is “cultured”. The Junta de Andalucia are not very “proactive” either are they? Unless demolishing houses is part of a long term job creation scheme. Many of the people affected (mainly Brits) would like to leave Spain or simply move house but they can’t because their properties are virtually worthless and impossible to sell. The Junta have the power to bring an end to all their problems tomorrow but they choose not to. Of course people are going to complain when they find themselves in an impossible situation (that could so easily be resolved) through no fault of their own. Or is there a law against that as well? Most of them belong to pressure groups and have been on numerous demonstrations but the Junta are hell bent on going ahead with the bulldozer. If anyone should be “embarrassed” it should be the Spanish for presiding over such a spiteful and non-democratic regime. What do you think these people should do, shut up and say nothing? Would you?

  12. Julie, forget it. Being pro-active on this thread for some is constantly complaining about what’s wrong instead of being part of the solution. I get your original comment about unhappy expats was a sarcastic jab that people took, twisted and ran away with. Next time put a fake lol behind it and all will be right with the world. LOL!(see)

  13. @Christine…..Being part of the solution IS having the spirit to seek and demand improvements. That is NOT the same as “constantly complaining”. And since we are (or should be) taxpayers then that gives us the moral right to do so in the face of politicians who are constantly demonstrating immunity in having to acknowledge the plight of house owners (ex-pats AND Spaniards) who face the Junta’s intransigence. That is what this thread is about, real estate hype driven by political rhetoric.

    That is a world away from the keyboard warriors that blight some OP threads with their constant negativity of life in Spain, their chosen destination.

  14. Fred,
    I thought your post on the 23rd nicely encapsulated the whole Spanish experience that far too many know all about.

    I was fortunate in that my professional experience meant that I would never ever have bought a Spanish built house. For us it is the lost time which can never be replaced at any cost.

    If only there had been programmes like the Dutch and Germans broadcast to warn their people about the reality of the corruption in Spain then I would have taken an extended vacation to check out the facts and would have come directly to France.

    Here the French like adventurous house designs especially alt. energy ones and I would have had some very profitable years of constructing before retiring – esta la vida.

  15. Hmm, so Christine says we should all keep quiet and complain about nothing, and Julie says we should be “proactive” and just go back home. No wonder Spain gets away with such appalling treatment of people. They just love people to behave like Christine and Julie. Hear no evil, speak no evil…

  16. Once again twisting words to suit your argument Fred. Please get your facts straight. If anything you should know by know I never sit by idle- say and do nothing. I am and always will be active. Funny when I previously posted about getting involved (on other topics like education , etc…) it falls on deaf ears but my goodness talk about being able to watch tv and the likes and hold back the masses.

    @Brian I agree with you on having the spirit to ask for and seek changes; the problem I have is folks who come to the table with problems/complaints but no talks of solutions.

  17. Christine, your response is always that your replies are being twisted and manipulated – give it a rest. Looks who’s moaning now lol. Anyway, we do have solutions and most expat residents that I know are constantly visiting their town halls with ideas and suggestions (I being one of them) except it’s a total waste of time since it’s like talking to a brick wall. Not even very simple things can be achieved when there is no will to implement them. People need to complain more, in fact that is something the Spanish have lost, perhaps because of their young democracy. The Spanish need to complain a lot more.

    So tell us Christine, should people just go back home, or should they complain and fight for change?

  18. Going back home was great for me but I appreciate when you cannot sell your house or business it cannot be done. I took my kids out of the useless school there and now they are doing very well here in the UK, grammar school etc. One came home with his mock GCSE results the other day, several A* grades, A’s and B was his lowest result. I earn enough to have private tutors in for 4 hours a week, we are thinking of A levels now, then uni, for me at my stage of life it was a great decision to leave Spain many years ago and I may come back to live in another 15 years or so but I am in no hurry and do not like the corrupt ways. Staying in Spain for me was the same as having shares in a Company that is going downhill and just holding on to them hoping they can turn it around whilst seeing the value slide. I am happy I have you lot fighting for me though and I hope you can turn it around so I can sell a place over there! Fred is right though, it is like hitting your head against a brick wall. With the climate Spain could be so much more than it is, a retirement home.

  19. I totally agree with Fred, Brian and Reap, and yes, it could all be so very different. Spain is like one great big wasted opportunity – if only the authorities could see the potential. We will of course carry on campaigning to get workable property laws which is the only thing that will revive the housing market in Spain.

  20. We are so digressing from the blog post but I must address this.
    Fred, my response is ALWAYS “my replies are being twisted”. I think you may have confused me with someone else. Now if you would read objectively for a moment(try at least)I said that once and it was earlier in this thread.
    Also where did I say we should all keep quiet and complain about nothing? Please I would like to know because that attitude is never on my agenda. What I do believe in is coming up with solutions not just moaning about how xyz is 123 and how horrible a place this is and no other place has such problems.
    I always question those that do nothing and yet continue to complain and trash, please why do you stay?

    Fred, I take it you are back living in Spain. I may be mistaken but I thought you said you were glad you left a few months back? anywho… really no need to respond to that,if your here your here.

    So going back to my original response to this post, that this was a BLOG post not a news article. A blog is about opinions and musings of the author. This author is in real estate so guess what the view is going to be…geez!

  21. Christine, firstly I’m glad you agree that we need to keep complaining and I stand corrected if that’s not what you implied. I’m not trashing anything, I’m telling it as a I find it. I am resident in Spain, currently, but I also live abroad for a large part of the year. I can assure you that I don’t “do nothing”, I am very busy in my community and hassle the authorities big time to get things changed and to make the town hall aware of problems and issues. How is that trashing Spain? So, you still very much have the wrong end of the stick Christine. I think you’ll also find that Spain is trashing its own country and people very well and that expats are the least of their worries.

  22. It would be interesting to discover what percentage of ex pat’s (of all nationalities) actually take the trouble to vote (in the limited way we can). I would venture to suggest it is very little. And that, fellow posters, sums it up. Just like in the UK, they moan about all and sundry but do sod all about it in a constructive and positive way.

    And that, combined with the traditional Spanish reaction to the insurmountable bureaucracy and prevarication (así son las cosas), is why the real estate sector is almost comatose.

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