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November 2008

26.11.2008 - Mallorca Property Transactions Fall

 

Mallorca property transaction levels fell by 37% during the 3rd trimester of 2008 when compared with the same period in 2007. While new Mallorca property sales fell by only 20%, completions on second hand homes plunged by 53%,according to the latest statistics from The Colegio de Registradores de la Propiedad.

The difference in sales levels between new build Mallorca property and older houses is probably down to the fact that hard pressed developers are reacting more actively to the current market conditions by cutting prices while private home owners are being much more reluctant to do so.

David Novi owner of Novi Property Mallorca, residential real estate consultants and Chartered Surveyors added "we have maintained for sometime that we are now entering a period where the Mallorca property market is going to operate on two main levels - properties that are fairly valued and those where owners are asking unrealistic and unsubstantiated prices". While many of the realistically valued properties will have seen their asking prices reduced substantially others, because of their unique characteristics may not.

David Novi explains, "the best valued properties are not always those where price has been reduced the most. It is very important that each property is examined separately. The price of any particular house may have been reduced because of the personal circumstances of the owner (need to sell to relocate or due to personal financial circumstances) or because there is a huge glut of almost identical properties and little or no demand. Assuming the characteristics of the first are better, it is likely that it will also prove a better long term investment than the unit with a problem of supply competition, that may take many years to rectify, even if the latter has seen it's price reduced the most. Equally a very unique front line property may have seen it's asking price reduced much less but due to it's unique characteristics may well also prove an excellent long term buy"

In a falling market, market research and appraisal of individual opportunities are essential if you are not going to get your fingers burnt!

Contact David to discuss your investment requirements and to look at where the best opportunities may lie info@novipropertymallorca.

14.11.2008 - Spanish and Mallorca Property Prices to Fall

 Spanish and Mallorca property prices are set to fall for at least two years if one takes into account the growing stockpile of unsold new build properties and poor demand due resulting from lack of available finance. Estimates for the number of unsold completed new properties vary between 600,000 and 900,000 and although it appears that the supply tap is now under much greater control - new properties coming to the market in 2008 will be around 325,000, with a further 300,000 in 2009, compared to around 750,000 in 2007, while the over hang in supply remains price weakness will be the order of the day. 

This situation is likely to put further pressure on the sector with more bankruptcies expected in the months ahead. As developers desperately seek to cover interest payments on unsold properties it is likely that an increasing number will offer properties for rent, or rentals with an option to purchase. At the same time developers will look to diversify their activities into more resilient sectors of the market such as homes for retired and commercial property, although the latter could start to suffer it's own problems as the financial crisis starts to undermine the "real" economy in the months ahead.  

Although supply problems in Mallorca are not as severe as many other coastal regions of mainland Spain, it is probable that prices on the Island will weaken significantly, all be it less than in some of the worst effected regions of Spain. Falls from peak to trough of around 30% can be expected with one of the main problems facing buyers the fact that price adjustments are not occurring evenly across the market. The new build sector  has responded much quickly with prices already significantly reduced while many second properties are being marketed at values unchanged from the peak in 2006 - 2007. This offers a real challenge for prospective buyers who will need to assess the values and price movements of each individual investment opportunity to see in which cases the realities of the market have been factored in, or where further very significant adjustments are required. Never has the term "buyer beware" been more apt. 

For further information on the Mallorca property market, valuation and investment appraisal advice, please contact David Novi BA MPhil MRICS at http://www.novipropertymallorca.com or info@novipropertymallorca.com 

5.11.2008 - Mallorca Property Prices - Update October 2008

The latest report from IESE Business School on the value of second hand property in Mallorca and mainland Spain highlights the trend of falling prices throughout Spain. The average price per m2 of property in Spain fell to 2,646€, a fall of 8.3% when compared with the same month of 2007, while in Mallorca the figures were 2,541€ per m2, a fall of 3.3%

The nationwide figures are:

