Where Have All the Buyers Gone in Spain?

Summary: What’s happened to make Spanish sales volumes plummet so spectacularly in the year to date and what does it mean for property i

With Ireland already in a recession and the latest high street news from the UK suggesting that we’re teetering on the brink here in Great Britain, things in Spain are actually worse which makes one think that Spain could well be the next nation called up as having fallen into recession in 2008.

The latest figures relating to property in Spain and the Spanish housing market have us asking, where have all the buyers gone in Spain?  It seems that in the year to July 2008 there was a decline of over 26% in house sales, fuelled in part by lack of mortgage financing and in part by the fact that many overseas buyers have failed to come to the market.

So what does the future hold for the Spanish market and what does this mean for those with a home in the nation as well as those hoping to move to live in Spain?  Let’s take a closer look…

The amount of mortgage financing available in Spain has declined sharply – in fact, according to the Spanish National Statistics Institute the amount of lending being done by Spain’s banks has dropped 33.2% in the past year.  So, for anyone hoping to buy in, now could be a very difficult time indeed.  For British buyers considering remortgaging a UK home to release equity, there is a mortgage squeeze underway according to The Times.  The nation’s biggest lender on properties at home and abroad, The Halifax, have literally halved the number of mortgage products they are offering.  If you come anywhere less than perfect on a scoring chart for financial viability this will also reduce your chances of getting a mortgage.

Anyone hoping to sell their British home and buy in Spain is also in for a shock.  House prices have fallen 11% on average across the nation in the year to date according to the BBC, and vendors are then further cutting the price of their home when they accept offers that are typically 9% below asking price.  So this naturally reduces the amount one has to potentially spend on property in Spain.  So, in asking where have all the buyers gone in Spain, the answer is probably, they are still there but they have no way of entering the market.

For those who are in a position to cash buy, the fact of the matter is, prices for Spanish homes are falling – so why buy now when the home you purchase may drop in value right after you’ve bought it?!  In other words, many buyers who are in a position to make a move are biding their time waiting to see the market bottom out.

For those with homes in Spain the bad news is that not only have prices been falling as interest ebbed away for at least the past year, but some analysts have been cited by the BBC as stating that values are still 30% over inflated.  The general consensus of opinion therefore is that Spain’s housing market is as screwed as ours, the Irish and that in the US!  But never mind, these things are always cyclical!

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