How’s the real estate market on Costa del Sol?
When I inevitably get asked the above question one or, two times a day, my stock answer is always the same:
“It depends! Are you looking to buy, sell, invest or rent?”
For this short article I am going to assume you are interested in either buying a property on the Costa del Sol for personal usage or, for investment or, looking to sell a property that you own.
You can request the Lion Trust Spain 2023 Market Forecast at the bottom of this article.
I am told by a number of marketers that no one is prepared to read anymore! My personal view is that if someone is going to part with several hundred thousand Euros to buy a home on the Costa del Sol, or entrust someone with marketing their valuable asset for sale, then surely they have the smarts to read a few paragraphs to further inform themselves! If you have made it this far, perhaps this article is for you!
If you have ever read one of the Lion Trust - Costa del Sol Annual Market Reports and Forecasts (next one due by mid December 2022) you will know that I deplore the generalisations that the market has “x% growth” or “y% decline”. It is my belief that the Costa del Sol is a collection of several micro markets, distinct by price, location and type of property.
The number 1 challenge for buyers is the shortage of good stock
If you talk to any number of reasonably informed estate agents along the coast you will soon come to the realisation that the common theme along the coast is that there is a ‘shortage of stock’.
Put more accurately, I believe the actual issue is that there is a ‘shortage of good stock’ currently available on the market.
That is one of the reasons off-plan sales have been so successful of late. You might initially think that an agent is spinning you a line by telling you that that is all that is available for sale in a given area, at a given price range. However, the chances are that you are probably being told the truth! What they are unlikely to be able to tell you is why.
I believe that the cause of this is a combination of the following:
1) After the 2020 and 2021 COVID period there was a pent up demand from buyers wanting to finally realise their dreams of owning a property on the Costa del Sol. Many of these clients took action and realised their dreams.
2) There are more people of different nationalities buying properties on the coast than ever before. Simply put, there are more genuine buyers than there are good properties for sale.
3) There is a new category of buyer – the expanding number of people that are perfectly capable of working remotely from their place of work. Previously this was predominantly just business owners, but now it is employees who are choosing to design their life in such a way that they can enjoy and benefit from what is arguably Europe’s best climate. I just returned from holiday and there was an advertising board at the airport saying ”Malaga – The best home office”!! These buyers are in addition to the usual retirees and holiday home buyers.
4) Property owners are choosing not to sell and hang on to their properties.
5) Investors have been buying up stock as long term holds and rental investments.
All of the above means that it is perhaps not as easy as one might initially assume to buy the ideal property, regardless of the price level.
So what about prices?
I am sure with some research you will find statistics saying that market prices have increased by x% across the board. Perhaps there is some general value to these figures, perhaps not. Personally I believe that local market pricing is being driven by supply outstripping demand for quality properties on an area by area basis.
Take a given property where “everything it is right”. It ticks all the boxes for 80% of buyers in that price / property category. For example, an apartment with open sea views, a large south west terrace with sufficient room for dining al fresco with friends and family and also room for a couple of sun loungers to take in the winter rays until sunset. Of course the terrace is private, not overlooked as it is a corner unit. The generous sized lounge is bright and airy and there is a Scandinavian style open plan kitchen which supports modern popular living styles. The bedrooms also look out onto the terrace and the master bedroom has an en-suite bathroom and the generous dressing area has plenty of storage space. The apartment is immaculate, so you really just need to bring your suitcase and move in. The community itself has beautiful mature tropical gardens where you can lounge around and relax, or enjoy the swimming pools to cool off. You have an underground parking space and a good sized storage room too. The community itself is just a short walk to local shops and restaurants and to the beach.
Wow, sounds great, doesn’t it?
Trouble is there is just one for sale on the market in the area in which you are looking and the owner knows that! So of course he is going to ask a premium price for his property!
So the real question is: “are you going to pay the asking price or close to secure the property, or not?”
Luck was on your side and your agent guided you to the perfect property. You have your chance to secure it now. It’s a big decision of course and there are so many things to consider! The hard truth is that while you are having a ponder, someone will likely come and buy it. So when it is gone, you console yourself for the loss by typically saying something to the effect of “it just wasn’t meant to be!”
I am not for one moment suggesting that as a buyer you should be paying over the odds for a property. Your trusted agent should ensure that this does not happen. However, the bottom line is that if you are not prepared to pay the market price for the right property, you will have to start making more compromises or lowering your expectations.
Note to property owners
Yes, it is a sellers’ market at the moment! But property owners who think they can ask silly prices are being just that – silly! Alternatively, they are misinformed, being poorly advised by weak estate agents who won’t give a true market valuation for fear of losing the listing.
In the main, buyers are smart. They have done their research and are being advised by a trusted agent. They are looking at the comparables and can see the value and where a premium is worth paying. Given the current market conditions, properties priced correctly are selling quickly. As a seller, if your property has been on the market for several weeks, chances are it is not priced correctly.
Where is the market heading?
That’s the million-dollar (Euro) question! There is talk in mainstream media of a looming global recession. Some say it is months away, others say 2-3 years. Will this have an impact on the Costa del Sol property market and property prices? Undoubtedly! But to what extent it will impact the price of your home will depend on the type of property you buy and in what location. Over the last several years a much larger proportion of buyers have been paying for their properties outright or, taking mortgages out of choice, rather than necessity. This is very different from the years in the early 2000s where high leverage was the name of the game. The profile of buyers has generally been more elevated. So I, along with other leading estate agents, don't see a flurry of fire sales on the market anytime soon.
Summary
If you have decided you want to buy a property here on the Costa del Sol, now might be just the right time for you. You need to be well informed on the local market in which you are looking to buy and have a property advisor who is genuinely looking out for your interests. Equally importantly is, that when you come shopping for a home, you need to be in a financial position where you can actually make a decision and buy. That’s the subject in a separate blog article.
If you are one of those few people who have made it this far I hope you have found this article of value. I would welcome any comments you might have. If you are interested in learning more about the Costa del Sol Property market you can contact me for an informal chat. You can also register your interest to receive the new edition of the Lion Trust Costa del Sol Annual Market Report and Forecast which will be available from around the 15th December 2022.
