People with a house to sell and those thinking of buying shouldn’t expect the same level of slump within the housing market post COVID as there was in 2008. The situation is proving to be quite different with some types of housing more, not less, in demand than before.
It’s still a bitter memory. The 2008 slump in the property market left many who were wanting to sell their property, high and dry. The good news is that even with the financial concerns that are hovering at the moment, a survey by Alicante University suggests that the outlook looks less bleak in the post-Covid years. But why?
Improved management of portfolios
Overall, it looks as though property developers have been less rash this time round. Whereas the bubble that burst in 2008 found many of them ill-prepared for a down turn in the market, this has not been the case so far it seems. The majority of those building new properties have already secured sales on 66.5% of them and are seeing a relatively small number of cancellations (3.36%).
Because of this house prices remain steady and developers are more optimistic about recovery than they were post 2008. Fifty per cent of the developers asked, as part of the study ‘The housing market in the province of Alicante’, said that they had decided to delay new promotions at the moment. However, 21.2% of the companies consulted had plans to begin the construction of new homes by the end of the year with 28.8% saying that they would wait a little longer.
It seems that current commitments will stand and then builders will bide their time to see how things progress as the country eases out of health safety measures. This confidence within the construction industry can partly be explained by lessons learnt in 2008 and the fact that many businesses now carry fewer debts, take fewer risks and so should be in a better position to recover more quickly.
There may be more of a reduction in the price of resale homes, however. Three out of four of those questioned in the survey by the University of Alicante foresaw a drop in prices in the resale housing market. This is because the number of second hand properties for sale is higher than the number of available new properties.
It is also likely that there will be a reduction in demand for holiday homes by Spanish buyers. Of those surveyed, 44.2% expected a fall in demand with only 23.1% thinking it might rise. However, responses when asked about foreign buyers were more positive.
A buoyant foreign housing market
In spite of lockdowns across Europe, there is still interest in buying in Spain. Developers remain hopeful that foreign buyers will return to the Costa Blanca partly due to having greater confidence in the health system here than in countries such as Turkey.
The importance of having a strong and reliable health service has never been more greatly acknowledged and buyers of second homes are likely to want the reassurance that if a similar outbreak were to happen again they could depend on clear and prudent measures being taken by the state.
Larger properties in demand
One interesting development in terms of the property market is interest in houses with some outside space. Having experienced the lockdown in flats, in some cases without even a balcony, some people are now looking to move to properties with outside areas and more space they can enjoy.
Coastal locations are also perceived as being healthier places to live than inner city areas and both national and international professionals alike are looking critically at their home environment in case confinement must be repeated at some point in the future.
The draw of online working
During the Covid crisis many workers discovered the benefits of working from home. Here lies another opportunity. If your home becomes your office, where would you most like your office to be? Increasingly strong internet connection and tools for remote working have led many to consider not only working from home as a permanent alternative but also moving that home to their ideal destination.
These factors along with consumer loyalty and determination to follow through a pre-Covid dream mean that there are still people looking to buy. Until recently only the most determined were able to continue with their purchases but now we are seeing those interested prior to lockdown are tentatively making their plans once again. Especially British purchasers, mindful of the clock ticking down to the end of the Brexit Transition period, when regulations may change, particularly for would-be residents.
Now real estate agents and developers would like to see a little more speed applied by those processing documentation and licences in order to keep pace with a return to interest in owning a home on the Costa Blanca.
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