The Spanish Property Market is a Tale of Two Halves (to coin a football phrase). Well actually, two uneven halves… if that is possible!
The first half is the local property market – Spanish vendors selling to Spanish buyers – it accounts for around 90% of sales, so it isn’t exactly half is it? Within this local market, there has been growth for at least the past 10 years, mostly because during that time the Spanish economy has experienced significant growth and benefitted from rising employment and wage increases. It wasn’t particularly difficult to achieve because, after the crash of 2008, the economic outlook for Spain couldn’t have got any worse. The only way was up!
The big cities like Madrid and Barcelona were the first to emerge from the ashes, as you would expect, but the provinces and Mediterranean coast took longer to recover. Spain is a big country; five times the size of England, but with a similar population. That is why, outside of the major cities, land and property is quite cheap. The boom in new-build properties in the first eight years of 2000-2008 was not at all aimed at the local market, but instead almost entirely the result of a new demand from foreign buyers. Yes, of course some Spanish citizens invested in the off-plan phenomena, but mostly to flip and make a profit. Largely, it was a boom created by foreign buyer demand: firstly, the Germans, Dutch, Swedes etc – then the British, French and the rest followed.
That same Spanish property market division has not really changed. Foreign buyers still account for the smaller fraction of the Spanish property market overall, but we are still quite insignificant, compared to the local/internal market. Yes, there are areas along the Costas where foreign buyers are up to 70 or 80% of the market – look at Camposol for example, but as mentioned above, Spain is a big country and there are many regions where foreign buyers are not attracted to. In effect, we sometimes get a false impression regarding our significance on the Spanish property market as a whole. Yes, we do make a difference, but we are not as important to the Spanish economy as we think except in those areas where we are the larger half!
The Changing Market in a State of Flux!
It was easy to predict the market trends prior to the crash of 2008. Prices were always rising, demand was always rising, supply was always increasing and easy finance was always available. They say, if you put ten economists in a room, you will get eleven different forecasts! My guess is, if you put ten Estate Agents in a room today, you will get zero forecasts because absolutely none of us knows where the market is going, what is driving it and where the money is coming from!
Fuente Alamo Real Estate/Murcia Coast & Country
Tel 0034 968 598 173