Spanish with savings look back at the Costas after the collapse of property prices!
During the last Easter break, many Spanish took advantage of their stay at the beach to check out what the property prices were like on the coast, five years after the bubble burst.
The Spanish coast experienced an explosion at the height of the real estate boom. Just like it had happened before, low interest rates and the open credit allowed many Spanish feed a parallel bubble in coastal areas that suffered an explosion of prices, greater even than that experienced in the first residence market.
With the bubble burst, the reverse in terms of prices and sales has also been much higher. An adjustment close to 35% on the Mediterranean coast, since 2007, according Tinsa. Almost 11% last year, compared with 31% and 12.6% registered, respectively, by major cities.
"This whole area, where the market is inextricably linked to holiday homes, is where we experienced the highest increase of prices in the last housing boom. As it often happens in the general market behaviour, in the areas in which the upward fluctuation has been more important, we now experience the most significant declines", said Raul Garcia Garcia, Director of Business and Marketing of Tinsa.
With these figures in hand, the holiday home market has returned to the radar of many Spanish who, with their first residence paid and some savings have looked towards the sea in search of properties. "This is usually a family with one or two children seeking for a property with one or two bedrooms in gated communities with swimming pool, well located and with good finishes and between 110,000 and 120,000 euros," told El Confidential, Valentin Fernandez, director of Residential Properties of Foro Consultores. Raul Garcia explains that "if in the years of economic growth, access to a holiday homes was opened to a very broad type customers, the crisis has dramatically reduced the spectrum, limiting it to those who have a sound and stable economy".
"There is no other choice but the profile of the buyer to be as it is, because the financing terms are quite complicated," says María Monasterio, Director of Aguirre Newman. She recognizes that, as with the first residence, the banks basically only fund product from their balance sheets, but even here you "obviously need some capital".
The holiday home market, as is happening with the first residence market, is in the hands of financial institutions, as they also have the upper hand of the credit. "It's not so common to obtain 100% financing, but there has been several cases," says Carlos Ferrer-Bonsoms, Director of Residential Properties of Jones Lang Lasalle, but if the client is solvent, the standard is 70-80%".
How much are they willing to pay?
The experts consulted by the newspaper insisted the holiday market is also very heterogeneous. Málaga is not the same as Torrevieja, Benidorm or Torremolinos.
For example, the average prices in Marbella and Benidorm go slightly over 200,000 euros, while in Torremolinos is around 170,000 and in Torrevieja and Guardamar del Segura, in the 140,000 Euros. However, María Monasterio says that "there is a psychological price barrier around 200,000 euros that is going down. The operations that are closing are doing so in between 120,000 and 160,000 euros".
"On the coast there is a very messy market. There are areas with homes at 900 euros per square metre and a little further down, some 2,000 Euros per square metre, a little better, but for the price difference they do not sell," says Carlos Ferrer-Bonsoms.
There are opportunities but no bargains.
In his opinion, "the coast, outside funding is very sensitive to price. The purchase decision is taken or not for a matter of 6,000 euros. An apartment of 89,000 euros compared with another € 76,000 will not sell because there is too much to choose from for the price difference. Demand is not as buoyant and is very price sensitive. Most take it easy”. He adds that the Spanish buyers in general, are willing to pay around 1000-1200 euros per square meter and warns the prospective buyer that "more than bargains, what you really find on the market are opportunities". "With few exceptions, the average Spaniard is not willing to pay 5,000 euros per square metre".
"With discounts between 30% and 40%, compared to the prices of five or six years ago, there are still customers trying to squeeze as much as possible," says Valentin Fernandez. "Given the vast offer of properties for sale, the customer has become much more demanding and due to current market conditions, has more power to negotiate. Now buyers won´t purchase what it is imposed to them, if the properties do not meet the client´s expectations in terms of design, quality and equipment, they will have a difficult time in this market; this did not happen years ago", says Raul Garcia.
"Some potential buyers will ask for a miracle in terms of prices. However, in general terms, people are usually very knowledgeable about the area that interests them and before entering the agency, they first have probed the market through the Internet," said Jose Martinez, broker of RE / MAX Inmomás (Elche), who says sales have increased by 50% over last year's figures and who claims to be selling real estate for individuals, financial institutions, mainly to international buyers. He also ensures that among nationals, four or five out of ten of those who finally decide to buy, do it with cash payments.
Will prices continue to fall?
As is happening with the first home, many potential buyers are still waiting for further price drops before going to market.
"Declines are no longer being as severe as in previous years," said María Monasterio. "They will continue to fall, but to a lesser extent." Not surprisingly, the adjustment in coastal areas, which accounts for almost half the housing stock. Only in the Valencia Community are about 2 in 10 (19.3%) and Andalusia and Catalonia about 15% in both cases.
Source: ElConfidencial.com
