Mark Stucklin has carried out a survey of people connected to the Spanish property market: buyers, sellers, owners and professionals and he has analysed their responses in a couple of erudite articles that can be found here and here.
Mark’s website is a source we can trust. He is a well-respected long term commentator and he is adept at analysing the statistics. There is so much misinformation flying around social media these days that we need trusted sources like Mark.
Mark has asked his respondents a series of questions about how they think the market will change as a result of the coronavirus, the lockdown, and the economic downturn. There are a number of conclusions that stood out for me:
“the majority of agents and developers in the holiday homes market could go out of business”
“Spanish second-home prices to fall either a lot or a little”
“most people expect demand to recover fully in a few years”
Personally I believe it’s also important to recognise that he is reporting on people’s opinions. Mark himself is very clear about this. These people’s opinions do count because they are all connected to property. They also count because there is a reasonably large sample of them.
Personally I see this mainly as a tool to sharpen my own thinking rather than necessarily to believe the opinions expressed.
My own experience of the Spanish property market is that it is highly localised (like all property markets). In the last economic crisis the asking prices for prime property in Marbella either on the seafront or in gated communities like El Madroñal or La Zagaleta and other areas around Nueva Andalucia didn’t fall. Activity dried up, valuations (whatever that means) fell, but asking prices were very robust.
This is because sellers didn’t, by and large, need to sell and they waited for the market prices to catch up with their unchanged asking prices. This is true of private sellers anyway. Property owned by commercial investors may have changed hands in remote offices and labelled debt restructuring.
And prime property is, well…..prime. It all about location and if you want the best location you will probably have to pay for it notwistanding financial crises and epedemics.
Distressed sellers, those who had no choice perhaps because someone died or changed jobs or got divorced and so on, are taken to the cleaners especially in a donwturn. In my experience these bargains are mopped up by the local community, lawyers, estate agents, who have the cash and who know about the opportunity before anyone else. I think it is almost impossible for foreigners to parachute in and find a distressed seller and pick up an absolute bargain.
I say almost impossible but I daresay it may be possible by spedning some time on the ground nurturing contacts and being prepared to share the opportunity with the local players. It is important to research and understand thoroughly the local market in order to be able to recognise the bargain for what it is. This takes time.
What is my opinion on what will happen to the Spanish property market as a result of coronavirus?
Firstly I would caution against believing anyone’s opinion including mine at the moment.
I would reiterate my point that the property market is highly localised. General market numbers are of interest but they contribute only background information to your purchase decision that should be taken according to local market conditions. This is the exciting part of buying property and of property investment.
I might also say that it doesn’t, at the moment, feel the same as the 2008 financial crisis. Am I the only one bursting to spend money on a holiday, flight, restaurant meal, haircut? We can be confident there will be a surge in demand in most economic secture as and when the lockdown is lifted.
Of course some people will have fallen over so there will be a possible supply problem. But if there is demand the market should replace those unfortunate people quickly.
I think it is far too early to say what might happen. The 2008 crisis probably is not a playbook for what might happen with this one.
My heart goes out to those who don’t have savings and whose income has disappeared and also of course to those who have lost friends and family members.
Author: John Wolfendale
Bio: John is a founder of Eco Vida Homes and is passionate about bringing modern design and construction practices to Spain. He believes a home which is warm in winter and cool in summer is largely a matter of design and selective use of materials. He is British and a Chartered Surveyor with over 24 years experience living and working in Spain.
Author: Eco Vida Homes is a team of Architects, Technical Architects, Builders, an Engineer, and a Chartered Surveyor. We help people design and build beautiful energy efficient home, designed for Mediterranean living, in Marbella and Southern Spain. There are two things that make us stand out: a sharp focus on our clients’ needs and everything we build is comfortable and energy efficiency………..It’s like Grand Designs………… only without the drama.