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The final sales figures for last year from the National Institute of Statistics (INE) show the market expanded 14% in 2016, the biggest increase since the run up to the last boom.
There were 362,182 home sales inscribed in the Spanish property register in 2016 (403,866 if you include subsidised housing) an increase of 14% for the year, and up 7% to 26,778 in December.
As you can see from the chart above, the market has expanded for the last three years after bottoming out in 2013. And the next chart illustrates how the recovery has posted two consecutive years of double-digit grown.
But despite the recent improvement in sales, the market is still 50% smaller by volume than it was in the peak boom year of 2007. What would be a normal level of sales for country the size of Spain? Somewhere between the two.
It was a relatively good year for new home sales, which only declined 3% in the year. That was a huge improvement after almost a decade of double-digit declines. As you can see from the following chart, 2016 was the year that new home sales declines petered out. I expect new home sales will increase next year for the first time in more than a decade.
Sales exploded in the Balearics, up 31%, but rose by just 5% in Malaga (Costa del Sol) and Murcia, well below the national average. That is probably due to Brexit depressing British demand in those regions, where British buyers have long been the biggest foreign market.
Sales were also strong in Barcelona, up 24%, driven in part by strong international demand from an increasingly diversified global market led by the Chinese.
What does it all mean? Firstly, it shows there is a real and sustained recovery in home sales (albeit from a low base), though some areas are doing much better than others. Secondly, there is room for more growth, as the market is still smaller than it should be considering the population size and housing stock. Thirdly, small investors are moving out of cash and deposits and into property, and this trend will probably continue in 2017. So 2016 was a year of positive news for the market in terms of sales, and 2017 should be more of the same assuming no nasty shocks. However, there are plenty of potential nasty shocks lurking around the world today. Fingers crossed.
WHEREVER you’re thinking of looking for your next home, purchasing a less than perfect property in the best possible location always makes more sense than buying an ideal home in the wrong place.
The oldest adage in estate-agent speak – location, location, location – sometimes falls on deaf ears in today’s rising market.
Buyers on the Costa del Sol, particularly those from overseas who are searching for a holiday home in the sun, are often willing to trade off location for the comfort and convenience of a brand-new home.
Their reasons for preferring turn-key properties are, in theory, sound: Spain’s labyrinthine bureaucracy, language barriers, and the hassle of dealing with building work anywhere, let alone in a foreign country, are enough to put anyone off taking on a project to develop or redevelop property.
At the same time, on paper at least, new-build homes can look like great value.
They generally have modern layouts, designer kitchens, lots of bathrooms, and all the amenities – swimming pools, padel courts and landscaped gardens – that would-be purchasers put on their must-have lists.
But in markets like Marbella, finding a new property in a great location at a price most people can afford is akin to looking for a needle in a haystack.
Housing sales and prices have been on the rise here since 2009, bucking the trend nationwide because of the double whammy of limited supply and strong demand.
Compounding this, a lack of prime development land in the best locations and a dwindling number of homes for renovation mean that developers of brand-new properties buyers want are being pushed out to less, let’s say, desirable addresses.
The price of land falls proportionally the further you go from the action, giving builders room to still make a profit but leaving buyers potentially out in the sticks.
As long as the market continues to rise, people will take risks and buy new properties, wherever they may be.
But, just in case anyone has already forgotten, the Spanish housing market, even in buoyant areas like Marbella, won’t remain bullish forever and, when it does all turn bear-shaped, only properties in prime locations will hold their value and sell quickly, if push comes to shove.
Our advice for clients, even if they plan on staying put for life at the time of purchase, is to always think about selling when buying.
A shiny new home in an unconsolidated neighbourhood may appear to be such a good deal that people are willing to compromise on location. But that’s exactly what happened last time around…
Marbella lags behind in the figures for new projects due to the annulment of its PGOU planning regulations
The recovery of the property market is starting to have a positive effect on town hall coffers around the province of Malaga. Last year the number of projects requiring planning permission increased and municipal planning departments have seen a rise in income from building licence fees.
In the case of the city of Malaga, a total of 8,430 building licences were granted in 2016, 6.3% more than in 2015. The value of the works involved in the approved projects was 400 million euros in the city alone, explained councillor Francisco Pomares, adding that this is the first time that the total investment for the year has been calculated.
Pomares stressed that the most significant increase in recent months has been in licences awarded for the construction of new homes. The figure went up from 911 in 2015 to 1,629 last year, a hike of 80%.
In the rest of the province, the increase in planning permission was especially noticeable in coastal areas. Vélez-Málaga, Rincón de la Victoria and Nerja saw increases of around 10% in building licences granted by the town halls. In Torrox, 41 licences were given the go-ahead, 51% more than the previous year.
Inland areas, meanwhile, are yet to take off. In Antequera, building licences were down 5% in number last year, although the investment involved in the projects launched was 61% up on 2015.
Contrary to other towns on the Costa del Sol, the number of building licences granted in Marbella fell by 11% in 2016. This drop, however, is due to the unique circumstances in the town, following the annulment of the PGOU urban plan at the end of 2015.
Planning permission was granted for 2,459 new projects in 2016, with a total investment of 135 million euros.
The councillor for Town Planning, Isabel Pérez, said that the fall was not due to the construction sector slowing down. Instead, she said there had been an increase in the number of cases of planning permits (that had been awarded in previous years) changing hands.
She explained that more building projects had got off the ground in 2016 than in the previous year. These, however, were not counted in the above figures as new permits did not have to be applied for.