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Spanish home prices down but sales are bearing up in high end locations

Average Spanish house prices fell 10.2% over the 12 months to November, according to the most recent figures from the General Council of Notaries.

The data shows that the average price per square metre fell to €1,166 per square meter and peak to present Spanish house prices are down close to 40%.

Sales were down too, seeing a fall of 22.2% over the same period and mortgage lending was down by 30.6%.
But the November decline in sales is not as bad as it looks according to Mark Stucklin of Spanish Property Insight who points out that it was mainly due to distortions caused by fiscal changes that inflated sales in November 2012, rather than a fresh slump in demand.

And evidence for agents around Spain indicates that sales are increasing, although certain regions are doing better. Some of the best performing markets can be found in the Balearics. On Mallorca, for example, Balearics Sotheby’s International Realty, has seen sales rise.

‘2013 has been quite an incredible year in the history of the Balearics’ property market. According to our own market research, in Port Andratx alone 16 villas priced over five million euros changed hands in 2013, the highest valued at 18 million euros,’ said Daniel Chavarria Waschke, managing director of Balearics Sotheby’s International Realty.

He pointed out that in southwest Mallorca no less than 25 five million euro plus villas were sold, 30 in Mallorca as a whole. ‘Bearing in mind this is just information gathered from our owners and advisors, it’s likely that even more than 30 were sold.  This is record breaking,’ he added.

He explained that the typical Mallorca Sotheby’s International Realty client is looking for a newly built or completely refurbished home, preferably furnished to immaculate taste, that they can just move in to and enjoy from the word go.  It is these kinds of home that form the vast majority of those 30 multimillion euro sales on the Island.  Properties that need refurbishment are simply becoming less desirable.  
The high end real estate agent has also spotted another interesting trend for 2013 and that’s the resurgence of Port Andratx as the in demand location for a luxury home. Just three years ago, the area of Bendinat-Costa d’en Blanes-Puerto Portals, just a few kilometres west of the capital Palma, was on a par with Port Andratx in terms of sales activity.

But research by Mallorca Sotheby’s International Realty shows that in 2013 properties with a combined value of over 250 million euros were sold in Port Andratx. And the average price per square metre of property sold by the agent now exceeds €9,000.

Nationality wise, Germans topped the firm’s buyer list in Mallorca, followed by British and Scandinavian buyers. ‘Interestingly this was not reflected in our enquiries with the majority being British, almost exactly a third, and just a little over 22% German. Perhaps this is a sign that we’ll be selling to more Brits in 2014,’ said Waschke.

‘Only a few Russians purchased in 2013 but, in my opinion, this will change for 2014 as they discover Mallorca’s charm. Likewise I expect more Chinese, Middle Eastern and other non-Schengen buyers in 2014 as the law granting automatic residency to foreign investors who use €500,000 or more of private funding to purchase a property in Spain is now in full effect,’ he pointed out.

Across in Ibiza, the mood is also good. Glynn Evans, managing director of Ibiza Sotheby’s International Realty, explained that figures are trickier to come by in Ibiza but the general view is that between 18 and 25 villas priced above two million euros changed hands in 2013.

‘As a Company we have come into 2014 with negotiations on five separate properties on the table, totalling in excess of €10 million. Various nationalities are involved including French, German, English, Spanish and Portuguese. We expect almost all of the five to come to fruition making this the best start to a year in Ibiza Sotheby’s International Realty’s short history,’ he added.

He said that British buyers topped the buyer list in Ibiza, this is backed up by enquiry figures with just under 40% of enquiries to the office being British, a significantly higher proportion than in Mallorca, and just over 10% of them being German, and the Dutch, Spanish and Italians follow behind at around 7% each.

Americans are expected to feature heavily in 2014 with many affluent individuals already booking top class summer holiday rentals, both homes and charter yachts, and the tendency is for more permanent arrangements to follow.