Working as a Building Surveyor on the Costa Blanca for over 15 years Mark Paddon has good knowledge of the residential property market in the key geographical areas of EWN readership.
Mark has also consulted for TV programmes including Channel 4’s ‘Selling Houses Abroad’ ITV’s ‘Homes from Hell’ and contributed to Spanish property books. Here’s his outlook on the future of residential property on the Costas.
Firstly it is important to understand that the current health crisis is not directly comparable to the financial crisis that affected Spain badly in 2008 and hence the results will be different. Just prior to lockdown I was super busy with buyer’s structural surveys at double the normal rate, following the Brexit date (February 1st). Costa Blanca and Costa Del Sol agents were also busier than normal with a reported (and very significant) 150% increase in business following Brexit. In short, the local market was booming!
This, of course, does not reflect the entire Spanish market, which had suffered a slight downward trend since a buoyant 2018. The popularity of developments in less desirable inland locations, with the most likely buyers being Spanish, are far more volatile, but let’s face it, most people reading this are ex-pat property owners in the popular coastal areas, (a distinctly different market), which prior to the Corona Virus lockdown were doing well in terms of property values and sales. Current low-interest rates (which are expected to remain for an overlap period) are also typically beneficial to the property market and in contrast to the 2008 financial crisis (where banks got some bailouts but others suffered), in this health-driven crisis, governments are supporting individuals and companies to help them survive.
The Bank of Spain expects the domestic housing market to remain fragile for some time following the lockdown, but it expects international investment flow to find momentum comparatively quickly.
Travel concerns and flight cancellations, of course, put an abrupt stop to property buyers in mid-March, (though personally I already have a list of buyer’s wanting structural surveys as soon as the crisis is over). Likewise whilst some estate agents have seen tentative (early stage) buyers withdraw from negotiations, many also continue to work in shortlisting properties for property hunters and have numerous deals awaiting completion as soon as the notaries are in full operation again.
Lucy Hobbs of Vicens Ash Estate agents Javea comments:-
“We kicked off 2020 with a really good start, lots of viewings and deals made, Brexit had been dealt with and the real estate market in Javea was looking rosy – until now ……. the current global pandemic of Corona Virus has affected all aspects of life and the real estate sector is going to be just one of its casualties. Having said that, all of our clients that were planning on purchasing property in Javea this year have not shelved their plans indefinitely but merely taken a rain check on buying a property in Spain. So there is light at the end of the tunnel and we hope to be completing a lot more sales towards the end of the year.”
The big question in the property sector is the same as in others i.e. how long will this health crisis last? It is a common opinion that if all went back to normal within weeks, the market and demand would bounce back very quickly ( and even if there was a 50% decrease in demand, most Costa Blanca agents would be running at a late 2019, early 2020 rate of business). If on the other hand flights do not resume for some months, the sector would inevitably be harder hit, with prices potentially dropping and the return of market buoyancy being much slower.
It is essential however, to consider that unusual circumstances also result in some unusual positive factors that will help to counteract the inevitable negatives.
Nick Snelling, director of Casalasafor Consultancies (property expert for US TV show, House Hunters International and author of How to Buy Spanish Property and Move to Spain – Safely!’) says:-
‘Of course, the property market has stopped dead, but it has in almost every country in the world. However, this is just a pause and the market will recover once the corona-virus is under control and ‘normal’ life returns. Certainly, the fundamentals of Spain have not changed. Property here is excellent value compared to most of northern Europe and if prices drop, then there may be no better time to buy for years to come. Meanwhile, the overall quality of life in Spain remains the same, providing us all with amazing value for money.’
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