• Property price growth in some Spanish regions gives hope of boost in 2014

    The outlook for the Spanish property  is looking more positive for 2014 with the   latest  official figures for the third quarter of 2013 showing that   house prices in four Spanish regions are now on the rise.

    The   Balearics lead the way with 4.4% annual growth year on year. The other three   regions seeing prices rises were Navarra with growth of 2.8%, Extremadura up   2.2% and Madrid up 0.3%.

    But   overall the House Price Index, published by the National Institute of   Statistics, shows a quarterly fall of 0.4% and an annual fall of 4.5% year on   year, although this is the smallest decline since the end of 2010. Rioja has   seen the steepest price decline at 12%.
    According to Chavarria Waschke, managing director of Balearics Sotheby’s   International Realty which has offices in Mallorca and Ibiza, the upward   trend should continue for 2014 in the region.

    ‘The   factors that kept these Mediterranean islands buoyant in recession, are the   same as those fuelling price rises today, lack of supply and appeal across   the nationalities. Ibiza and Mallorca were never overbuilt, planning controls   have always been much tighter, and as a result we have never had an oversupply   to sell off,’ he explained.

    He   also pointed out that foreign ownership is still strong and has doubled over   the last five year with British, Dutch, German, Danish, and Swedish buyers   keen to secure a home in the Balearics. The latest data shows that up until   June this year, 1,412 foreigners had purchased homes, almost the same as the   whole of 2008.

    The   Council of Notaries reveals that Germans are out front in this trend, making   three times the number of house purchases in 2012. There are still a lot of   British buyers but interest from Russian and Nordic buyers is rising.
    For example only 27 properties were bought by Swedes in 2008, rising to 168   in 2012 and already 75 in the first six months of 2013. In 2008 there were 35   Russian purchases, by 2012 this figure was 86. Interest is also increasing   from Chinese, Romanian, Argentinean, French and Italian buyers.

    Figures   from the General Council of Notaires show a small quarterly rise of 0.7%, the   first quarterly rise in three years and this could be taken as a sign that   the housing market is bottoming   out. But how well the Spanish market is doing is a matter of debate.

    For   example, Mark Stucklin of Spanish   Property Insight believes that a small quarterly increase does not herald   the end of the Spanish house price crash as is being reported in the Spanish   press.

    ‘After   years of reporting nothing but bad news, I understand why the media might   jump on the slightest bit of good news, if only to report something different   for once, I do it myself. But the optimism is premature and there are various   reasons why it’s still too early celebrate the end of the great Spanish house   price crash,’ he said.

    ‘Firstly,   this was just a quarterly increase, and you have to be careful comparing   quarters. A more important comparison is the year on year figure, which was   down 7.9%, so house prices are still falling substantially, albeit at a   slower rate than before,’ he   explained.

    ‘Secondly,   transaction levels are now so low the average price can easily be pushed up   or down by a relatively small number of sales. As the notaries recently   pointed out, fewer transactions means the index has become more volatile,   making it difficult to draw conclusions.

    ‘Thirdly,   the price increase was driven by sales of newly built homes which saw prices   up 2.3%, most of which were repossessed by banks and sold with a price   premium thanks to preferential financing that private vendors can’t match. In   such a thin market this distortion   can have an impact on the index,’ he added.

    Whilst   some experts predict more price falls for Spain in 2014, or at best   stabilisation, Waschke predicts more price rises for the Balearics. ‘Each   month we are listing more and more expensive homes. In Mallorca the seven,   eight, nine, ten million euro plus category is growing and properties in the   best locations with the finest qualities and move in décor are being snapped   up, even at those prices,’ he said.

    Meanwhile   in Ibiza, a luxury developer on the west coast has instigated two price hikes   at his million euro plus villa project this year as phase one sold out in a   matter of months.  I think the Balearics really are the exception to the   Spanish rule,’ he added.

    Marc   Pritchard, sales and marketing manager of Taylor Wimpey España also suggests   that the Spanish market will move in a positive direction in 2014. ‘Sale   prices in Spain for quality   properties in prime locations could be nearing the end of their fall   according to several reports released in recent weeks. Indeed, the Ministry   of Development reported that during the third quarter of 2013, homes recorded   their lowest drop since 2010, even becoming more expensive in several   regions,’ he said.

    He   pointed out that properties in less popular inland locations which have   reduced infrastructure or no views will drop further in price, but he added   that overall the perception that the housing market is nearing the end of its   adjustment is gaining in popularity. For example, according to the Consumer   Confidence Indicator for November, prepared by the Centre for Sociological   Research, 46.4% of those surveyed think that Spanish housing prices will   stabilise over the next year, signalling a boost of confidence in the market.

    His   firm experienced a huge increase of sales across the Costa del Sol, Mallorca   and the Costa Blanca over the last 12 months. ‘We are expecting sales levels   in 2014 to be in line with 2013 however seeing as we will have additional   sales outlets and several new developments in the pipeline across all three   regions of Spain in which we operate, coupled with the fact that prices in   prime locations across each area have now bottomed out and will not fall any   further, we are hoping sales volumes to increase making for an exciting new   year,’ he explained.

    He   also expects that 2014 is likely to see a surge of interest from foreign   buyers outside the EU from countries such as China, Russia and the Middle   East investing their money in Spanish property due to the   golden visa scheme for property investors outside the European Union   investing a minimum of €500,000 in real estate.


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