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Changed Spanish Property Market Touching Recovery

News Posted On: 12 September 2011

According to some reports, the Spanish property market is finally starting to recover, but according to all reports it is not because of the hyped road show of the Spanish government currently on tour in Europe.

The consensus is that demand is now growing, and that prices have fallen far enough, but that the market is still difficult and very different to what it was -- a fact that the road show planners seem to have missed.

The road show hopes to appeal to the mass-market, low end buyers, but these buyers relied on the loose lending that fuelled recklessness and over-development in the market, and also on the surge of confidence that came from house prices rising rapidly in their home countries.

So, now we have a Spain that is still over developed and over supplied, and where lending is hard to come by, but where prices are up to 70% below peak 2007 prices. And it is that last fact that has the buyers coming back.

Sean Adams, international director at mortgage broker Savills Private Clients, told Mortgage Observer that although banks are now starting to lend again, they are cautiously offering a maximum 60 to 65% loan to value.

However, Adams continued, there are significant signs of change in the market. "After the previous two years of absolutely no activity, over the past six to nine months we've seen a lot more going on in the Costas," he reports. "At the lower end, mainly experienced property investors are piling in, buying units at 50 to 60% off the 2007 prices."

The top end is also seeing a recovery, with Marbella seeing plenty of activity and Andalucia-based property search agent Barbara Wood says wealthy buyers are also starting to look again at country properties as a lifestyle alternative to the busy coast.

Wood also summed up why the road show is set to fail; she said that neither the mass market nor the top end will be listening. "The first group because they don't have any money, and the second because they're not interested in what is on offer, and anyway they have been buying again quite happily for more than two years, picking up unbelievable deals in the best locations."

Meanwhile the investors don't need a politician, let alone a Spanish housing minister to identify investment opportunities for them.

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