Marbella first out of crisis says Mayor, as property market shows signs of recovery

It’s a matter of fact that Marbella’s property market has been in a funk for years, starting long before the credit crunch struck, thanks to the venal greed and corruption of local politicians and some developers. But finally, some light at the end of the tunnel, argues Ángeles Muñoz, Marbella’s lady Mayor, with figures in hand to show the best property sales figures in 4 years (chart above).

If the figures are kosher, Muñoz has reason to be positive. A report from Marbella’s tax office shows there were 2,499 property sales in the first 3 months of this year, a rise of more than 200% compared to the same period last year. Look a bit further back and it appears the first quarter of this year was the best by far in the last 4 years.

Year – Sales in first quarter
2010 – 2,499
2009 – 820
2008 – 1,263
2007 – 1,602
2006 – 1,224

If correct, the figures show the market has improved by 100% compared even to the first quarter of 2006, before the ‘Malaya’ corruption scandal exploded, when the market was still relatively buoyant, just starting to come off the boil.

Does that make sense? Some argue it might be the increase in VAT in July bringing sales forward, but I doubt it. So have Marbella property prices dropped, and confidence returned enough to give the market such a big push? Well, I hope so, but I have to say it took me by surprise. I’d heard that there was some improvement, but nothing like this. It makes me wonder.

Ángeles Muñoz, on the other hand, has no doubts. As you would expect she is using the figures to vindicate her policies, saying that Marbella will be “first out of the crisis,” in a message aimed at local and international investors.

Marbella’s new town-plan is also helping. It comes into effect this month, legalises 16,000 properties, and enables owners to “sell, mortgage, swap or use as an asset,” properties that have been frozen out of the market for years, says the Mayor.

Source: Mark Stucklin

So what happened? Well, figures for January from the INE show that, excluding social housing, there were exactly 34,000 sales in January, up 1.4% over 12 months. A year-on-year increase of 1.4% is no big deal, but it’s a much needed respite when it is the first time in 3 years that the market has actually grown, as you can see from the chart above. And it’s difficult to dismiss it as a one off, because it is clear that the market has now found a floor around 30,000 transactions/month, as the next chart shows.

But, of course, we have to keep in mind that the market in January was 56% smaller than it was in January 2007, when it stood at 77,400 sales/ month. So a year on year improvement is good news, but peak-to-trough the market is still just a shadow of its former self. Until that situation changes, there’s not much to cheer about.

If you dig into the figures you find that most of the improvement is now coming from resales, not new builds, as the next chart shows. New build sales kept the market from total annihilation last year, but I’ve been warning for months that, sooner or later, they might fall off a cliff.

And finally, the following table shows how the market evolved in January, for selected regions. A lot of the improvement came from big cities like Barcelona, Valencia, and Madrid, whereas sales continued falling in popular coastal regions like Malaga (Costa del Sol) and the Canaries. So, when it comes to holiday homes, the market in many areas is still shrinking.

Source: Spanish Property Insight