The deflation in property prices in the Spanish Costas continues, largley unheraldeded in the media in Ireland or the UK. The once red hot market, which reached a peak in 2002, is now seldom mentioned (well not in polite conversation). It seems markets in Cyprus and Croatia are feeling the pinch also. Prehaps these forgotten markets illustrate the likley fate of other hotspots which presently consume the attention of the fly to let hoards.
SUR In English
Desperate property owners start to lower asking prices to speed up sales
Flats are taking 32 months to sell
Some owners are accepting offers 30,000 euros below their original price
After seven year long real estate boom with prices reaching exorbitant levels, sales are starting to slow down. Some owners, tired of seeing the “For Sale” sign outside their home for months on end, are finding themselves selling for sums way below what they had originally hoped for, and sometimes even less than the amount quoted on the official valuation.
Professionals claim that one of the main causes of this present situation is that much of the demand has already been satisfied while other potential buyers have been priced out of the market. The threat of rising interest rates has helped to slow down sales along with the fact that “it would have been impossible to keep up the recent rate of evolution of the market for much longer”, explains the national director of the MC estate agency, Juan Felipe Muñoz. Now it is taking an average of 32 months to sell a property.
While experts are avoiding using the word “crisis”, they admit that those people who bought properties in order to sell them on again are now finding it hard to turn the bricks back into cash. Owners can no longer use the amount fetched by a neighbouring property as a guideline as this “often leads to disappointment”, pointed out the president of the School of Real Estate Agents, Cayetano Rengel. “The time when studios fetched 250,000 euros could not go on forever”, he added.
“Now an owner in a hurry to sell has no choice but to lower the price. Someone asking 300,000 at first might easily drop the price to 230,000 after several months have gone by without finding a buyer”, point out sources from Unicasa. Similarly Juan Carlos Cuevas, the manager of a Tecnocasa franchise, said that he is seeing “brutal cuts” in prices. “It’s quite normal for an owner to drop between 18,000 and 30,000 after less than three months”.
Not contented with the usual classified advertising, owners are also seeking new ways of finding a buyer. Over recently months we have seen an increase in advertisements appearing everywhere, from car windscreens to lampposts and letter boxes.
Meanwhile the Association of Madrid Property Developers and international financial analysts predict that the slump in the market could reduce employment in Spain by two per cent by the middle of 2007 and reduce the Gross Domestic Product by 1.3 per cent.