Spanish property prices dividing opinion

Property prices in Spain will begin to rise by 2017

Property prices across Spain have been dividing opinion over recent weeks, with official statistics and estimates that predict a couple more years of stagnation running counter to experts who believe that the bottom of the market – especially on the Costa del Sol – has already been reached.

Spain’s governing body responsible for overseeing the country’s recent ‘bad bank’ restructuring has released detailed analysis that predicts property prices will begin their upturn after two years of further falls, and another two years of relative stagnation.

The body, known colloquially as Frob (The Fund for the Orderly Bank Restructuring), estimates that by 2017 property values in Spain will increase by three per cent. Before then, however, the market is in for 24 months of small price falls – 2.8 per cent next year, in 2013, and 1.5 per cent in 2014.

Similar research predicts that the value of land will experience similar fluctuations, with recovery expected by 2016.

However, despite this recent uncertainty, the property market on the Costa del Sol has enjoyed some positive buoyancy, with reports suggesting that the number of sales has been rising in a number of areas across the region.

Local agents have cited the comparative strength of the pound sterling against the euro and the reduction of VAT on new-build property bought before the end of 2012 as the reasons for the upturn.

Experienced market commentators, analysts and agents from the region are unified on one telling home truth – the Costa del Sol generally bounces back far quicker than the rest of the market, and the signs are strong that property prices are unlikely to fall any further.

The positive sales rises on the Costa del Sol are indicative of this fact, yet there remains a deep well of lifestyle buyers who are ‘ready to go’ but are nervously, and perhaps naively, awaiting an official sign from the government and the banks that the market is in prime shape for them.

Observers note, however, that an acute lack of consumer confidence is bedevilling the Brits in particular, who appear reluctant to buy in the numbers they were doing so before the market downturn.

Elsewhere on the continent, buyers from Scandinavia, Germany, France, Belgium and the Netherlands have no such worries and are snapping up great value homes on the Costa del Sol in their droves.

Where Brits used to be responsible for some 60 per cent of all foreign purchases on the Costa del Sol, that figure is currently languishing at around 19 per cent – although the interest in a home in Southern Spain is as strong as ever.