Spanish Property Market Rebounds As Hurdles Removed

The Spanish property market is finally experiencing a rebound

, some months after rebounds began in many of the world's property market. Property in Spain has been one of the biggest sufferers of the recent financial crisis, largely because the international crisis exacerbated what was already a housing market crash-in-the-making fuelled by over-supply in many areas.

Spain is a funny one, because even when all the news on the Spanish property market was negative, Spain was coming up in first and second place in the charts of UK based overseas property portals.

Spain was still the most popular British tourism destination, and demand for property remained strong even during the worst of the crash. In fact agents have reported only a 20-25 percent drop in enquires for property in Spain. Two main things working in tandem prevented this demand from turning into sales in all but a fraction of cases.

1: Repossessed Properties

As the credit crunch became a financial crisis of global proportions, thousands of Spanish properties began getting repossessed. In the brochure these were the answer to all our prayers, the chance to buy a property in Spain for a fraction of its peak price.

What the brochure didn't say was that the banks were offering and selling all the best properties to their own staff, who had first refusal before they went out for sale. What the brochure also didn't even hint as was the numbers of people who had chosen to default on their mortgage because the value of their property had plummeted due to over-development and then the financial crisis.

Thus, the large majority of repossessed properties were far from a foreign buyers dream holiday home, far even from being a good investment. None the less, these repossessed offers took up and wasted a lot of genuinely interested foreigners time, preventing what may have been sales otherwise.

2: Underestimation of the Crisis in the Industry

At the same time developers and agents the length and breadth of Spain were refusing to drop their prices. So, we had the repossessed properties on one side, which were cheap but not a bargain, and we had the developers and agents trying to sell their properties at peak price of neither cheap nor a bargain, and nothing in between; nothing to fill the void between buyers and sellers' expectations of the Spanish property market's current reality.

Developers and agents had underestimated the severity of the crisis. Many thought that the sales would pick up again once the summer came in. That is why Spanish property sales have been increasing since about September last year. This is when developers and agents realised they needed more than a hot summer to repair their balance sheets and began offering discounts.

Since then, we know that agents and developers, especially in the prime areas of Spain, the Costa del Sol, Marbella, and Andalusia have seen sales surge on properties discounted by between 20 and 40 percent. This has continued into this year, with reports of sales up 150% on 2009 in the first quarter of this year.

by: Gen Wright

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