Over recent months we keep hearing more and more about how cheap property in Spain is becoming. A real case of supply outstripping demand.
Has there ever been such a great time to buy? If you believe everything in the press then this has to be a great time to jump in. Low prices, 100% mortgages, 50% IVA discount on new properties, etc.
Most of us who bought in the “glory days” are feeling a little nauseous at the moment as prices continue to tumble, but for those looking to buy today, surely the press must be right and now is the time to benefit from such a depressed market…not to mention depressed property sellers!
But are there real bargains to be had?
There’s only one way to answer that question and that’s by getting out there and checking it out first hand.
What better way to waste an estate agent’s time than to make him show you loads of properties when in actual fact you have no intention of buying anything (this is a typical client these days…I’m told!).
But luckily the agent in question is a good friend; Andrew Hamilton from Hamilton Homes
so he wasn’t too upset that I wasted his day, I think.
The brand new apartments
As I suspected, if you want to buy a brand new two bedroom apartment then you are spoiled for choice. 110,000 Euros gets you a good quality apartment on a nice complex and the bank will happily give you 100% finance, possibly a little more too if you ask nicely.
They may not be in the best locations but they are more than 50% less than they were when initially marketed during those glory days. I feel for the other owners there who paid the higher prices and now see these properties advertised for so much less. But hey, most of us are in the same boat.
Then there are other properties in much better locations, such as on the seafront of which some have been reduced by an astonishing 75%. But to me these were severely overpriced to begin with, so I don’t think that drop in value is quite what it seems. Still, some people there will have paid those outrageous initial prices.
So where new apartments are concerned, yes, they have come down a lot and they are available much of the time fully financed.
Will they continue to come down in price? No one can say for certain but they are definitely selling going by Andrew’s excel spreadsheet. So it’s only a matter of time before the remaining ones are sold.
But once these quality properties are sold, that’s going to leave the, let’s call them “less desirable properties” available on the market and these will be the last to go over the next few years. These will get progressively cheaper as the banks that own them come under increasing pressure to get them sold. This is just my guess but by going off the current reduced prices for quality apartments, I wouldn’t be surprised if in two or three years we’ll be seeing the “less desirable properties” coming onto the market at around the 40 - 50,000 Euro mark. I can’t see any other way other than those low price levels to get them shifted.
The brand new townhouses
It’s a fact that developers built many more apartments than townhouses during the glory days. Searching for a decent new townhouse to buy I assumed that they should in theory be more difficult and probably not with the level of discounting I saw with the apartments.
But I was wrong.
I looked at some beautiful, great quality, large townhouses which had been reduced from 495,000 Euros to….wait for it…209,000 Euros. These are large good quality properties but the location isn’t great, which probably explains the price drop. Finance on these was at 80% and they were selling. There were other people looking at them, one had just been removed from the list of available properties and there were only a few left.
Great townhouses at the right price seem to sell.
I was then taken to see some other brand new townhouses which again, weren’t in the best of locations but they too had been reduced by some silly figure and they were now on the market at 199,000 Euros with 100% finance.
And what a difference. These were truly awful. The poor build quality, low quality fittings, tiny rooms, low ceilings, etc. You name it these townhouses had everything you wouldn’t want in a property. The bank literally can’t give these away and I suspect prices of these types of properties will have to fall and the banks may have to finance over 100% to get them sold. Who would want them?
These reminded me of the fact that many developers assumed that if they built them people would buy them. These properties belong to a different era. Yes they have come down in price, they are fully financed but they are also crap. That’s why I was the only muppet checking them out!
Is the bargain property myth busted?
Well yes and no. There are bargains to be had but there are good and bad bargains. The last thing you would want to do today is buy a lemon of a property. That would be inexcusable.
From what I saw on my day out with Andrew, the great properties are selling (slowly), even if they aren’t in the absolute best locations, whilst the inferior properties still have some way to go and they will get cheaper; they have to.
So at the end of the day it depends on what you want. It seems that the properties being sold at the moment for low prices are the better properties, and then in two or three years time it’s those less desirable ones that are going to be left. Most agents are now only pushing those new properties which they know are good and will probably sell at the current price levels.
What is particularly worrying is that the level of not-so-good properties is much higher than the good ones, so I still think it’s going to take many years to shift all of these. Like I said before, many belong to a different era where anything sold but that’s not today’s or tomorrow’s market.
So that’s my roundup of one day looking at new properties for sale. Every area will be different but that’s what I saw and found out for myself. If I had some cash to spare I would be seriously tempted to snap up one of those 100% mortgage quality apartments, they were that good.
How very tempting.
Anyway, this is what I found in the area of Manilva/Duquesa, how are things looking in your area? Leave a comment below and let me know.