There are rumours, murmurs, gossip and more that something is stirring in the Spanish Property Market. Developers are talking up the market, estate agents are talking up the market, the media is starting to get very interested again and enquiries are up over 50% year on year for the third year running. There is something happening of course but what is it? The truth is as follows…
Average prices reduced by about 6.1% or 2.2% in 2014 according to differing official figures. As I have said before take official figures with a pinch of salt that resembles a pillar really but in general they give you an idea over time for trends and tendencies. So despite the perception that prices in general have reached their base, that we are now at the bottom of the curve, that those prices will not go any lower, prices ARE actually still falling.
Hold on Graham, you said prices are falling AND at the same time they aren’t falling. That makes no sense.
I know, but it’s true. Prices are still falling in places. Prices have become steady in others. And prices are actually rising in certain specific areas. I have written before about segmentation in the Spanish property market (I actually wrote it six years ago but it still holds true) but just to repeat it here there is no such thing as the Spanish property market as a whole, even within a city you have neighborhoods that are doing well and others that are doing badly and within those neighborhoods you have streets that people want to be in and others where they don’t so much. This is true in both residential and commercial property throughout the World. Spain is no different.
So what will happen in 2015?
Prices will continue to fall. There is still 25% unemployment, underemployment of those in work, downward pressure on wages and salaries and a great uncertainty about the future. This year there are three sets of elections in the country and they are likely to leave uncertain political conditions meaning the Spanish themselves won’t be buying handfuls of property each in the near future.
Prices will continue to stabilize. There are areas which are very popular with Spanish people and foreigners, where the price drops have been brutal and the inherent value now is so great that buying in those areas for those looking for property looks such a good deal that people will buy regularly. In those areas prices will not drop anymore although you may get an agreement on a discount from the advertised price especially when there is a motivated seller.
Prices will rise. There are hotspots around, places which are so popular and quality properties in those areas are in short supply. The usual economic doctrine of supply and demand work in the Spanish Property Market just as they do anywhere else. When supply is short and demand rises then prices will rise too. Remember that although there are potentially over a million properties on sale in Spain the vast majority are not really high quality or brilliantly located. That number is limited and getting lower as they are cherry picked by buyers. Therefore there is no real infinite supply despite what the base figures of number of properties for sale may suggest.
In future articles in 2015 we are going to write about these hotspots all around Spain. Not all of them are luxury areas but all of them have great potential for future price rises, especially if you are developing the property, and all of them should be considered good places to live, holiday in, rent out or work in. Your choice.
So the conclusion is not clear, there is no 100% certain answer for what will happen in 2015 in the Spanish Property Market. I cannot tell you that prices will rise by x% or that prices will crash again or anything in between. What I can tell you is that there are some great deals around and if you want one of them then you may be well advised to contact us at the SPM and tell us exactly what you are looking for. There might well be a great deal around for you at the moment. You never know until you take a look.
Equally you could just fill in the form below. However you contact us we look forward to hearing from you and hope you have a happy 2015.