Some of the smaller markets in Spain saw sales increases in the summer of 2014 (up 8.8 percent from 2013) and an increase in the number of mortgages being given and taken (up 19 percent). Even prices rose slightly, up 1 percent after six years worth of drops. Could this mean recovery?
Well, we will just have to wait for the next two or three quarters to see if things keep coming back.
What is helping properties for sale in Spain at the moment? People are regaining their trust in the economy, and are seeing that prices have hit all-time lows and that financing is available for purchases now.
So, who are we talking about exactly? Are there any trends in the way that they are purchasing? Are they seeing and doing things differently than they were before the bubble burst?
1. People buying are planning to live there more often than not. Only one of three buyers is buying property to have as an investment.
2. People buying are now thinking about the long-term instead of the short-term. In 2007, people buying wanted to buy and then turn around and sell for a profit. Now, people want to buy properties to have for the long haul, or to rent out to turn a profit. If you can make more than five percent off of a property, it is considered a good investment.
3. We are seeing drastic changes in where buyers are coming from and how old they are. Almost half of mortgages before the crisis were for people from other countries. This has dropped to a mere three percent! Younger buyers are also more rare these days: only three percent of those younger than age 25 are buying homes. Foreign investors, however, are on the rise. An agent can have four out of every five clients be a foreigner ate the moment. Some agents are even hard-pressed to find any Spanish clients at all.
4. The prices have definitely dropped. It depends on the region, but we are looking at between 30 and 70 percent, which means that houses are around 60 percent cheaper than they were in 2007.
5. To buy or not to buy? People are taking their time considering whether or not to buy properties. Agents say that people want to see more properties than before and they are pickier too. They only purchase if a property meets almost all of their standards.
6. Is it too risky to build? Not in Madrid and Barcelona, because fewer properties have been being built recently, but in other regions, it can take up to a year to sell a newly built flat in a housing unit.
7. Let’s chat. Before the bubble burst, the asking price for a property was the asking price. Not anymore. The buyer is certainly negotiating these days, because they can. Sellers are in a tight spot these days, and only 70 percent of offers actually go through to a completed purchase, so lower offers are accepted more often.
8. No inflation here. Apartments are only selling if they are at or below market value. Sellers must consider reducing prices for quick sales.
9. Only about half of the purchase price can be financed by buyers from out of the country. They used to be able to mortgage almost all of it.
10. There has been a drastic fall in the average mortgage value. In 2007, the average was 185,462 euros, but now, the average is just 81,318 euros! Also, complete financing is a rarity at the moment. Only about 70 percent of the home value can be financed now, compared to almost 90 percent before. People used to buy homes that cost up to sixty percent of their income, and this has dropped all the way down to 24 percent currently. It is not recommended to spend more than a third of your income on your mortgage.
11. Who is selling? The banks, actually, but the good properties are in private vendors hands. Ture is that Banks are the main sellers, ahead of private home owners, and followed lastly by those building new housing.
12. What kind of home is selling? Larger homes than buyers imagine themselves buying. Before the crash, people had to lower their expectations, but now, they are seeing they can actually afford more than they thought. Also, more and more people are buying their home for the long-term instead of the “starter home” to be sold in a few years.
13. Buyers are more professional. They are starting to realize that homes are huge investments, so they are in need of solid advice from the pros. This all leads to a more professional buying and selling situation as well.