Both the National Institute of Statistics and the Society of Property Valuers (Sociedad de Tasación) report that prices in Catalunya dropped more than every other region of Spain during the past 12 months: just over 13%. However, the rate of decline seems to be slowing. The first six months of 2009 have shown a decrease of 4.5% compared with 8.4% in the last semester of 2008.
As would be expected, the larger cities and industrial areas have fared worse than less populated areas. Prices in the province of Girona, for instance, have only eased by half the rate of those in the province of Barcelona. And prices in the provincial capitals of Girona and Tarragona have held up better than those in Barcelona and Lleida.
The city of Barcelona shows wild variations from neighborhood to neighborhood. For example, during the first six months of 2009, property values declined only 3.7% in Les Corts compared to nearly 18% in Nou Barris. Les Corts is a central part of Barcelona, extremely sought after by local families; Nou Barris is mostly large, impersonal blocks of flats in a former industrial zone.
A brief telephone survey of professionals indicates there now seems to be a general feeling of optimism throughout the entire region. The top agents in Barcelona seem relatively busy, commenting that numbers of transactions are beginning to improve. Also, in the provinces, interest has picked up and I am told there is a latent demand from nationals and foreigners alike who are waiting for the right moment to buy.
It is true we have seen a massive thinning out of agents. One large group, Don Piso, closed all of its own offices, leaving behind just the franchises. In Tarragona, as much as 25% of agents have closed their doors. I see this as a good thing for the industry as a whole, as the agents that have closed were generally the ones with the least experience.
While there may be a gentle increase in numbers of transactions now with some agents, the volume as a whole is heavily down compared to last year (nearly 35% in the first 6 months of 2009 compared to the same period in 2008). Much of the unsold stock is in areas of irresponsible overbuilding or over reliance on foreign buyers. These properties will always be the very last to be absorbed. Fortunately, Catalunya has not suffered as much as other regions in Spain from the problem of over-building.
This brings us to the importance of location and a good case in point is my own recent experience on the Costa Brava. Just as in the last serious downturn in the early 90s, there is a large selection of mediocre property in mediocre locations but a short supply of quality property for sale at all price levels. When I begin a search for a client who wants to buy on the Costa Brava it is surprising how few quality properties are on the market.
A recent short-list for one of my clients featured only two properties and there were competitive buyers for both.
My experience in quality areas shows that the concept of price discounts is another minefield. Just because many properties are priced over market value does not mean every property is and agents often take a very laid back attitude to educating their clients about prices. I have not come across anyone prepared to offer discounts on the price of good building plots in prime areas either. So it is essential to understand an area and when a specific property has been correctly priced. Only long experience can give this understanding.
I recently short-listed the perfect property for one of my clients. The vendor is using one of the area’s most serious selling agents and has, refreshingly, listened to their advice. The result was his property was put on the market at the right price to sell, even in a buyer’s market.
I recognised immediately that the price was correct for the market and managed to get the property taken off the market for sufficient time for my client to make his decision. I had already briefed him on the fact that the asking price was spot on so we were not surprised that our first offer was turned down. In this case, even paying near the asking price, my client has made a sound investment and has secured the perfect property for his needs.
Interestingly, two further properties which I would have shortlisted were sold while I was doing my research.
So, we are back to the old maxim: location, location, location…
Rita Fryer is is a buying agent with specialist knowledge of the market in Catalunya (+34 972 624557; www.thepropertyfinders.com)