Many commentators have been looking to call the bottom of the market after the turbulence of the last 3 years and it would now appear that we are there or thereabouts.
There have been two recent indictors that suggest the Spanish property market is in fact ‘bouncing along the bottom’. The Spanish National Institute of Statistics (INE) reported a 29.6% increase in property sales in August 2010 when compared to the same period in 2009. By contrast, the following month, sales were down 4.5%.
Until September of this year 2010 had seen a consistent increase in sales volume compared to 2009. The general improvement is a clear sign that certain buyers are happy with the 30% + price reductions down from the peak in 2007. However, September’s drop suggests the tide hasn’t turned fully and seasonal fluctuations and other factors can affect demand.
So far 2010 has shown that buyers will really only purchase what they perceive to be excellent deals and that demand is very much geared to realistic pricing with many overpriced properties not receiving any interest at all.
The market is being driven, albeit slowly, by large discounts, offers and developer deals. Several well promoted developments have almost completely sold out this year when the building promoters (or the banks behind them) have applied discounts of 30% or more. One development has this week taken deposits on 35 units in three days after launching discounts of around 40%.
Resale vendors who fall into the ‘distressed’ category and have to sell have found that only large discounts will attract viewings on their properties and so eventually and reluctantly they are reducing their prices to levels where they will generate some interest.
In summary, the market shows distinct signs of life and has come through the perilous depths of the crisis, but it is not yet out of the woods. The market will most probably continue to bounce along the bottom in the short term as vendors and developers continue to adjust their prices to the level where sales are being achieved.