Are more property price falls on the way for Spain?

The gorgeous towns of southern Spain have enjoyed a more stable property market since the downturn

Predicting which way the Spanish property market is going to go is an often foolhardy errand.

While prices have scraped along the bottom for the past two years, some figures have shown that prices in certain parts of the country are on their way up once more.

But then other sources predict that prices still have a little way to fall before they can fall no more. The whole market is pockmarked with phrases calling out ‘gaining momentum’ or ‘further slumps’ or ‘protracted correction’…

The most recent attempt at understanding the market in Spain comes from Standard & Poors (S&P). The global credit agency has reported that Spanish house prices are likely to fall by a further 13 per cent before the end of 2014 – indicating that there are at least 18 more months to go before prices begin to rise.

S&P are well respected and often on the money, so industry watchers are treating this news as serious and accurate. There are few reliable studies or reports available that could counter their claims, which go on to report that since March 2008, Spanish property prices have fallen by as much as 28 per cent.

S&P has no interest in selling property, promoting Spain or adding value to a commodity that was selling like the proverbial hotcakes a few years ago. Impartiality is something the industry needs.

But it also needs compartmentalising, too. Reporting that prices are falling across the board fails to see the wider picture. Namely, the regional variations that have always characterised Spain’s property market.

Demand for housing and access to mortgages is sluggish in the northern areas of Spain, which has traditionally relied on domestic demand to keep the market ticking over. And as we all know, the domestic situation for millions of Spaniards is incredibly tough right now. Unemployment stands at record levels and job security is shakier than a cocktail bar on a faultline.

But on the Costa del Sol – which has reported increased tourist numbers, increased tourist spending and the announcement of yet more direct flight routes to and from some of Europe’s more affluent areas – property prices are moving in the right direction.

Along with the rest of the market, property prices on the Costa del Sol fell sharply after the post-2008 economic collapse. They had to. But since that fall (a price correction in all but name, really), stability and confidence have returned to the market, aided and abetted by robust and perpetual interest from foreign investors.

It’s the wealthy Brits, Dutch, Germans, Scandinavians, Russians and Chinese who are keeping much of the Costa del Sol property market ticking over, attracted by competitive prices, brilliant choice and that wonderful Costa del Sol lifestyle.

So while prices may have some way to fall throughout much of Spain, the Costa del Sol is leading the way to recovery. Just as it always has…