The Spanish Property Crisis – Pricing Your Property For Sale – Part 2

So, how do you ‘call’ the current Spanish property market? How long will the crisis last? The answers to these questions will define everything – from whether you bother trying to sell now to the sale price you place on your home if you do choose to sell.

Without doubt, we are in a crisis situation. There is no getting away from the starkness of this fact and to pretend otherwise is pure folly. That said, a property crash of some depth would probably have occurred in Spain irrespective of the current world economic problems. A combination of massive over building and unrealistically high property prices were always going to lead to a major correction. Unfortunately, this has been exacerbated terribly by the world credit crunch and the resulting global economic meltdown.

The facts, in the medium term, are not encouraging for any Spanish property owner. Tinsa (a respected Spanish property appraisal company) predict further price falls of 20% in 2009 with the worst drops occurring in the very coastal areas so popular with us Britons. Meanwhile, the property market is still being flooded by new builds as the record 2006 starts are completed. It is possible that there may be as many as 1.5 million new builds for sale throughout Spain by the end of 2009. On top of the new builds, of course, are resale properties. No-one knows for sure how many are for sale but there may be as many as 1 million on the market – making a total of around 2.5 million properties of all types for sale.

Making matters worse, for us Britons, is the horrendous drop in the value of Sterling against the Euro which has meant that pensioners in Spain have seen their income drop by around a third in twelve months. For many, this has made living in Spain unsustainable thus placing many properties onto the market in high density British ex-patriot areas. The simple laws of supply and demand therefore mean that prices in these areas are weak and, unless Sterling makes an astonishing recovery, will remain so for some time to come.

Meanwhile, of course, Spain is heading towards a major economic crisis with the government predicting unemployment for 2009 to rise to 16% – with some commentators believing that this will reach 20%.

Any ‘call’ made about the future is always going to be an educated guess and is only something that you can do yourself. However, it is hard not to believe that the present crisis will not last for some years. Accordingly, if you either want to sell or, worse still, need to sell then you may have to price your property with a gloomy future in mind.

Finally, do not forget that in a property crash buyers have the upper hand and know it. They will be looking specifically for ‘distress’ sale prices which to you and the market as a whole will appear ridiculous. These grossly distort values downwards but, until removed, will define the current market price of your own property. Whilst you should avoid joining this particular battle, you must at least price your property very tightly to draw buyers to your home.

Sadly, pricing your home for sale in a property crisis is always going to be a painful task and one that is invariably replete with disappointment. However, it is something that has to be undertaken ruthlessly – albeit that it is only one of the many marketing tools available to you when it comes to selling…

By Nick Snelling – Author of “How to Sell Your Spanish Property in a Crisis”

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