A combination of reduced demand, continuing high levels of building, and the aftermath of natural hazards could see property prices in Spain and Portugal fall by 10 per cent next year, Guildford based Tribune Properties has concluded.
The rate of new builds on the Costa del Sol and Costa Blanca hasn’t slowed any great degree, “and before long there could be a price correction as there is going to be quite an oversupply in the market”, said the firm.
Europe’s worst drought in living memory has had an affect on the markets in Spain and Portugal, leaving many would be buyers wondering if they would be able to use their pool in years to come. Meanwhile property investment opportunities in eastern European countries have diverted interest in that direction.
“Second home buyers are seeing properties offered in Bulgaria at less than half the price they thought they would need to own a home overseas, and the traditional markets of Spain and Portugal are losing out”, said Roger Munns of Tribune Properties.
Spanish and Portuguese property buyers will be in their strongest negotiating position since the mid to late 1980s when prices dropped by nearly a third on the Spanish Costas’, said the firm.
“Already we have seen villas in Menorca drop in value by around 10 per cent, and they could, and probably will, go lower still”.
Tribune’s predictions are at odds with recent findings of a Barclays survey and official Spanish estimates.
Barclays found that almost a third of those 2.2m people planning to buy an overseas property would be looking first in Spain, while Portugal was the first choice of 5 per cent the same as the combined percentage of those nominating Bulgaria and Croatia as their first choice.
Meanwhile Spain’s tourist office has said its internal estimates suggest relaxation of the UK’s pension rules allowing self invested pension plans (SIPPs) to hold overseas residential properties will stimulate the Spanish market, resulting in sales of approximately 150,000 homes.