Costa del Sol property downward lurch or stagnation

In the short to medium term it appears that Spain’s property market is not set to rebound as many with a vested interest have been claiming. With high unemployment and lack of credit a general improvement in property transactions is still a way off. Even though the INE property statistics do appear to showing that the market has bottomed.

Except for the spikes and lurch the statistics do appear to show that we have finally reached the bottom of the market. Whether this will be followed by an increase is unlikely. Many potential buyers still face a scarcity of credit, making home buying an impossibility. There is also the fear that the interest rates might increase. I think this is unlikely as with the recent initiatives by the EU to bolster the European Markets. The ECB will maintain the lower interest rates to help stimulate the larger economies.

In the short term we should see a slight pick-up in sales as property buyers will be pushing forward sales so as not to pay the additional VAT/Transfer tax charges that will be coming into force from the first of July. Many Spanish residents’ buyers will also look at purchasing prior to 2011, so as still to benefit from the tax/mortgage exemptions that are to be removed.

What can be definitely ruled out at the moment is an increase in prices. Although the Spanish economy has shown the first signs of growth in the first quarter of the year, it is still too early to tell whether it is a trend or an anomaly. Economic growth should benefit the property market. But of course the opposite applies as well.

But not everything is doom & gloom. There does appear to be a general increase in interest in Costa del Sol property. We have seen an increase in both web-based enquiries and an increasing amount of passing trade. But potential buyers need to see the value in the property, whether it is location and/or quality. Only these ‘prime’ properties are generating interest at the moment.

Regards

Andrew Bellés

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