Fincas and Country property - Málaga Property

News - 2010

January News

Predictions for 2010

Well, where to start!

It is not easy to remain positive in this type of property market because there is so much negativity surrounding property here in Spain. Prices have continued to fall, newspapers are full of headlines about corruption, illegal homes and demolitions and the poor value of the pound has reduced the number of Brits considering buying in Spain.

Could it get any worse? Well, I’m afraid that things haven’t quite bottomed out just yet and there is a new twist in the issue regarding legal paperwork which we will come to later.

There is some really good news amongst the doom and gloom and that’s the fact that prices haven’t been as cheap as this since the early 00’s and therefore, if you are looking to buy in Spain there is an abundance of choice and some cracking deals to be done.

Indeed, many European buyers are seizing the opportunities available to buy properties at substantial discounts. They want to benefit from the weather and culture that Spain will always offer. Dutch, German, French, Belgium and Swiss buyers are coming to Torcal Estates every week and with no concerns over exchange rates these buyers are taking advantage of the amazing deals that can be done. 

Prices –

As predicted back in January 2009, the pressure on asking prices has continued downwards – in real terms we would say that prices have fallen by around 15% to 20% during 2009. As some of you may know, we like to keep detailed records of the properties we sell and those that are sold in our area by other agents. This information makes for interesting reading!

We keep a record of all properties that receive offers and sell. Taking the stated built area (this can sometimes include pools and terraces but is always confirmed in writing by the Property Register or the Catastro) and then work out an average € per square meter. For example, in simple terms, a property sold for €200,000 with a built area of 150M2 achieved a price per square meter of €1,333.

In 2007, the average price per square meter across the whole year equated to €2,100, in 2008 this average dropped to €1,850 and for 2009 this dropped further to a staggeringly low level of €1,250. This means that, on average, a property of 100M2 is expected to sell for around €125,000. For many this will be incomprehensible because this demonstrates a huge drop in actual sales values from 2007 of 40%.

Unfortunately, prices may well continue to drop during 2010 – the exact levels are pretty difficult to state accurately because they will be affected by various things…

• Has the property been reduced from its 2006/2007peak price already? If not then the owners are likely to be in for a huge shock.
• If there is a lot of competition (many houses available for sale in the area) the value of all comparable properties are basically dictated by the cheapest one (until it sells). All similar properties will be pegged and compared with the cheapest available in the area and buyers will tend to steer clear of those that look expensive.

Density counts for a lot – competition, as already stated, will affect everyone and when there are high levels of competition you really could suffer from lots of properties competing for the few buyers that are out there.  It only takes a few desperate vendors to reduce prices and everyone within the area is affected.

Thankfully, in the area that Torcal Estates operates in, there never have been huge numbers of properties. Overbuilding hasn’t taken place therefore there isn’t a huge over-supply of properties for sale at any given time. This does tend to keep values a little more stable.

Some areas such as Competa and Alhaurin el Grande have seen massive price reductions because of the density of properties and competition amongst vendors. Sadly, these areas have been over developed in past years offering buyers a very different experience than this area. The area covered by Torcal Estates remains unspoilt with very few houses, comfortably sitting in the rural farming countryside and typical white villages serving the community.

Are any properties selling?

This is where there is some good news!

From the start of September through to November 2009 Torcal Estates agreed sales on 8 properties. Compared with the rest of the year, that was a fantastic improvement and gave us all some confidence that things were improving.

Interestingly, each of the properties were sold at levels which coincide with the averages above. In fact, the average of these last 8 sales comes in at €1,186 per square meter.

Of these 8 buyers 50% of them were still British (so people are still able to deal with the bad press and exchange rate!). The rest were a mixture of Spanish, Belgium and Dutch buyers (confirming that an agent capable of dealing with European buyers is extremely important!).

The current exchange rate between the Pound and Euro is likely to fluctuate for some time while the economic and political situation remains unclear – many experts feel that Sterling is under-valued and that the Eurozone will continue to struggle as has been highlighted recently with the problems in Greece.

So, having agreed the sale of 8 houses, is this the end of the story? Absolutely not…!

Town Halls, lawyers and the logjam of all logjams!

You cannot pick up a newspaper or listen to the radio without some mention of illegality, demolitions or corruption. I guess Spain has had this coming for a long time as things have always been done in a certain way (which in various ways have shocked us, appalled us and attracted us to this weird and wonderful country).

Sadly, with many articles written there is a distinct lack of detail or background and this leads to further confusion amongst the general public.

Torcal Estates will be offering a comprehensive report on illegality and some of the many issues which have been highlighted over recent months. However, for the purposes of this report we can confirm that getting a buyer at the moment is only half the battle!

Many buyers, their lawyers and lenders (if needed) will make various requests for confirmation that the property they are buying will not suddenly become one of the soon-to-be-demolished properties we are all reading about.

