Mortgage approvals in the province of Las Palmas, of which Lanzarote is part, fell by nearly 36% in the first quarter of 2008. According to figures recently released by Spain’s National Institute of Statistics. Suggesting that property prices on the island are now likely to follow suit – despite the fact that tourism is still enjoying an upswing.
The statistics from one of Spain’s most respected official sources reveal that mortgage approvals in the first three months of the year fell from 14,546 in 2007 to 9333 in 2008. As a weakening domestic economy and growing international pressures all colluded to impact upon the hitherto healthy market for property for sale in Lanzarote.
Historically, Lanzarote has been a firm favourite with overseas investors. Especially in the UK – thanks to a buoyant, year round tourist trade that provides owners of holiday properties with a reliable rental income for twelve months of the year.
The majority of overseas buyers apply for mortgages locally – in order to take advantage of lower interest rates in the euro zone. But just as elsewhere island based banks have started to impose tougher lending criteria and conditions. Whilst also imposing more realistic valuations on vendors – so exerting a downward pressure on price.
Ironically, the island has been enjoying something of a renaissance in tourist terms recently. With overall foreign visitor numbers rising by 8.7% in the first five months of the year. But now, property prices on the island look set to head in the other direction. As more vendors chase fewer buyers.
A straw poll of the islands leading estate agents certainly seems to corroborate this view. With all of the three largest agencies reporting a growing number of price discounted property coming onto the market. And a cursory glance at many agents websites tells the same story – as the number of properties reduced in price grows by the week.
According to Nick Ball, editor of leading Lanzarote property portal Lanzarote Guidebook; “There are still buyers out there. But they are now definitely starting to exercise more caution. Of the 1500 enquiries we have received to date this year the vast majority have been for lower priced properties such as studios and apartments in the main resorts. With little interest being shown in anything priced above the €300,000 mark”.
Other local agents, such as Warwick Pemberton of Freedom Properties suggest that Lanzarote is now on the verge of becoming a buyers market. Enabling bolder investors to secure properties at prices way below their previous market valuations.
Written by
Nick Ball
Nick Ball is editor of Lanzarote Guidebook – the in depth Lanzarote tourist information website