Torcal Estates Fincas and Country property - Málaga, Spain

Fincas and Country property - Málaga Property

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News - November 2008

The bad news headlines keep coming!

Yes, we are seeing more and more headlines confirming the changing property market around the world.

Sadly, many of these headlines simply do not delve deeply enough into the real story that is the property market – whilst headlines generalise about countries, the truth is that there are huge differences in the property market in Spain just as it is impossible to compare Brighton with Birmingham.

Whilst some areas will suffer from the recession more than others, it is not fair to tar all areas with the same brush.

There is no doubt that the Costas will be hardest hit. There is no mystery as to why, either – the fact is that the Costas have been over-supplied with new properties. We have all seen the enormous tower cranes helping to build these thousands of new apartments, townhouses along the coastal strip.

Unfortunately, many of these builders refused to see the smoke signals that we, at Torcal Estates, first noticed during 2006. The market had changed and demand was falling. The best thing would have been to halt production of developments and concentrate on selling the existing stock they had built.

There are still developments which are being built today and all that does is increase the amount of competition in a falling market – this is why the coastal strip and modern properties will be hit hardest by prices falling. If you bought a new 2 bedroom flat on a characterless development during 2007 you will probably see its value drop by as much as 50% at some stage.

The problem is that, to sell, you either need a point of difference in the property itself or the price. There will be some bargains to be had during 2009 and that is what is needed to encourage people back into the market.

Inland tends to be a different story – whilst most areas and villages have seen development over the last ten years, the amount has been limited and there is not the gross over-supply that has been seen on the coast.

Whilst the supply of property is lower, so is the demand, however the inland property market is primarily made up of people wishing to buy to live in permanently or as a holiday home rather than as an investment vehicle. This means that all the reasons which made Spain popular in the first place will remain important whereas the investment buyers have nothing left to attract them.

Let’s hope that the bad news that is prevalent at the moment is short-lived and is all out in the open before the end of the year – this will hopefully mean that the New Year can start with a more optimistic view on the long-term market.

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