Mortgage Approvals Falling In Lanzarote

The market for property for sale in Lanzarote is starting to feel the impact of the mortgage and property crisis in the UK. As figures just released by Spain’s National Institute of Statistics show a sharp fall in mortgage approvals for the first quarter of 2008 in the province of Las Palmas, of which Lanzarote is part.

During the first three months of 2007 14,456 new mortgages were approved across the eastern Canary Islands – many of them assigned to overseas property investors taking advantage of more favourable euro zone interest rates.

But this figure has now fallen dramatically by 36% during the first quarter of 2008 – with just 9333 new mortgages processed for approval by local banks. Who have tightened their lending criteria considerably over the last twelve months.

Allied with a weakening sterling exchange rate, diminishing disposable income and crumbing consumer confidence these factors are all starting to collude on a hitherto healthy market. Which has traditionally been buoyed by Lanzarote´s enormous popularity as a year holiday destination – attracting over one million British and Irish visitors alone during 2007. Providing a reliable stream of rental income for owners of holiday property on the island.

But despite the fact that tourist visitor numbers are in fact up this year – by 8.7% to May end, property prices on the island are slowly starting to head in the opposite direction. As agents and vendors come to terms with the fact that there are simply less buyers around. Necessitating more realistic property valuations in order to attract their attention.

Local banks are also adding to this downward pressure on prices. Their valuation is all important – as this is the figure they lend against. Not the price displayed in an estate agents window. And many vendors are finding that the banks are now actively valuing property at figures which fall short of their personal expectations.

There is abundant evidence that island based estate agents are starting to actively market price discounted property – with one of the largest realtors on the island now featuring over 90 properties on their website which have been recently reduced in price. In some instances by as much as €90,000.

Demand is still out there – as one of the leading island property portals, Lanzarote Guidebook, is still reporting high levels of enquiry. But interest is only being show in property priced below the €300,000 mark. With the bulk of interest focusing on ´safer’ investments, such as holiday rental apartments and studios in the island’s three main tourist resorts.