Tuesday, February 8, 2011

TINSA February 2011

The Spanish property price valuation index as estimated by TINSA has dropped by an average inter-annual rate of -5%

Download the latest TINSA property price index

The interannual rate of change was steadily decreasing toward the end of 2010, but the downward drive in prices seems to be showing steeper falls once again.

The biggest drops in inter annual valutaion were seen in large cities (-6.5%) and the Meditereaean properties (-8.4%)

This indicates that confidence in property prices across Spain is falling, and that prices are yet to hit the bottom.

The estimated price drops may be due to the banks revising the prcies of their property portfolios that they have respossed from people who have been unable to keep up their mortgage payments.

An increase in the unemployment figures published last month is alos likely to be a contributing factor as more and more people are forced to hand the keys to their properties back to the banks.

Bank Respossesions act as a negaitive feedback into the system, forcing prices down further.

Investors looking to purchase at the bottom of the curv would be best advised to bide their time.

The general message to potential buyers is to continue waiting as property prices continue downwards.

Those looking to move to Spain would be best advised to rent.

Sunday, February 6, 2011

Market report for 2011

Nick Hagan a reporter from adferro asked me 4 questions:
Will we see an ongoing decline in Spanish property prices in 2011 ?

The best data indicates that prices are still falling and will continue to do so throughout 2011. The rate of decline appears to be falling so those looking for the bottom of the market should probably continue to wait.

Will low-rate mortgages continue to be widely available in Spain?

Most analysts are predicting modest rate rises but finance is still relatively cheap and easy.

The easiest way to get finance is to purchase a property from the bank itself, many are offer rent to buy options or low or no deposits. That said bank repossessed properties don't always offer the best value for money.

What should bargain hunters be looking for when searching for Spanish property?

Bargain hunters should be looking for "Pre-repossession distressed property".  This is property that still has equity, where the owner cannot keep up to date with the payments and is in a position where he is forced to sell or give the keys to the bank. These properties often represent the best value for money.

As the banks that have been forced to repossess properties need to liquidate these assests, they will have to reprice their property portfolios. Look out for bank properties that have been significantly reduced in price.

Don't pay the full asking price. It's a buyer's market, make a low offer

More generally, what are your predictions for the Spanish property market in 2011?

I think we will see a modest improvement in the number of transactions as the bargain properties are hovered up.

The conditions that have caused the crisis in Spain are not going away:
  •  Massive unemployment
  • Bank repossessions
  • A huge glut of property on the market
  • The global financial crisis and property crisis continues to exert a downward pressure on prices.