This figure contrasts to the official estimate of 24%, provided by the Official Spanish House Price index, which is regularly criticised for its inaccuracy from both inside and outside of Spain, and which gives a false impression to would-be-buyers abroad as they think that prices are over inflated and should drop further. Here at LPG Spain, we would prefer to believe the former as being more accurate.
Tinsa goes on to report that the drop varies depending on the region or area of Spain. Average prices on the Mediterranean coastline have fallen the most with a 39.5% drop. Capital cities have fallen by 35.6% whilst metropolitan areas, by 31.4%.
The question is: Will prices continue to fall?
This depends from whom and where you buy.
The banks in Spain are discounting their property quicker than they can sell them, with prices sometimes up to 50% off together with very attractive mortgage packages to boot. The banks of course have to unload as soon as possible given the “toxic” state of their assets. On the other hand, some developers, who haven’t as yet been taken over by a bank, are also offering some very good deals.
The resale market is different though. Prices in general will vary considerably from one coastline to another, i.e. the Costa Blanca to the Costa del Sol, and still further from one town or village to another. Then you have the individual circumstances of the vendor, and whether there is urgency to sell, or not. Or has the property been on the market for long? And how many times has it been reduced in price?
One thing for sure is that the property market is moving and sales are being regularly made by our members, but there is one common factor – the price. A property is either offered for sale at the right price for today’s market, and sells quickly, or is one that has been around for a while and has finally come down to a competitive price, finally attracting a buyer.
So it’s still very much a buyers market as there is no sign of any increases, as yet. But it only needs a gradual increase in demand to firstly stop prices decreasing further, something that is already beginning to happen as purchases by the British last year were up on the previous year and the Scandinavian and Russian buyers are also quite prominent at the moment.