Torcal Estates has always been proud to offer properties which are 100% legal, have all necessary paperwork and can be bought without any concerns. Unfortunately, in recent months many lawyers seem to want to further protect themselves by now applying to the local Town Hall for some form of written confirmation that there is nothing wrong with the property.

This is a fool’s errand on a number of levels:

• These same lawyers now applying to the Town Hall for comfort, in many instances, have bought questionable properties in the past - you show me a lawyer who hasn’t had dealings with a country property in the last 10 years and I’ll eat my hat! None of them used to do these checks on any properties!
• The lawyers are requesting this confirmation from the body (ie, the Town Hall) which is primarily responsible for the mess that they are in anyway!
• What is the point in having public registries (The Catastro and the Property Register) when all you really need to do is ask the Town Hall if the property is legal! The emphasis is in the wrong area.

The current frustration for buyers, vendors and the man in the middle

So, you’ve found the house you want to buy and your lawyer puts in a request to the local Town Hall to make sure that all is ok with the property – that shouldn’t take long should it? Well, in fact this is probably one of the most important factors to affect the Spanish property market in recent times. It is a crippling situation with some instances of Town Hall’s refusing to reply to these requests for fear of saying something that later becomes a problem with the Junta de Andalucia!

We, at Torcal Estates, have some excellent lawyers who regularly give us the benefit of their advice and the one thing you know when you ask 10 lawyers for an opinion you will end up with 11 different answers!  

The fact is each and every property has to be treated individually.

Each property should be investigated individually to see when it was built, what has been done to the property (extensions, changes of use etc) and what status of land the property sits on. These are all issues which will influence a lawyer and their decision to ask questions at the Town Hall.

Where does Torcal Estates stand in all of this confusion?

All of the properties that Torcal Estates offer for sale have good legal paperwork – many of them were built before the land law changed in 2003 and many of them have all the paperwork that was or is now needed to comply with the Andalusian Land Law.

If you are in any doubts regarding a property that you are buying, the first things you need to know are:

• Check the description of the property on the Escritura compared with each of the public registries (the Property Register and the Catastro)
• Is the property registered at the Registro de la Propiedad and is it registered at the correct meters (compared to the escritura, the Catastro and in reality?
• Is the property registered in the Catastro at the correct meters and is the plan of the land correct?
• Is the property paying IBI
• Is the property connected to mains water and electric?
• If the property has been built (or reformed) in recent years are all the licenses in place (especially the Licencia de Primera Occupación)?

If the property you are buying is older than 2003 then there is a good chance that the property is perfectly legal and will never be threatened with demolition. The only caveat to this is those properties that have been built on specifically designated protected land or land which is subject to flooding.

At Torcal Estates we can show you the above paperwork for all of our properties and therefore the need for further certification is, for most properties, quite unnecessary.

If you are dealing with an estate agent or vendor who doesn’t allow you access to this information then, in our opinion, you should walk away.

Summary and final thoughts on 2010

Well, just when we thought that things may be picking up we’ve been hit by the latest concerns over illegality and demolitions. Thankfully, all of this publicity and cleaning up of the system will help encourage future buyers and will avoid many of the problems that have been encountered over recent years.

Prices may continue to fall, however this very much will be dictated by the availability of properties and levels of competition (you may even hear of prices going up in areas of high demand). Whether prices will bottom out during the year is perhaps the biggest question – at Torcal Estates, we feel that this is going to be the case. At some stage during the year we will see an increase in activity, buyers will return and prices will start to level off (that doesn’t mean they’ll start to rise!).

Sadly, a factor that we simply cannot control is the requirement of lawyers to request information from the Town Halls and their ability to deal with these requests. If lawyers persist in requiring written confirmation that a property is ok to be sold then the Town Halls will either “fall over” from the high number of requests or they will need to recruit many more staff.

Whilst there is plenty to moan about at the moment it does mean that purchasers who want to buy because they want a better lifestyle can obtain a bargain at some incredible prices. Spain still has such a lot to offer buyers and residents that we feel certain things will start to pick up during 2010 and we’ll all drink to that!

February News

Work starts again on the AP46

Construction of the new toll road due to alleviate much of the traffic congestion around Málaga and the new ring roads has re-started.

After lengthy negotiations between the local government and the company responsible for the project work has recommenced with a targeted finish date later in 2010.

This road is to link the current A45/A92(M) motorway at Las Pedrizas (north of Casabermeja) to the new outer ring road being built around Málaga which is all expected to reduce the amount of traffic build up on the existing road system. The new motorway will be a toll road and will be particularly useful for those travelling from the north of the province and wishing to get to the western stretches of the Costa del Sol.

Whilst there are no junctions on the motorway between Las Pedrizas and Puerte de la Torre the motorway is also expected to increase the connectivity of villages such as Almogia, Casabermeja and Villanueva de la Concepción with the rest of the Málaga province.

