There seem to be a great debate now as to whether a sovereign debt crisis in Spain actually makes it a worse time to buy. Let's look at the two sides of this debate. On the one hand we have people who believe that if the country gets into further difficulty then Spanish property will not be worth anything. In some ways they are right, but only with those properties that are available in abundance or that were already so overpriced that they are still not worth purchasing.
And this is the key. The other side of this story is that just because Spain is having a sovereign debt crisis that the developers or vendors of the country are suddenly going to be accepting any price or that we can buy the Royal Palace, La Zarzuela, in Madrid for a few quid. After all, don't they say it's a "sovereign debt" problem?
The reality is that this type of crisis will sort the wheat from the chaff but the property that has really been affected is the centre city property aimed at the nationals. They are now hitting the dole queues at a a terrible rate and soon will be unable to service the mortgages on their overvalued properties. In the face of negative equity will they walk away? They might, but history shows us that in the UK when faced with negative equity many people tightened their belts, borrowed from family and waited.
So perhaps the idea of buying a property in the centre of Palencia or Bilbao could be precarious because its price may fall even more if the economy does not recover. But can this be said of the property that is, and always was, destined to the foreign market?
In the market that concerns us, the Spanish Costas, could it not be argued that it is the UK economy that decides how the market reacts? True, there is some property that really will not sell but this is not to say that we can expect 8 bedroom villas in La Zagaleta to be down in price anytime soon.
We exagerate, of course. The large existing stock of two bed two bath apartments will certainly see "price adjustments" but there is still a hierarchy of quality to follow. The best property will hold prices and will sell before others. we are seeing great property selling NOW. Many clients are being disappointed because they wait too long and then some other Northern European buys the unit. If you hold out too long
We have seen whole Spanish property developments sell out in the last few months and these were developments that have had unsold units on them for years. Why? Because the Spanish economy has little to do with pricing in Costa del Sol or Costa Blanca. All of northern Europe would love to have a Spanish villa or apartment and they are quite literally lurking waiting, like in a Dutch auction, for the price to drop just a bit before snapping it up.
The number of British buyers in Spain in the last 5 months has once again surpassed buyers from other countries, but don't be fooled into thinking you can take your time. If you find a great property, at a price you like, go for it because you may be disappointed. After all, you don't want to be buying just one more distressed unit, you want to buy a great property that suits you and that you want to use. The real estate market in Barcelona is also reacting ery well to the lower Euro and overseas byers. You could spend the rest of 2010 looking for a bargain or you could buy a bargain now and spend the rest of 2010 relaxing and using it!
Whatever you do, enjoy the journey!
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