Property Prices

[SimonCarter]

Has anybody got a realistic idea as to how much more property prices are likely to fall until the market 'bottoms out' ?

[Robster]

How long is the proverbial peice of string ?

You should know that, as with most places in the world, prices can and do vary enormously between property tyres, regions, provinces and towns and villages - even different areas of villages ! Add into to the mix that that a high percentage of properties in many area have 'leglity issues' to consider, and you can see that (unless you are in the minority of being a cash buyer) vendors who need to so sell (as opposed to just wanting to move uo the property ladder) are having to offer their property for sale at a level where a buyer would be able to secure a mortgage - no easy task in today's climate.

If I was a gambling man, I would expect prices to fall on certain property types and in certain areas by as much as 10% before starting to recover next year. Well presented properties in popular areas will always be in demand and therefore hold their value better.

[SimonCarter]

Thankyou. Do you think I should still work to 10% for an average 3 bed/2 bath detached Villa with pool, located in a Town about 2km from the beach on the Costa Blanca ?

[MrGrumpy]

Simon , if you will forgive me for saying so, you are making a classic mistake here.
- Talking about 'average property prices' is fine if you are a Banker or and Economist, but of very little value to the guy on the ground looking at buying a a property.

For one, the guy on the ground is only usually interested in one particular type of property, in one relatively small area and in one price range - compared to the entire market, which is what theese 'averages' are based on.

Secondly, if and when you do find a property for sale that you like, in an area that you like, the price that you can actually get it for can then vary on things such as the vendor's nationality; their age; the currency they may be transfering the proceeds of the sale into; whetehr you need a mortgage or cash buyer; how desperate they are to sell and so on...

The bottom line is this : you may find some people desperate to sell who you can negotiate a 50% reduction under the asking price with, or you may come up against a vendor who is simply testing the market and not bothered either way.

[SimonCarter]

Thanks. I appreciate that it is impossible to apply what is happening with the Spanish Housing Market as a whole to any one property, and will try to re-phrase my question :

"Would it be a good idea for me to buy a property now or wait 6 months, AND, how much of a discount should I try and negtiate for ?"

I can see that I can't expect a definitive and accurate answer with the information that I have, but I would really appreaciate some guidance as a I am complete noob to buying in Spain.

[MrGrumpy]

Again, it would be wrong to apply a very broad and general 'rule of thumb' to one specific property in one specific area, but I would suggest that in general house prices have on average a futher 10% - 15% to fall before the market will start to recover, which should be mid 2013.

Just my Opinion ...

[Robster]

The general consensus some months ago was that prices in 2006 were 30% overpriced for today's market, and that by the end of 2012 they had dropped by around 22% - In other words they are still around 8% overpriced. However, you need to factor in 2 more things : There is a massive glut of properties and a massive number of people desperate to sell, so this might drive prices down even further.

[FuenteAlamo]

Hi, I just joined yesterday. Interesting question on how much further will prices fall, I don't think it's as simple as that.

There are individual cases where some vendors can't afford to drop any more due to high mortgages etc, they are often trapped as they can't sell at the prices they need and can hardly afford their repayments.

Then you have the property owners who will just stay-put with their properties on the market with multiple agents at rather optimistic prices, never having had a viewing in years. They can afford to sit it out and would like to sell but not give their homes away, this is quite understandable as they have often spent a small fortune on them over the years.

Next come the banks, they haven't dropped their prices enough to move anything in volume, and so to date haven't really impacted on market prices. That is about to change because they have been instructed to put liquidity into the banking system this year by dropping the prices of their housing stocks until they sell, this could do some damage over a couple of years and force prices lower in a short space of time instead of the drip, drip, drip effect since 2008.

As things stand, it's almost impossibe to know where the market is at right now, due to the huge disparity in situations described above.

I have a rule of thumb and that is anything purchased around 2000 -2003 is now back to where it was value wise. Anything purchased at the peak 2004 -2008 is selling at about half it's value when purchased.

As for the future, there are so many unknowns, such as the possible collapse of the Euro, or a 2 speed Euro. There is still the hidden bad news from America's banks as well as Europe's banks, all hiding off-balance sheet ticking-bombs.

What would help is if there was a 2 speed Euro, with the PIIGS (Portugal, Italy, Ireland, Greece, Spain) running a devalued Euro, especially if it was trading at say 1.75€ to the pound. We would see a boom in tourism and property rentals, resulting in more buyers from the UK obtaining a 100,000€ property for 57,000 pounds instead of 84,000 pounds as it is at present. I'll stop now as I'm probably rambling on a bit.

[Robster]

What would help is if there was a 2 speed Euro, with the PIIGS (Portugal, Italy, Ireland, Greece, Spain) running a devalued Euro, especially if it was trading at say 1.75€ to the pound.

A good idea in theory, but I can't see Brussels allowing that to happen

[SimonCarter]

So it sounds like (in very general terms) we are either at the bottom of the curve, or very close to it ?