Mallorca Property Partners
Mallorca property market update August 2009.
Property market recovery - Mallorca
Our assessment and update for August shows the very early signs of a change in the market that is worth consideration by anyone thinking of buying a property in Mallorca.
The amount of activity in the market has changed significantly from its near-dormant state earlier in the year. The market is now very busy with active buyers looking at properties of all types, at all price levels, and in all of the well-known and sought-after areas. Whilst the level of sales is still significantly lower than it was prior to the recession, it also appears to be notably higher than it was around this same time last year.
It has to be said there are no reliable market statistics to support this. Our observations are drawn from the volume and nature of enquiries we are receiving, and from discussion with estate agents and other property professionals across the island. The level of sales that are being notarised is one of the most solid indicators. As much as we are able to get feedback on this subject it supports our view that the market has picked up somewhat.
There are several reasons for this:
- The seasonal factor is clearly an important contributor to the current level of activity in the market. July and August are not necessarily the times when the most serious property-seekers come to Mallorca, but there are lots of holiday-makers who like the idea of buying a property and this creates a lot of activity. Mixed in with these "browsers" there are some serious buyers and consequently some sales being made.
- There seems to be a widening consensus that the global recession is reaching its floor. This growing belief that things have passed their worst is creating confidence amongst some buyers that the market bottom has been reached and now is the time to start looking for property more seriously.
- Our view as expressed in past market updates is that demand for properties in Mallorca has never "gone away". Whilst demand in many areas (e.g. parts of the Spanish mainland) has dissipated and will take many years to re-establish, demand for Mallorca was simply put on hold while prospective buyers waited to get a sense as to the scale and impact of the recession. Now there is some confidence that there is an end in sight some of this "latent demand" is coming back on-stream.
Related information
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Previous market update - June 2009"
About our leading Mallorca property finder services
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Feature Mallorca properties - selected from our partners across the island
Mallorca property price reductions
Articles on PRLog
Mallorca Properties: Mallorca property market steps up a gear - Jul 21, 2009
MPP launches service for Mallorca property investors - Jun 28, 2009
Articles on our Blog
What exactly is a Mallorca property bargain? - May 23, 2009
How to choose the right area for your property in Mallorca - February 26, 2009
How to secure the best Mallorca property deals in the current market - February 5, 2009
This might indicate that prices will soon on the up again. However, the recession is not over, just reaching a floor. And there is a back-drop of continuing declines in Spanish property prices. The latest TINSA (leading real-estate appraisal group) report shows prices in the Spanish islands have fallen by just under 10% since June 2008 and the indication is that this trend will continue.
The situation with the housing market across Spain as a whole is regarded as perhaps the worst in Europe, with prices potentially declining through to 2012. This would indicate that buyers might do better by waiting a while longer before they enter the market.
So should you buy now, or wait?A key thing in assessing prices and whether now is the best time to buy is to recognise that Mallorca is a very different market to mainland Spain, or Minorca, Ibiza and the Canaries.
The available market statistics that lump Mallorca in with other regions are of absolutely no value what-so-ever in assessing the current situation and opportunity. Mallorca has one of the most robust and resilient property markets in Europe and this points to it being at the leading-edge of any recovery in property prices.
A further important point to recognise is the local differences within Mallorca. Just as there are regional differences within the UK where currently some of the prime areas are showing small price increases whereas areas with less demand are still falling, the level of demand for different locations within Mallorca also varies considerably.
Properties in these prime locations will behave the same as they do in the UK. I.e. they will be the first to start increasing in value as buyers return to the market. This may be stating the obvious but it is a key point to realise when assessing the market.
With all this in mind our advice for people interested in properties in Mallorca, is as follows:
- There are signs that we are have reaching the bottom of the current recession, but we may be dragging along this bottom point for quite a while
- The signs are that the property market in Spain as a whole will follow this, but might take longer to turn around
- The market in Mallorca is distinct from this and buyers are entering back into the market
- The current sales activity is at relatively small volume overall, but is clearly focussed on the prime locations and best properties
- This indicates the market bottom has already been reached in Mallorca specifically with regard to these prime properties
This is not to say there is not still a buying opportunity. The poor economic outlook noted above indicates that a return to solid price rises is a way off. Furthermore, the positive seasonal influence outlined above will tail off toward the middle of September, and owners who have not sold may be more motivated at this time to sell before the quietest periods in December, January and February.
More realistically what we will be seeing is owners of prime properties gradually becoming less prepared to negotiate. Last year and early this year there was a significant "fear factor" which led to some dramatic price reductions. Now there is a little confidence returning to the market the owners of the prime properties in particular will be more tempted to hold out for better prices ... even if it takes them a while to realise.
Beyond this there continues to be significant variance in price of individual properties above and below this "bottom" average. This is dictated to a large extent by the owners circumstance which continues to be a far stronger influence than in a more buoyant market.
So the buying opportunity in Mallorca is still there, but the current step-up in the market is real and clearly shows that this window of opportunity will not last forever. For those seeking a quality property in a prime Mallorca location waiting for indications of further price drops before (re-)entering the market is not a wise strategy.
In order to to take best advantage of the current opportunity you should be looking "on the ground", not remotely by browsing websites as this will not give you a clear indication of where the best opportunities lie. For many it is impractical to make such a commitment to spend time directly researching options - in this instance we would put our specialist Mallorca property finder services forward as the ideal choice to work for you in finding the best deals.
