Spanish Property is like a Box of Chocolates
January 6th, 2009
Over the Christmas break, I was reminded how some things never change.
After systematically working my way through a big tin of Quality Street, it was the round, flat, yellow toffee pennies which remained for several days before being thrown away. Perhaps it’s just me, but I’ve never understood why Nestlé persevere with that particular sweet.
According to our latest Spanish House Price Index, property vendors in Spain are also persevering with a lost cause – maintaining asking prices. Despite the well publicised economic downturn, and despite Spain suffering from the boom to bust cycle more than most countries, it seems that vendors are not willing to reduce their asking prices at all.
In reality, property in Spain is being sold – but not at anywhere near the asking price. I know of a handful of properties sold recently in Almuñecar where the vendors were willing to reduce their asking prices by around 30%. Yes, it’s harder to get a mortgage these days, but there are buyers when the price is right.
I can understand the vendors’ reluctance of dropping asking price by 30% – and not leaving any room for further haggling – but leaving asking prices high is simply putting off buyers from even contemplating making an offer.
My advice? In the absence of any reliable house price data about actual sales prices, take the asking price with a pinch of salt. You know how much you want to spend on a Spanish property – just add 30% to that and begin searching in that price range. Once you’ve found a property that appeals, make a cheeky offer. What’s the worst that can happen?
Not every vendor will be willing to drop their price substantially – and they’re entitled to hold out and wait several years for property to actually be worth today’s asking prices.
When you factor in the devaluation of the Pound against the Euro, the ideal vendor to seek out in 2009 is a vendor in a hurry (for whatever reason) who wants to repatriate the proceeds of the sale to the UK. If you are buying in Euros, you can now offer at least 20% less than just six months ago. The vendor will still finish up with the same amount in Sterling, and their tax liabilities will be 20% lower in Spain too.
If you are buying in Sterling, conduct the entire transaction in that currency to reduce the buying and selling costs and to remove the currency risk from the equation for both parties.
I think that there will be some great Spanish property bargains up for grabs in 2009, but like the Quality street toffee pennies, there will also be a lot of properties just making up the numbers.
Martin Dell, Kyero.com
