Spanish Property News Review
September 16th, 2008
While I was summarising the new house price data from the Ministry of Housing, I noticed a fairly strong correlation between the top-selling towns in Spain and those recognised as being the most transparent in their dealings with the public. Coincidence?
Of course there isn’t a 100% tally between the two. Orihuela appears in the top ten towns for sales of new-build properties yet ranks as one of the least transparent town halls to do business with. Wouldn’t it be great, though, if a strong commitment to transparency translated directly into strong property sales?
In terms of market analysis, I really like the clarity and common-sense contained in Problematic Spanish Property Valuations and I think the conclusions are right on the money:
“In 2009, vulture funds and other bargain-hunters will begin to buy assets from administrators .. It is difficult to see any real recovery in the sector as a whole until the second half of next year when property deals start to come through at rock-bottom prices.”
This coincides with my own conclusions drawn from reviewing the latest Ministry of Housing data, and with what estate agents are saying about the market at present: There are buyers – and they’re looking for bargains in Spain.
So, how do you find a Spanish property bargain? First, it’s worth noting that most genuine repossessions or distressed sales don’t appear on the market at all. They get snapped-up by investors or by friends of company administrators and banks. It’s also worth remembering that cheap isn’t necessarily the same as bargain.
You need a reliable baseline of property prices in Spain – that’s where the data collected by Kyero.com over the past few years can help. Whenever you’re browsing for properties on Kyero.com, look in the left hand column for this box and click the house prices link. The information is always focused on the area of Spain in which you’re searching for property.
Take a look at the price trend overview for my home town of Almuñecar. You can see that Almuñecar is a bit more expensive compared to the average price in Granada province and compared to the Spanish national average. You can also see that prices peaked towards the end of 2006 and have been declining slowly since then.
Notice how there’s no evidence of a dramatic price crash at all? That’s because this data is based on advertised prices, and vendors, on the whole, aren’t reducing what they’re asking for – but the ones keen to sell are willing to haggle.
There’s a further level of detail available where you can see a breakdown of prices by size of property.
How can this data be useful in finding a bargain?
If I were looking for a bargain 3 bed house in Almuñecar today, I’d look at the average price today (€348K) and the price at its peak (€369K).
Market analysts say that, at their peak, properties were over-valued by as much as 30% in Spain. Take 30% off of €369K and you’re left with €258K. Take off another 10% of normal haggling discount and you’ll be looking at €249K. That represents an overall discount of 28% on today’s asking price of €348K.
Can you buy a three bed property in Almuñecar for €249K today? Yes you can, but that still doesn’t make them all bargains. By comparing property prices in different locations within a town, you can build up your own profile of property values and what you’re willing to pay.
Using this as a baseline, I’d find an interesting property and make a cheeky offer based on discounting today’s asking price by 28% – or more. Many vendors will laugh in your face – but some want to sell and they’ll be prepared to take you seriously. What have you got to lose by trying?
Martin Dell, Kyero.com
