31 May, 2020 @ 17:48
1 min read

Property boss in Spain predicts up to 20% crash in house prices due to coronavirus crisis

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A SPANISH property boss has predicted house prices could crash by 20% this year because of the coronavirus crisis.

President of the Remax real estate agency network in Spain, Javier Sierra has forecast that house sales could plunge between 10% to 30% with corresponding ‘coronavirus discounts’ having to be offered by sellers.

Most property forecasts have predicted more modest price reductions, with banks generally anticipating a 6% drop, while other predictions – including from the EU – are around the 3% mark.

Sierra, boss of the estate agency franchise which has more than 150 offices in Spain, gave the extremely negative forecast to the Idealista property portal.

Javier Sierra
NEGATIVE: Javier Sierra thinks property prices could crash.

Sierra told Idealista: “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.

“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 markets; at present we expect an average fall of between 10% and 20% this year.”

But the Olive Press’s property commentator, Adam Neale, is unconvinced by Sierra’s gloomy assertion.

He said: “I would equate trying to forecast what is going to happen with trying to predict the score in a world cup final – extremely unlikely to be accurate and at best a wild guess.

“Such predictions are unhelpful since they do not reflect facts on the ground. My wild guess is much more accurate since it is based on experience. The last financial crisis did not see a blanket reduction in prices but rather a random pattern based on location and circumstance.

“Prime locations held their prices to a large extent, an obvious example being beachfront locations where there is a limited supply of property compared to non-beachfront property which is in a huge supply.”

He added: “I would say at present most buyers are looking for discounts between 5% and up to 15%. Some owners based on circumstance are willing to trade but the majority are not, so expect discounts of 5% to 10% at the most. If the situation worsens then we may need to revisit these figures.”

He said: “Whilst there are negative pressures on prices as a result of the pandemic including restrictions in travel and unemployment, there are also very positive factors.

“Property being viewed as a safe haven for investors and lifestyle changes away from cities are a couple of examples.”

Neale explained that demand measured by enquiries is up not down. He said: “People want to get back to normal as soon as possible but not just what they were doing before.

“A home in the sun is an appealing addition to a new normality for many and a good alternative to flying to a different destination every year.”

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