A wobble for Spanish property

It’s a New Year and a new marketplace for the Spanish property sector, as the bargain hunters for Costa villas and apartments gather like UK High Street shoppers prowling for closure sales and colossal discounts…

With developers and builders going down all over Spain and estate agents shutting up shop on a daily basis, 2008 was clearly the worst year ever for the property business in Spain.

The economic crisis buffeting in Spain sent the number of bankruptcies soaring by 182% to 2,864 in 2008, 38% of them in the real estate sector, reveals a new report from Pricewaterhouse Coopers. “Between October and December there were more insolvency proceedings than in all of 2007,” says the report, which warns that the commercial courts could collapse under the workload if this trend continues in 2009.

Bankruptcies amongst developers and brokers rose from 74 in 2007 to 387 in 2008, and in the construction sector from 182 to 692. The rapidly rising number of property companies being forced into administration, like Martinsa-Fadesa, is likely to have a significant impact on the market.

There is even more bad news - the number of Spanish properties bought and sold in October (39,201) was 27.5% less than the same time last year, according to the latest figures from the Spain’s National Institute of Statistics (INE). In the first 10 months of the year, sales are down by 28.4% compared to last year.

That means that the Spanish property market has shrunk by almost 30% in a year. Instead of producing 600,000 homes a year, it’s now doing 400,000 – still more than the UK, Germany and France combined.

So, maybe, more of a wobble than a disaster? A viewed now shared by many buyers in Northern European countries where growing recession, ineffectual Government action and uncertain futures are combining to focus on grabbing some of the property bargains available in Spain.

While new build prices are falling 6.6%, the biggest ever recorded, according to Sociedad de Tasación, one of Spain’s leading appraisal companies, there are plenty of homes – key ready with 10 year guarantees and resales with appliances and furniture – that can be snapped up at prices 30-50% below their current valuations.

It seems that enough is enough for many families and retirees in the UK and other colder climes and they are now clamouring for the big discounts in the warm, welcoming Costas.They Google search for “Spanish bank repossessions” and “Half-price property in Spain” or even “Must sell Spanish homes” and they find the top ranked source for exactly this kind of property.

It’s PropertyInSpain.Net, a long established website with a good affiliate network on the ground to help registered buyers find the best deals. They have 1,000s of bargains and an online showcase of properties to tempt the discount hunters. Just as important, the banks are prepared to lend up to 80% of the price, given the unprecedented loan to value ratios.

Massive discounts, generous low cost mortgages, cheap flights to a still low-cost country from a high-cost, chaotic homeland threatened with burgeoning tax bills for decades, is a bit of a no-brainer for the 250 families a week registering for Spanish bargains…