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The price of new housing drops for the first time in recent years on the Costa del Sol
CRISTINA GONZáLEZ
A new report reveals declining sales figures on the western coastline
The building market on the Costa del Sol is slowing down, after many years of galloping growth and a landscape of high cranes right across the area. A recent study by the property consultant group Aguirre Newman, which analyses the residential tourism market on the Western Costa del Sol between Torremolinos and Alcaidesa, in the province of Cadiz, every year, reveals that the prices of new second homes in the region have dropped for the first time in years. Although apartment prices in general have remained stable, the price of detached houses has dropped by three per cent. Property speculators have also said that houses of this type are taking longer to sell.
Average cost
One piece of data is quite surprising: newly built apartments in Marbella, and in the Benahavís area, which tend not to be high-rise blocks, are cheaper than a year ago by approximately 7.4 per cent (from 3,291 euros to 3,046 euros per square metre). But a high-rise apartment or detached home in these areas will still cost more than anywhere else on the Costa del Sol.
The experts attribute this to the fact that prices in these areas had reached their maximum, so it was improbable that they could go higher. In other areas, such as Fuengirola and Mijas Costa, prices have risen by 26.2 per cent and 15.8 per cent respectively. “Prices in general tend to be contained, which we believe is very healthy for the market. One could say that the boom, by which one could double one’s investment in two years on the Costa del Sol, has ended, although property is still a very profitable business to invest in,” says Emilio Langle, director of Residential Properties at Aguirre Newman.
This is an opinion shared by Gerardo Mochales, marketing director of the company, and he foresees a closing of the gap between supply and demand. “It would not be healthy if prices dropped by ten per cent every year, just as it would be bad if they were to rise by 18 or 20 per cent annually, as has happened in many places in Spain,” he says.
He sees prices levelling off in the future, “as a means of preventing the accumulation of houses with no possibility of selling them,” as he says. He does not see building work halting completely, he says, because there is always a market, and tells us that the urban plans for the coastal municipalities will go ahead regardless, the strength of the market depending on interest rates and foreign investment, especially on the part of British investors.
More on offer
The study was carried out on a total of 479 second-home developments on the Costa del Sol, by means of simulated interest in purchase, and it showed more than just a stabilization of prices. The time it takes to sell properties has also increased with regard to detached houses in all areas except Torremolinos, Benalmádena, Fuengirola and Alcaidesa, in the province of Cadiz.
The 13 per cent increase in the number of new houses on the market over the past year, with Mijas Costa, Manilva and Estepona accounting for more than half of them, is one of the reasons, according to the experts, why prices have dropped. Supply has outstripped demand.
According to the report, apartments take between 22 and 24 months to sell, on average, and detached houses will take up to 30 months to sell. At the end of March, three out of every ten apartments being built were still on sale, against a figure of 37 per cent for detached houses in stock.
The average size of apartments in areas that Spaniards tend to buy in, such as Torremolinos, Fuengirola and Benalmádena, are between 85 and 114 square metres, and sell at between 183,000 and 232,000 euros.
In Marbella, Estepona and Sotogrande, on the other hand, apartments of between 154 and 188 square metres cost between 404,000 and 509,000 euros. |
