Spanish Property Finders

If 2011 was the year in which property investors and homebuyers kept a closer eye on property prices in Spain they will spot even more encouraging trends for 2012 which are likely to generate more active buying.

These trends are likely to include better prices; better quality of new properties; encouraging rental market; more security to investors; more Government pressure on banks to balance their property books.

1. Better prices for buyers in 2012. Property prices dropped in 2011, an average of 6.85% according to the Ministry of Public Work. Prices level has reached 2005’s figures and the economic climate suggests that further falls will come.

2. The market is touching rock bottom. 2011 has probably been the worst year in terms of property prices and sales drop. If the price fall in 2010 was by 3% compared to 2009, the mentioned fall of 6.85% in 2011 compared to 2010 confirms that the market is reaching its lowest at the right speed.

3. Cash is king not only for particular vendors but also for banks and savings banks. Get your cash ready for upfront payments to guarantee juicy discounts from private sellers and financial institutions.

4. Buy-to-let is still the only short-term strategy for property investors. Unless you are a high-end investor with your clients’ portfolio, the economic situation in Spain still does not give hope for reselling in the short- and mid-terms.

5. Once again and probably forever: location, location, location and property specifications. Avoid subprime properties. Subprime tends to be easy to identify. Subprime properties in Spain are in poor locations and are bad-quality properties: poor building specifications, no lifts and frequently they need expensive refurbishment.

6. The best opportunities will come from those in need to sell. If a bank’s portfolio is the largest in the country, it’s probably because its stock is difficult to sell. Generally banks have the worst properties in Spain because the owners could not sell or rent them in order to repay the mortgage. There are good deals from private sellers who need cash and want to sell a good flat or house.

7. Timing. At this moment (the beginning of 2012), Spanish property bargains are most likely to be in the hands of private owners rather than in banks’ repossessed property portfolios.

8. Banks will still be driving the market in 2012 as they are not only holding the largest property portfolios, but also use their financial strength to tip the balance towards their own business. Banks are the easiest option but potentially not the best right now. It may change shortly if the economic climate still hitting private owners.

9. Banks’ mortgage restrictions are still tough and mortgage conditions are not improving despite the fact that Banks tend to mask bad mortgages with residual discounts: free arrangement fees, very low notary fees (the bank pays the notary bill), etc. You must shop around and find the best mortgage.

10. Buying tip of the year: As a starting point when dealing with a seller directly offer 30% of the asking price. That is the way to guarantee a bargain in the negotiation process.
 

• The original author, Spanish journalist Daniel Talavera of TheSpanishBrick.com