InspectaHomeSpain Latest Survey on Snagging and Buying Trends in 2007 -2008 based on information for 700 Spanish New Build Properties

Introduction

Two years ago InspectaHomeSpain published its first survey report based on 350 new property inspections www.thesnaggingforum.com and with the incredible changes that the Spanish property market has gone through an update was overdue.

In the latest survey we look at inspection results for 700 properties, checked over the period from April 2007 – December 2008, in the Costa Blanca, Costa Calida, Costa Almeria and Costa del Sol areas.

The survey includes a good cross section of results as they are based collected from properties built by 55 different developers, and includes resorts and developments from Polaris World, Calidona, Taray, Peraleja Golf, United Golf Resort La Tercia, Hacienda Del Alamo, Quara, Technologica, MASA, Urbanasa, KeyMare, Azul, Meriban, San Jose, Alfa Noray and San Antonio.

One large developer, knowing that we were about to publish this survey asked, have  standards improved since the last survey?  The simple answer was yes, but not necessarily as a result of actions by the developers.

The truth is that, according to our customers, advice gained from forums, articles in the press and our information packs have been invaluable in helping to educate them on their rights and questions to ask on the common issues including the Certificate of Habitation, builders supply and their right to compensation for contractual infringements.

Previously buyers would never have refused to complete on a property, and we have seen a significant increase in our involvement in dispute resolution, as part of the snagging management process.

The survey now includes information on buying trends including furniture and mortgages and looks different mix between lifestyle and investment buyers. Some results from the survey included facts that 72% of all buyers purchased furniture pack and that it is not all doom and as 89% of buyers were happy with their purchase in Spain.

The change from a sellers to a buyer’s market, more key ready properties available, developer’s bankruptcies, distressed sellers and a flood of resale offerings, means far more choice for the educated buyer, more buyers demanding to negotiate better contract terms. A more worrying trend, well documented in the press, is buyers concerns about the completion of all of the facilities advertised as part of the development, normally shown in the glossy sales brochures which promote the commercial centres, hotels, Spas, Clubhouses, Bars, and Golf Courses. 90% of the people surveyed didn´t realise legally these facilities are not part of any sales contract and that very little can be done if the builder doesn’t build them, leaving the buyers with properties that have no facilities and are impossible to rent out.

If there is one message for the agents, promoters and developers it is that people are able to vote with their feet, there´s plenty of choice for the buyer, reducing prices and the buyer expects an improved quality product and a responsive after sales service, with improved communications during the buying process and AFTER completion

Summary of Report & Findings

The following summary highlights some of the statistics with a more detailed breakdown included in the main survey report but it´s not all bad news as there were improvements in a number of key areas

• This survey is based on inspections carried out to 700 new build properties constructed by 51 developers/promoters over 21 months period from April 2007 – December 2008
• Property types varied from apartments to detached villas with the largest percentage being 2-3 bedroom apartments which represented 62% of the total properties checked
• There has been an improvement in the delivery times for properties surveyed
• For properties delivered more than one year later than the contract date the percentage decreased from 37% to 22%
• Properties delivered that were between 6 months and 1 year later than the agreed contract date the percentage increased from 53% to 61%
• Properties delivered on time or within 3 months of the agreed contract date increased from 10% to 17%
• The message regarding Cédula de habitabilidad o licencia de primera ocupación, Certificate of Habitation, being legally required before completion has certainly being understood. 83% or 581 properties had a Certificate issued at time of completion compared to 11% in the last survey. More than 100 buyers exercised their legal right by refusing to complete until the certificate had been issued but later went on to complete successfully within 6 months.
• There was a reduction in the average number of defects found in each property with a total of 38500 individual snagging defects found, an average of 55 snagging defects per property, however this a higher percentage of smaller properties were checked, 2-3 bedroom apartments. The survey includes a breakdown of property defects by property type which show a reduction in the number of defects in every type of property.
• A significant change in Spanish construction is the move to having non-textured wall and ceilings with a subsequent increase in defects which are now the most common defect found, 14,850 equalling 39% on all defects recorded.
• Tiling still comes in a close 2nd defects including damage, and problems with levels, defects found 13,420 equalling 35% of all defects recorded.
• The average time for the developers to repair 90% of the snagging defects was 51 days
• An average of 4 visits were to properties to resolve snagging defects
• Almost three quarters of buyers 73%.of all buyers purchased properties as an investment, often based on information provided by agents on rental return and capital appreciation and
• 74% of all buyers requiring a mortgage, 54% at 70% of the contract price
• 89% of all buyers surveyed told us that they were happy with their purchase in Spain

The information that has been used for this report has been collected from reports commissioned by buyers and carried out by InspectaHomeSpain in the Costa Blanca, Costa Calida, and Costa del Sol and Costa Almeria areas.

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A full copy of the survey can be obtained by mailing survey2008@thesnaggingforum.com