Green Shoots in Tenerife Property
The green shoots of spring are becoming increasingly evident in the Tenerife property market after a quiet economic winter. Sales activity in the Tenerife South micro-market is picking up pace, continuing a trend that tentatively started in January, according to statistics. Signs of recovery in property are not restricted to Tenerife, as markets over the world start reporting increasing confidence.
Activity in Tenerife at the moment is still centred around the bottom of the market, with over 70% of sales in the sub €150,000 sector, but there are signs that the trend is moving up the price scale. In both January and February, closer to 80% of all sales were in this bottom price bracket.
Enquiries have been rising month on month, with a steep rise in demand for €800,000 plus homes, as affluent purchasers identify that market prices appear to have hit bottom.
The recovery of property demand is not a phenomena restricted to the island. Tenerife Property Shop, retain a network of partner agents throughout the world, who report that optimism is starting to appear across the board.
More optimism comes from a new report by the University of Barcelona, who argue that the Spanish property market will come back to life this year, after a dismal 2008. "There are five key reasons for saying that there will be more home sales in 2009 than there were in 2008," says the report. "Interest rates are lower; house prices have fallen back to their 2003 levels; banks are lending more; investors are coming back; and many people who were thinking of renting have decided to buy."
Even the press, who many people blame for the crisis of confidence, are starting to pick up on the changes. In Spain, ‘El Mundo’, one of Spain’s leading news papers, suggests there may be signs of recovery in the Spanish property market, in one of the first positive articles about the market since the crisis began. "It appears to be the beginning of the end of the worst period for property sales since the crisis began," says the article.
The Economist (3rd April) writes that homes have reached their fair prices if rent prices are taken into account, even saying that we are seeing the first indications that the end of the recession may be in sight. The Guardian in the UK (31st March) notes that in February 37,937 new mortgages were approved, 19% more compared to the previous month in the UK -the highest value reached since may 2008 and in March there was an increase in real estate prices.
The news is good for both buyers and property owners. Increased availability of mortgage funds is one of the drivers, but the real issue is the gradual return of confidence. Despite the positive signs Mary Spencer, a Director of Tenerife Property Shop advises caution, "Clearly, from a buyer’s point of view, the time of easy pickings and bargains is drawing to a close but we will still have to wait some time until all sectors of the market see sustained demand. Owners who are selling their property can see some positive news, but should certainly remain cautious and price their properties competitively."
