In the last couple of weeks have seen some pretty astonishing reports and figures coming from several companies, with regard to the condition of the Spanish property market.
So why are so many newspapers and estate agents talking up the Spanish property market? And it is not just Spanish companies who are claiming that the drastic fall in Spanish property is bottoming out. The problem is that many outlets, including those in the UK, are seeing this perceived leveling off of appalling property sales and values, as somehow being a clear indication that the Spanish property market is about to move into boom-time.
Many British online and off-line Spanish property sellers say that visitor numbers and enquiries reached an all-time high over the summer months. That in itself seems a little odd, as summer is actually the slowest part of the year for Spanish property sellers.
If we are to believe these reports they indicate that this summer was the exact opposite. One company even reported that they had nearly 50% more visitors this summer, than last summer to their property website.
The same company also claims that their monthly visitor numbers grew steadily from spring through to the end of summer; this also seems strange, as Internet traffic in general declines dramatically in Europe during those months.
According to R. R. de Acuña & Asociados, who are Madrid-based analysts who specialise in real estate, there are approximately 3,000,000 properties languishing on the Spanish market waiting for buyers.
They estimate that there are nearly 1.7 million houses and apartments that lie empty, as well as 325,000 properties that are “under construction” but have no viable completion date.
To add to these already huge numbers there are around 1.1 million residential property units for which planning permission has already been given. The big problem with these Spanish construction permits is that the building must be completed within 24 months.
When you add up all the numbers that is over 3 million properties that have been, or are due to be built in Spain, over the next year or so. This adds up to a catastrophic over production of new properties as well as a massive glut of resale residential units.
Then there is the slight problem of the credit crunch, and the difficulties facing buyers who actually do have an interest in purchasing a property, as banks and other lenders are not totally enthusiastic about handing out a reasonable percentage of the cost of buying a second home in the sun.
The Spanish buyers are few and far between, as estimates say within months there will be somewhere between 25 and 30% unemployment in Spain. Not to forget the 700,000 people that have been employed thanks to the Spanish stimulus project “Plan E”, which if not renewed face unemployment by October/November. Not exactly the best climate for anyone trying to sell off these huge numbers of new and resale properties.
Yet despite these figures, and a general common sense feeling, that any kind of a recovery in the Spanish property market is a long way off, two sectors seem to have gone into overdrive pushing the concept of yet another Spanish property boom.
The first is obviously the real estate agents, based in Spain and other European countries, who had become well accustomed to selling and renting properties in huge numbers, in particular to foreigners, throughout the 90s and early part of this decade.
Those same agents are now languishing with books full of un-saleable properties, so there seems to be a concerted effort to “talk up” the Spanish property market, by interpreting a possible end to falling prices, as a sure sign that people who buy now, can only make a huge profit on their investment.
The other set of organisations with an interest in seeing the good side of any slight chink of property light, are the newspapers, in particular local English-language Spanish papers, who for many years relied on page after page of property display advertisements filling up their classified section and bank accounts.
While Mark Stucklin of Spanish Property Insight, suggest that “recovery won’t come until 2013, by which time the sector will be just half the size it used to be, it that,”, the report from RR de Acuña & Asociados suggests that there is no recovery in sight until 2016.
The only conclusion can be that there is a huge number of available properties, and anyone who does have the cash available to buy, should not be sucked in to buying any of the 3 million properties, that is not an absolute bargain.