Unless you’re an astute investor, be careful about buying Spanish property – the market is a mess.
Start out by being prepared to ignore what agents and developers say to you – they’re desperate to sell and will say anything, and in Spain, that means anything…
Statements such as – ‘the banks have stopped repossessing so prices are going up, the British are coming back into the market, there’s no new property coming on the market, they’ll never be another chance to buy here again, they’re selling it for less than they bought it for, we’re taking a loss on this, we’ve spent all our savings doing it up – you get the idea.
The fact is that there are still thousands of empty, mostly illegal properties just waiting to come back on the market at some time in the not too distant future, particularly in places like Calahonda, La Cala, Benahavis, Torrequebrada and even Benalmadena. (These are all towns in and around Marbella and are previous hot spots for foreign and British investors.)
At the moment however, the Townhalls are reluctant to issue licenses to any development that was built ‘illegally’
But prices cannot go back up until this empty stock is cleared from the market and that is estimated to take another 2 years at current rates. Even now, among legal properties, it is estimated that the Malaga area alone has over 2,000 empty units and most of them are well out of the price range of local residents.
If foreign investors are absent and local residents can’t afford the current prices – then work it out for yourself. Prices are going nowhere for the time being.
Add to this the discrepancies in the market itself. Two houses can be sat alongside each other and one is on the market for €400,000 and the one next door is on for €200,000 – yet they’re identical.
The reason for this is because everyone is looking for a sucker as big as themselves. But suckers are thin on the ground at the moment.
Take the unfortunate Brits who didn’t know their property was illegal when they bought it and who seemingly can’t understand the callousness of the Spanish government.
We constantly hear of British buyers who ‘didn’t know ‘ that their property was illegal now that they want to sell it. They’ll go on a UK TV documentary and moan that they ‘thought’ it was worth $500,000 because the agent assured them it was and now they can’t get anything for it because it’s ‘illegal’ and isn’t even worth half that price. They were originally told not to worry that the property is illegal, they’ll just get a fine and everything will be all right.
Illegal is illegal, the only difference now is that the Townhall has decided to impose the law…
I’m not aware of one person who didn’t know their house was illegal when they signed the contracts at the Notaries office! I don’t know of one person who didn’t know that $500,000 was too much to pay but ignored the warnings in their pursuit of greed and a quick buck.
I do however know of several situations where people happily bought illegally thinking they got a ‘bargain’ and are now participating in rallies and demonstrations up and down the coast claiming they were cheated.
I know of several instances where people have bought not one but several properties expecting to sell them before completion- a mugs game – knowing that they could never get €2,000,000 worth of mortgages if they ever had to complete. According to some British documentary makers, the Spanish government is at fault for that as well…
The fact is that Spanish property went through a bubble, agents and developers got rich, many UK investors left their brains at the airport and sometimes didn’t hire solicitors or take valuations in pursuit of a quick deal – and now they’re paying the price.
There are many people out there who did do everything right and are simply the victims of a falling market. That can’t be helped.
But if I were you, I’d hang fire or do what one bank suggested – offer 20% less than the current market valuation!
Don’t get me wrong. There are people who want to walk away from this and whose properties are on the market at a sensible price. But you’ll need to have your wits about you to find them…
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