                                                  Av. Price     Month +/-       Quarter +/-   Annual +/-

Guipúzcoa4.407-2,4 %-0,7 %-1,8 %
Vizcaya3.906-0,8 %-1,5 %-7,9 %
Barcelona3.831-0,9 %-2,3 %-11,4 %
Álava3.530-0,3 %-0,4 %-4,1 %
Madrid3.434-0,9 %-1,7 %-9,2 %
Zaragoza3.050-1,2 %-1,7 %-8,7 %
Navarra2.881-0,3 %-1,4 %-11,3 %
Girona2.857-0,6 %-2,0 %-8,5 %
Cantabria2.712-0,6 %-0,4 %-5,3 %
Tarragona2.567-0,7 %-2,1 %-8,9 %
Balears (Illes)2.5410,1 %-0,1 %-3,3 %
Sevilla2.495-0,1 %-0,5 %-1,3 %
Guadalajara2.447-0,8 %-2,3 %-7,9 %
Málaga2.420-0,6 %-1,7 %-7,5 %
Huesca2.4090,5 %0,3 %1,8 %
Asturias2.370-0,9 %-1,5 %-9,7 %
Salamanca2.366-0,3 %0,2 %-9,4 %
Pontevedra2.340-0,2 %-1,8 %-9,9 %
Córdoba2.298-1,6 %-2,7 %-6,4 %
Rioja (La)2.288-1,9 %-2,7 %-12,8 %
Burgos2.2820,4 %1,1 %-5,1 %
Cádiz2.266-1,1 %-2,2 %-6,3 %
Valladolid2.259-1,4 %-2,7 %-5,9 %
Valencia2.212-1,1 %-0,9 %-10,4 %
Soria2.202-1,9 %-3,1 %-
Albacete2.192-0,9 %-2,8 %-9,4 %
Segovia2.183-0,3 %-0,1 %-3,8 %
Coruña (A)2.164-1,5 %-0,9 %-11,7 %
Granada2.092-0,4 %-1,3 %-7,6 %
Almería2.068-0,6 %-1,9 %-9,5 %
Huelva2.057-0,2 %-0,7 %-6,1 %
Palmas (Las)2.054-0,8 %-1,2 %-3,2 %
Lleida2.041-0,2 %0,0 %-6,8 %
Castellón2.022-0,8 %-1,5 %-6,6 %
Alicante1.9620,2 %-1,0 %-7,2 %
Tenerife1.944-0,4 %-3,0 %-8,0 %
Toledo1.924-0,7 %-1,6 %-8,6 %
Murcia1.923-0,5 %-0,7 %-7,8 %
Palencia1.912-0,1 %-1,1 %-8,4 %
Cuenca1.880-1,6 %-2,7 %-6,6 %
Ourense1.8573,9 %4,6 %-2,6 %
Zamora1.842-0,1 %0,7 %-1,7 %
Jaén1.839-0,5 %-2,0 %-2,2 %
Teruel1.8351,9 %-3,0 %-
Ávila1.7960,1 %-0,2 %3,2 %
León1.7760,0 %-1,5 %-8,6 %
Ciudad Real1.752-0,3 %-2,2 %-8,8 %
Cáceres1.720-1,0 %1,4 %-0,8 %
Lugo1.7040,5 %-0,1 %-11,4 %
Badajoz1.692-1,4 %-4,8 %-7,6 %

(Full report see http://www.fotocasa.es/indice-inmobiliario__fotocasa.aspx)

For Mallorca and the wider Balearic Islands some of the key figures are:

             Av. Price        Annual +/-

Ibiza        3,354                 -3.7%

Calvia      3,134                 -4.2%

Maratxi    2,585                 -2.4%

Llucmajor 2,578                 -10.9%

Palma       2,519                 -4.8%

Inca          2,058                 -3.6%

Manacor   1,867                 -4.8%

Commenting on the report, Novi Property Mallorca's David Novi explained "while the figures in many respects confirm the underlying strengths of the fundamentals underpinning the Mallorca property market, I also believe that Mallorca prices have not fully adjusted to the realities of the current economic climate". Expanding further, David added "at Novi Property Mallorca we have long mantained that the fundamentals of the Mallorca property market (relating to supply and demand) are sound and will ensure that some of the downside pressures are checked when compared with the situation on mainland Spain. Prices are and will continue to fall but not as much as many parts of mainland Spain".

Furthermore he explained "we have also observed that owners in Mallorca have probably held out longer than in other areas of the country before readjusting their expections relating to the values of their homes and this also explains why the fall in prices in Mallorca is lower than the national average. The short term outlook is, we believe, for further price falls, although with this we are also seeing the type of buying opportunities that come in a falling market"

Contact David on info@novipropertymallorca.com for a detailed discussion regarding the Mallorca property market and emerging buying opportunities.   

 

 

View PDF file3.11.2008 - Mallorca Property - Interest & Exchange Rates

The latest RBS Interest & Exchange Rate Forecast makes gloomy reading in terms of the worldwide economic outlook but at least offers the prospect of greatly reduced interest rates in the months ahead. 

As previously reported the rapid decline in world economies, many moving into recession particularly in Europe, has moved the agenda away from concerns of inflation to one fully focused on stimulating flagging economies. In the Eurozone last months half point cut in rates came after a concerted period of near obsession over inflation pressures even though many economists had highlighted that these were always likely to weaken towards the end of 2008 and the main threat was one of recession.

Whatever ones view we are now in a period when global interest rates are on a sharply declining path that should, according to the RBS, see Eurozone rates back down to 2% by mid 2009.

This will offer much needed respite for property owners in Mallorca that have seen mortgage repayments rise sharply over the last 18 months. David Novi of Novi Property Mallorca was quick to point out that with most Spanish and Mallorca mortgages on reviewed annually it will take well into 2010 for much of the benefit of falling rates to feed through to the repayments of individual mortgage holders, but at least there is light at the end of the tunnel. In the meantime it is likely that where necessary banks will work with customers most in need to renegotiate mortgage terms and stave off the threat of widespread default.

Regarding exchange rates, some of the hoped for strengthening of Sterling against the Euro, which would have helped boost some extra interest from British buyers of Mallorca property, has fallen away as fears for the UK economy increase. The RBS foresee relative stability in the Euro - Sterling exchange rates in the months ahead with some only modest improvements in the value of the UK currency. 

For further information on the Mallorca Property Market, it's prospects in the months ahead, buying opportunities and best deal mortgages please contact David Novi BA MPhil MRICS on info@novipropertymallorca.com or www.novipropertymallorca.com