Property prices 2008 according to TINSA

According to Tinsa’s property price index on the Mediterranean coast fell by 14,3% in 2008 with a lower drop in the towns and cities at 10,2%. For you information Tinsa is one of Spain’s leading appraisal companies.
It also appears that this fall applies to both newly built and resale properties.

So why have properties along the Mediterranean coast been hit so hard compared to the towns and cities?

Quite simple really much of the market outside of the towns made up of second homes (holiday homes), which are not a priority when budgets are tight and secondly, because much of Spain’s property boom took place on the coast, so certain areas have a glut of ‘investment’ properties which help depress prices.

But let us also remember that Spain’s Mediterranean coast is 1.660 km long, so it is very hard to generalise. As a comparison Britain measures just over 1.000 km from the south coast of England to the extreme north of the Scottish mainland and according to the Nationwide building society house prices fell by 15.9% in 2008 in Britain.

So according to these general statistics, the Spanish ‘Costas’ are holding up better than Britain! But looking more in depth prices held up better in Scotland than England and London still has the highest average prices in Britain.

So what does this tell us about broad stroke statistics? Good for headlines and nothing more.

Anyway back to the Costa’s

Yes prices have dropped, and if anyone says otherwise they are giving out misleading information. But it has not been a uniform drop. The Costa del Sol has held up better than the Costa Tropical (west of Costa del Sol) and the Costa de la Luz (east of Costa del Sol). The same applies Andalucia, which has weathered the crisis better than Murcia.

Yet why is that? Well when investing in property became a popular “get rich quick” scheme back in 2004 it started mainly on the Costa del Sol, and as prices increase it branched out to other areas. And even on the Costa del Sol it was more localized to the area west of the Malaga airport with the Eastern end only playing catch-up several years later. Anyway people bought in these areas on the advice that it would be the new Costa del Sol or Marbella, solely on the idea of “flipping” the property and not on the final product or on the quality of the area.

It should also be noted that prices have held up a lot better within the towns, such as Fuengirola, Torremolinos, Benalmadena, La Cala, etc… than in Mijas Costa, Riviera, Calahonda, etc… as many of the properties are more primary residence and the surrounding infrastructure is of a higher calibre.

And even though prices might be at their 2005 average what is currently selling is being priced at a 2004 figure as I previously mentioned in The Spanish property Market 2008 and Beyond.

Andrew Belles

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