Spanish House Prices fell by 6.6 % in Q1

Compared to the final quarter of 2012, prices for Spanish homes declined by 6.6% in the first quarter of this year, their sharpest drop since 2007, when the housing market crashed and the economic crisis began. It is also the year when the National Statistics Office started collecting data for their house price index.

Prices dropped for both newly constructed homes and second-hand homes. The former saw a price drop of 6.5% in quarter one and the latter recorded declines of 6.8%, compared to the final quarter of 2012.

So what does this mean for hopeful Marbella buyers?

While the luxury end of the market has seen a surge of buyers come forward from emerging markets like Scandinavia, Russia and China, the mainstream market still offers buyers some astonishing bargains, particularly at entry level. Resale studios and 1-bed flats can be purchased for under EUR 100,000 in some parts of Marbella.

In leafy, up-and-coming Elviria new luxury apartments start at asking prices of EUR 250,000, while in Puerto Banus buyers are hard pressed to find the same size apartment for EUR 500,000. In El Madronal and La Zagaleta, buyers need to dig deep into their pockets and draw out at least EUR 1 million to buy a home.

The Costa del Sol is still one of Europe’s most popular holiday and real estate investment destinations. However, while some experts predicted the property market in Spain would follow in the footsteps of Florida and stage a similarly spectacular recovery, this has not happened.

Buyers can find penthouses and apartments starting at less than EUR 180,000, even on prestigious golf developments. It takes some effort and research, but Marbella offers those willing to go the extra mile plenty of bargains.

While Miami in Florida recorded the highest sales level in the city’s 93-year history, Spain’s residential property market has seen 20 consecutive quarters of price declines, despite a 13% increase in international buyer demand last year. With around 1 million unsold homes still waiting for purchasers, a recovery is a long way off.

Reasons to buy this year:

Prices are set to fall further as the “bad bank” floods the market with cheap distressed sales;

Institutional investors are starting to sniff around the huge portfolios SAREB has to offer - they can command discounts of 70% to 80%;

International demand has diversified, just like it did in Florida; buyers come from South America and the USA, Middle East, Russia and China, India and Scandinavia; the traditional markets of Britain, Germany and France are far less active than they used to be. At the Costa Blanca foreign buyer demand already accounts for 30% of the market.

More people are fleeing their temperamental climates and wet summers at home and opt for a place in the sun than ever before;

Working via the Internet makes more people location-independent, allowing them to relocate to the Costa del Sol and still keep their jobs at home. There has also been a veritable explosion of people starting their own online businesses. Coming from countries with strong economies, such as Norway or Sweden, they can pick and choose where and what they want to buy, since they are cash buyers, able to obtain finance from home.

When the “golden visa rule” becomes law next year, more non-EU nationals will buy a home in Spain. Once they invest EUR 500,000 plus, they will be granted residency permits automatically.

With luxury Marbella apartment and penthouse prices starting at just EUR 250,000 in exclusive golf communities with communal swimming pools, 24-hour security, beautifully landscaped gardens and views over prestigious golf courses like the one at Los Arqueros, international investors from non-EU countries are bound to snap up such bargains. Located in Benahavis, a pleasant village-type district of Marbella, luxury apartments and penthouses like these never stay on the market for long.

Andalucía was among the regions recording the lowest price falls in quarterly terms (down 5.4%), according to property portal kyero.com. With greater demand from a diversified field of international buyers, prices are beginning to stabilise in some areas of Spain, particular at the Costa del Sol, the Canary Islands and the Balearics.