The rain in Spain falls mainly…everywhere!

Yes, its official – this winter has been the wettest on record in Andalucia.

For many people the rains have been an inconvenience, for some unlucky residents it has caused much damage and heartache and for a few it has led to death and destruction but we must all remember the need for rain fall in this area.

By comparison with natural disasters seen recently in Haiti, Chile and Madeira we have suffered very little and having seen 4 or 5 years of virtually no rain during the winter months the rain must be seen as a relief to many.

Natural reservoirs and the man made lake at Viñuela are all virtually full and in some instances water has had to be released because of the high levels!

March News

Malaga airport new terminal opens this month

The long awaited opening of Terminal 3 at Málaga airport is now confirmed for the 15th March and there is much excitement surrounding the opening ceremony.

Kind Juan Carlos is presiding over the opening and it is expected to create headlines across the whole of Spain.

The new terminal is unlikely to be seen by many of the ex-pat community as they pass through Málaga airport as it is anticipated that the current Terminal (2) will remain in use with the majority of low cost airlines and will be the main entry point for British flights.

Whilst the economic outlook remains bleak it is unlikely that the new terminal will lead to large numbers of new destinations but the opening will create a huge number of jobs for the many retail outlets, restaurants and bars as well as the staff for the terminal check in desks.

This extension of Málaga airport offers a degree of comfort to all residents and holiday home owners across Andalucia as it guarantees the connectivity of southern Spain with the rest of Europe for many years to come.

Sterling against the Euro (and the Dollar too!)

Wow, what a rollercoaster the Foreign Exchange traders must be on at the moment.

One minute everyone is predicting the end of the Euro with Sterling and the Dollar taking a hike upwards and then the next minute Sterling is sliding on fears of a hung parliament and the concerns over the levels of UK public debt!

Many market commentators are giving their predictions for the future and what should we make of these “informed” predictions? Probably not a lot – the fact is that nobody really knows what is likely to happen to the value of any currency given the current economic disarray.

Yes, there’s a chance that the Euro will continue to struggle given the concerns over Greece, Portugal and Spain (not to mention Italy and Ireland) but will the Euro fail completely as a cross border currency? No, because Germany and France cannot afford to let the currency disappear and they have too much influence over the rest of Europe to be ignored.

Whilst the Dollar is doing particularly well against both currencies at the moment, there are all sorts of problems with the state of the property market in the US which are still yet to surface. Some reports suggest that the property market is emerging from the slump (which in many ways caused the financial tsunami that’s gone global) however as with every property market there are headlines which can be misleading.

One week the UK sees a report from the Halifax to say that house prices and rising and the next week there’s a report from the Nationwide to say that prices are falling again!

All I would suggest at the moment is that all reports (even this well considered article) be taken with a pinch of salt because we really don’t know what’s around the corner.

Fluctuations in currencies are no different to fluctuations in property prices – they don’t actually affect you unless you quantify them at a given time (actually transferring money or selling/buying a property) because it’s only at that time that your value is fixed.

Wind farms are welcome but not in the south of El Torcal

On a lighter note, it is good to see that a local wind farm (south of El Torcal in the direction of Alora) is to be blocked by the mayors of Antequera and Villanueva de la Concepción.

Whilst we are not against sustainable and “green” energy, the location of wind farms (and solar farms) must be carefully considered. Sustainable energy supplies are vital to everyone and they will be increasingly important as the years pass but to spoil naturally beautiful landscapes forever is questionable.

Further meetings are planned with the mayors of Almogia, Alora and Valle de Abdalajis to gain their support in rejecting these proposals to spoil the landscape.

Title Insurance and the Safe Purchase guarantee

With the increased awareness  and concerns from buyers over the legality of Spanish property there is a relatively new product available to reduce the concerns of buyers and help smooth the sale of property in the country.

Caser Seguros SL, a large Madrid based insurance company, now offer Title Insurance on all properties bought through Torcal Estates.

The title insurance effectively covers a property for a period of 20 years up to a maximum claim value of €360,000. The insurance covers a variety of possible claims including demolition orders, registration problems, boundary disputes and any claim from relatives of the vendor.

The great news is that this Title Insurance will not cost the buyer or the seller a penny! Torcal Estates will pay the cost of the 20 year cover at the point where the escritura is signed into the names of the new buyers so that they are immediately covered from the day of completion.

Why do Torcal Estates offer this free to seller and buyer? Well the answer is simple – we don’t charge the seller anything for this service because it really is to the benefit of the buyer and we feel that agent’s fees are reasonable and that this amount should come out of our costs. In addition, we feel that buyers will want this cover without doubt and they need all the encouragement we can give them at the moment! Learn more about title insurance and the huge range of benefits it offers by keeping an eye on the Torcal Estates website in the coming weeks. 

News – 2009