Property prices in Spain are falling, have further to fall and are currently crippling the market, according to the majority of commentary on the Spanish property market at the moment. This is creating a stalemate situation that is preventing buyers from entering the market, and creating an opportunity for landlords as the demand for rental accommodation rises.
On top of these findings and general opinions held by commentators on the market, the news relating to the housing market in Spain has been dominated this week by the fact that those affected by the collapse of Compañía Inmobiliaria Masdevallia need to get in their claims for compensation as soon as possible.
This month’s Spanish property update focuses on falling prices, rising opportunities and what you should do if you have been affected by any of the property companies that have collapsed in Spain.
According to Kyero.com, experts on the Spanish property market, average prices for property in Spain have fallen by about 6.5% in the year to October, and according to Reuters, this decline will continue throughout next year with an annual fall predicted in the region of 9% in 2009. These figures are in line with a fall in consumer demand which has really dropped off in recent months as a lack of mortgage financing has hit Spain, just as it is affecting the UK.
Those who want to enter the market are being prevented from doing so – still more are biding their time, aware that the market has nowhere near bottomed out just yet. In fact, if you listen to the findings from property consultants Aguirre Newman, prices in the main urban market need to fall a further 23% before they come back in line with median consumer affordability.
On the negative side of things this means that the market is in a state of decline as buyers are clearly conspicuous by their absence, but on the positive front, those who have second homes in Spain could be about to profit from an upturn in rental demand. Traditionally Spaniards have preferred to own their properties with a very low 7 – 8% of the market choosing to rent, however all this is about to change as buyers stay away from the market and are forced to rent instead.
The state of the market is also good for would-be buyers who have the cash in hand with which to secure a purchase. They can look at the market predictions, make offers accordingly and buy in now whilst developers and vendors are incredibly keen, (read ‘desperate’), to sell. Of course if you take this approach you do need to be careful. You need to make sure that any private seller has the legal right to sell and that any outstanding debts on the property are identified and the responsibility of the vendor. You do not want to inherit someone else’s unpaid mortgage. Second of all, if you’re buying from a developer who is keen to sell you need to make sure they’re not on the brink of bankruptcy.
Talking of bankruptcy, the aforementioned Compañía Inmobiliaria Masdevallia, that was developing the likes of the Nueva Ribera and Nueva Ribera Golf Club developments in Murcia, has gone well and truly into liquidation with allegations of corruption rife in relation to those involved with the running of the company. If you were affected by the decline in the company’s fortunes you need to register your status and complaint as soon as you possibly can, otherwise you will lose your right to seek compensation.
In conclusion, the state of the housing market in Spain is far from pretty, but if you’re prepared to take a bit of a risk and bid well below current market prices for a property, you could stand an increased chance of earning a rental return from it, and you will have bought in at an affordable price that the market can sustain – meaning you may well have made a good investment for the longer term.