More lifestyle buyers predicted to enter the second home market this year
A growing number of experts believe that the Spanish property market is showing signs of recovery following the well documented economic crash which has plagued numerous global property markets.
The market has reached the bottom according to Marc Pritchard, sales and marketing manager of Taylor Wimpey España and will move in a positive direction this year.
Sale prices in Spain for quality properties in prime locations were stable in 2011 and Pritchard indicates that this trend will continue into 2012 while properties in less popular inland locations that have reduced infrastructure or no views will drop further in price.
He predicts that a greater number of lifestyle buyers will enter the second home market this year with very few looking for rental returns and suggests that the average age of the property buyer will increase to 55 years old signalling that lifestyle attributes will be of greater importance in 2012.
Furthermore, Pritchard explains that this year is likely to see inflation increase in the UK, with rising interest on bank accounts and unstable stock markets pushing British buyers, Spain’s strongest market, into investing their money in Spanish property.
‘We expect sales levels this year to be in line with 2011, however seeing as we will have additional sales outlets, new developments launching in 2012 and are covering the reinstated IVA tax now at 4% on new build properties until the end of February 2012, we are expecting sales numbers to increase,’ explained Pritchard.
Meanwhile, Spanish Banks are prepared to lend over 100% on their own properties that have been repossessed, it has been revealed. They are also selling them at rock bottom prices to attract buyers so that they can reduce the amount of property on their books.
According to Adam Cornwell, managing director of Feltrim International these are quality properties in desirable areas.
‘Whilst Spanish mortgage lending is not expected to recover in 2012 due to high unemployment and limited bank funding, financial institutions have to optimise their balance sheets,’ said Cornwell.
‘To incentivise quality buyers they are prepared to offload these homes at rock bottom prices and with the highest mortgages. If a bank is prepared to lend all of the money, more than 100%, on a project that has fallen to 50% of its value five years previously then it must have the confidence that the market has reached the bottom and that the properties will regain value in the not too distant future,’ he explained.
Examples include a luxury beachside development close to Marbella at 50% off the developer’s 2007 price plus a 110% mortgage option with two years interest only. A one bedroom penthouse in Soto Serena, designed by architect Melvin Villarroel, with landscaped gardens, pools, gym and sauna, is available for €184,000 compared with €368,000 in 2007.
‘We are now in a situation where the best units in these marked down resorts are selling fast, just like in the heady days of the property boom when the best off plan units were snapped up fast, albeit now they have the peace of mind of something complete and tangible,’ explained Cornwell.
‘Investors can buy using very little, or none, of their own capital with the risk being entirely taken by the bank. This simply does not happen in any other distressed market in the world,’ he added.