Everything Spain Property news. November 2004
Prices reach boiling point
Property prices in Spain are continuing to rise so much faster than any other euro-zone country that the European Central Bank has called for caution.
The average cost of a house in Spain jumped a massive 17.3% during 2003, the highest hike out of all euro-zone countries and nearly two and a half times the average of 7.2%
The ECB warned: “The rapid pace of residential price increases in some euro area countries warrant a close monitoring of housing market developments in these countries, given the potential implications for these economies and for the euro area as a whole.”
The report from the European Central Bank (ECB) stated that Spain was the only euro-zone country that experienced an increase in growth rate for each consecutive year between 1990 to 2003, adding that growth rates for property prices in Europe “are currently close to their highest point since the early 1990s”.
Rumblings from the ECB come at a time when property agents on the Costa del Sol have started to express concerns about over-inflated property prices.
Newly-built apartments on the Costa are no longer selling like hot cakes, suggesting that buyers have become wise to over-pricing, urging many to look inland in cheaper, less developed areas.
Off- plan developments have also been the target of concern recently, amid claims that agents are unrealistic about the true investment potential of this method of buying. Inez Rix, from Direct Auctions and also Inderix Property Management in Fuengirola, believes that buying off-plan could now actually lose you money. She told the Independent newspaper:, A lot of people bought for investment and thought they would double their money. Now they’re realizing that’s impossible. If you pay €200,000 now, by the time its built in two years time it wont be worth that.”
Barry Mc Entee from Direct Auctions and First Choice Properties, based in Puerto Banus, cut to the chase:, The day of reckoning has arrived,” he said.” The Costa del Sol has priced itself out of the market. Tourism in Marbella is down 60% on last summer and the bubble has burst in the property market. Come autumn / winter, the panic will set in and people will be desperate to sell.” It then becomes a buyers market.
