Post-Boom Spanish Real Estate: A Return to Consumer’s Interests

The ten-year Spanish property boom finally came to an end over 2007, according to figures from Spain’s department of housing (MiV). The 4.8% rise in prices throughout last year may seem like a normal figure compared to other non-booming property markets, but represents a sharp deceleration compared to the powerful rises – of up to 20% – experienced during the boom years.

The private property buyer today is faced with a completely different scenario thanks to the regularization of price increases and the ease in demand. Although Spanish property no longer holds the promise of strong, short-term valuation, the main qualities that have attracted foreign buyers to Spanish property remain unchanged: Spain’s excellent weather, beautiful natural surroundings, inviting culture and unbeatable quality of life.

These natural qualities continue to attract overseas property buyers who buy not for profits, but to secure a beautiful home in a sunny, relaxed environment. On the other hand, the market is experiencing a draining of profit-minded investors that sought the quick and easy returns made possible by Spain’s real estate boom.

For foreign buyers looking for a long-term investment in a home and an enjoyable lifestyle, the Spanish property market has increased in appeal due to several factors. Most importantly, the market has reoriented itself to suit the needs of the consumer and thus offers much more accessibility and purchasing power to the buyer.

This may seem like a given for a real estate market, but it was certainly not the case during the boom years, when demand was so strong it was taken for granted and sector-related companies could afford to bypass the consumer. Prices were unrelentingly driven upwards, profits were sought at all costs and the powerless buyer was at the mercy of higher-level market forces. This situation was a dream come true for powerful investors, banks, estate agencies and construction companies that took demand for granted and disrespected and ignored the needs of the actual consumer.

With the current regularized price increases and reduced demand, the market has no choice but to acknowledge and turn once again to the consumer. Buyers, no longer in fierce competition amongst themselves, are free to exercise their power at the bargaining table.

Today, sector companies can no longer afford to bypass consumer needs; since demand is more selective, irresponsible business practices put the company’s survival at risk. Due to this shift in the market, many businesses that operated irresponsibly and lacked clear business plans saw their demise throughout the last year.

From a consumer viewpoint, this has been another positive impact of the conclusion Spain’s property boom: the cleaning effect its had on the market. This process has been clearly evident with the recent closing of a staggering 40% of Spain’s estate agencies. While some of these closings may be attributable to normal market effects, this percentage clearly reflects the existence of many leech-businesses that sought merely to take advantage of unrelenting demand and worsened conditions for the consumer.

Fortunately, the evaporation of these leech-businesses has left the market populated with service-oriented companies that owe their continued survival to responsible market practices and clear, consumer-focused business plans. As a consequence, buyers in search of a retirement or vacation home in Spain can look forward to a quality buying experience. And while soaring short-term price increases are no longer likely, Spanish property still represents an excellent investment in quality of life and long-term value.

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