Predictions 2009 Country Property and Real Estate Market Andalucia
28-12-2008
Are there any positive lights at the end of the tunnel?
Analysis of the Country Property market Andalucia by Oscar Ernstsen
Things are changing in the financial services industry. Until the finance sector gets its act together, and there is some accountability, the real estate market is going to continue to face issues and continue to fall in value. With sales of luxury goods collapsing in the world, automobile industries are facing a crisis we cannot deny we can face a good year for 2009. The pound is now almost at parity with the Euro, so many British buyers (was at least 25% on the market in Andalucia) need to get used to the new situation: Europe is getting expensive for them. The knock-on effect will be felt around the world. Russian billionaires have been helping to push up prices in Marbella, London, Manhattan, the Cote D’Azur in France, and the Italian Riviera, amongst other “hot spots.” With this pool of potential buyers suddenly drying up, the effect can only be one of downward prices in the luxury real estate. wrote Mark Knowles of Luxury Property.com
More Pain Before Any Gain
No matter what happens in the Spanish housing market, until a large inventory reduction takes place, housing prices will not really stabilize. Many areas still have a large oversupply of properties.
Are there any positive predictions for the Costa del Sol property market in 2009?
Well as many wise and wealthy investors always did, just buy in the bad times! Many people in the Costa del Sol own holiday houses or are retired and they are not depending on the sale of their properties. They rather hang on than selling for the lowest price. However some do need to sell. Some Property Developers will be in trouble next year and Banks will or need to cash there positions in those Developments. For sure you need knowledge and experience to buy for the right price these days. Villas and Fincas can assist you in that perspective. Some house owners bought their properties a long time ago and can afford to sell for lower prices. In some cases property can sell for half the price. It’s a matter of putting a firm offer in and use a good Estate Agent who knows the prices from the last years. Other important matter of buying Real Estate is the location! Everybody is telling you they are living on a top location! This is not through of course. Again a good Estate Agent knows the areas and can tell you what a good location is. Quality of the property makes another hot issue to negotiate a good price. Normally the older houses in Spain are not very well insulated, do not have proper heating, etc. It’s always good to double check with a licensed chartered surveyor. Also look at the number of properties for sale in the areas. There are many apartments for sale but not so many nice smaller houses. Sometimes it’s much better to find a small Country House close to the schools and shopping areas. Since the new law in 2002 in Andalucia that you cannot build anymore on ‘Rustic Land’ and they are very strict to it, Country Properties give you a certain extra value and security and for sure a kind of quality of living. More and more people are choosing the real life in stead of living in the Holiday Apartments. Andalucia is not only beach and sun; it has so much more to offer.
Generally we will see a decline of property prices in 2009. But there is also a bottom price. Land prices, building prices, supply and demand are making those prices. In some places they are close to a bottom price of property. Andalucia has a reasonable flexible housing market when it comes to prices because it’s a second home market. Prices go up quickly and fall in the bad times. Our forecast suggests that we are now at least half way through the process of price falls, with around 15% of an estimated 30-40% peak-to-trough decline already factored into prices. In 2006-7 was the peak of property prices. We are bottoming quickly a many places. We will come to more reality and less speculation the following years. Markets will be driven again by more and more retired people (around 10 million in Europe) and people always want to change and upgrade after a while. Another fast growing market in Andalucia is a real change of life. Young professionals are relocating themselves into a better lifestyle. Since Andalucia is upgrading her infrastructures, industries, reforming the old cities, new museums, more culture it’s becoming a serious Metropole. That means that quality properties will have a better change to survive in these times. It’s a matter of finding the best deals on the best locations. On the bright side, cash buyers and employed home buyers with good credit will find 2009 is an excellent time to buy. It’s likely that interest rates will come down in 2009. This could be good news for the housing market; with house prices and interest rates down, it will be more affordable to buy, which is the only thing that will bring buyers back to the market – affordability is what is now needed.’ According to recent statistics in Andalucia, the numbers of sales are between 50 per cent and 70 per cent down when compared to 2007 in the Costa del Sol. Official statistics are generally always unreliable but this is more or less what it is. The total volume of sales is now close to the lowest point we think, and the Government’s efforts to rescue the banking system, along with the lower interest rates, will work to restore enough consumer confidence for many buyers to make a return to the property market – leading to a possible recovery for overall sales volumes. 2009 is the year of excellent deals!
Trends in the Property Market in 2009-10
Eco-homes will become more popular. Cost efficient homes and living with the benefits of living in an eco friendly property. In Europe there are many initiatives to achieve those new building methods as carbon efficiency, solar panels, recycled water, waste, new building materials and new environment concepts. In Spain there is not really much technology available but that will be the grow market. Not only for new developments but also to reform existing properties. Prices need to come down in this industry because most of those systems are on top of the normal construction costs.
