Spain’s real estate market may still be some way from recovery but some vendors are able to sell at much less than they bought and still turn a profit, it has been revealed.
At first glance it’s tricky to work out how buying a villa in Spain in 2000 for €122,000 and selling in 2010 for €85,000 can be seen as anything but an unmitigated disaster. In actuality, the client’s getting a bargain and the vendor’s making a profit. That’s because the vendor’s British and currency exchanges work in their favour.
Spain’s Costa Cálida, in particular the Camposol Golf Resort promoted by real estate agent Mercers, is currently replete with vendors returning to the UK who have the strength of the euro to their advantage. This is making the local property market more price sensitive than ever with asking prices tumbling yet still not to the detriment of the vendor making a good profit.
For example, in August 2000 Mercers was selling three bedroom three bathroom detached villas on Camposol Golf for €122,000. The exchange rate was a heady €1.65 – £1.00 so this worked out to be an equivalent of £73,939. If the same villa was sold at the same price tag today at the current rate of €1.12 – £1.00, the vendor would get around £108,708, a gain of almost £35,000.
So, the reality is that they could comfortably drop the price to €85,000 (£75,735), way below its value a decade ago, and still be better off.
‘Some commentators have held real estate agents responsible for artificially driving prices down but the fact is we live in a market economy. In 26 years in the business I have never experienced a Spanish property market that is so price-sensitive and for that we can blame British monetary policy and a weak pound, the reluctance of banks to lend and an enduring global recession,’ explained Chris Mercer, Director of Mercers.
‘I would of course much rather be selling villas for €180,000 plus, but motivated vendors need to be open to offers and buyers be aware that genuine bargains are available if they look in the right places,’ he added.
He says that the good news is that there is still a pent-up for Spanish property. Both Rightmove and Primelocation put Spain at the number one spot in their most searched for destinations in November 2009 taking 19.64% and 30% of the total respectively.
‘If these would-be Spanish homeowners choose Costa Cálida they will be able to negotiate on price, pick the location and style of house they want and be secure in the knowledge that they bought somewhere near the bottom of the housing market,’ said Mercer.