Gran Canaria property update: March 2019: How the upcoming elections and other factors are affecting the market

When I wrote the 2019 guide to Las Palmas property in late 2018 I noted that I expected average prices to rise in 2019 despite a set of moderating factors.

These were; a decline in tourist rental investment, an increase in new-build property, and the inevitable decline in tourist numbers following the recent boom.

We must now add the uncertainty of national elections on April 28 and local elections on May 25.

Let’s have a look at each of these factors in more detail…

Tourist rental investment

The decline in holiday rental (VV) investment was amplified when the government banned local businesses from investing in VV property within the RIC: An investment scheme designed to encourage companies to invest their profits within the Canary Islands.

Also, misguided attempts by local politicians, now delayed, to ban tourist rentals in resort areas have added to uncertainty about the sector.

VV buyers, in general, are now far more realistic and yield-focused. There has also been a move away from VV investment and towards residential letting. While holiday lets do have higher potential earnings they require more investment and higher management fees.

New build property

There is now a construction boom in areas of Las Palmas close to Las Canteras beach and especially in the Guanarteme barrio.

Building has also increased all over Gran Canaria. Construction jobs in the Canary Islands increased by 11.1% per year since 2017 and new build permits increased by 29.1% in 2018.

The island has needed new property for some time but the rate of building is affecting the property market.

New build and off-plan buyers put down a 10% deposit and make further payments in instalments during construction. It’s an attractive option as you end up with a smaller mortgage even though you pay a 5-10% premium on market rates for a brand new property.

See my guide to new-build Gran Canaria property.

Declining tourist numbers

After a five-year boom with record tourist numbers, occupancy is starting to drop in Gran Canaria. This is largely inevitable as competitors such as Turkey, Egypt and Tunisia come back into the market but it does impact the local economy and buyer confidence.

The 2019 national and local elections

Spanish national politics is up in the air at the moment as the centre-left PSOE party took over power from the right-wing PP. The appearance of VOX, a new party to the right of both the PP and Ciudadanos, has added to the uncertainty.

The most likely outcome of the general election is a coalition of right-wing parties but nobody knows what will actually happen. The same goes for the local elections where Canarian parties compete with the big Spanish parties.

What matters is that uncertainty about the results is affecting buyer confidence. Buyers are holding back from investment until they know the outcome.

Positive factors influencing Gran Canaria property prices in 2019

Local banks are still offering attractive mortgage deals to both resident and non-resident buyers as EU interest rates remain at record lows. See my 2019 Gran Canaria mortgage guide.

There are still attractive yields to be had for both residential and holiday let investments if you choose the right property.

While tourism is down from its record highs the local economy is healthy and employment figures are positive.

In Las Palmas, tourist numbers remain healthy and the non-tourism parts of the economy such as the post and oil services continue to thrive.

Gran Canaria property market update: March 2019

Property prices in Las Palmas de Gran Canaria province have risen consistently since Q3 2015. They rose by 3.9% in 2017 and 7.4% in 2018, according to valuation company Tinsa. In Las Palmas city, prices rose by 4.7% in 2017 and 3.7% in 2018 on average. Price increases in desirable areas of the city were higher.

In Q4 2018, Las Palmas province prices rose by 7.4% and by 3.7% in Las Palmas city.

Overall, prices are still significantly below the 2008 peak.

However, local business owners say that the Gran Canaria economy slowed in Q4 2018 and Q1 2019. Banks and estate agents report a decrease in mortgage applications and property purchases.

So far in 2019, this hasn’t led to a noticeable drop in property prices but it has changed the market.

For-sale property gets fewer visits and takes longer to sell. Buyers are more cautious and more likely to make an offer under the asking price.

The overall effect is still subtle but noticeable and we just don’t know which of the moderating factors is most influential.

There is a good chance that buyer activity will rebound after the elections.

Selling a Gran Canaria property in 2019: The right time?

It is a good time to sell a Gran Canaria property as the market remains healthy and many owners are sitting on significant gains made in the last few years.

With buyer activity down it is important to price your property realistically and to invest some money in making your property as attractive as possible.

As one of Gran Canaria’s top-selling estate agents, I can help you to set the right price and prepare your property for sale.

In most cases, I don’t advise making major changes to a property before selling in Gran Canaria. Most buyers prefer a slightly lower price than, for example, a new kitchen.

Buying a Gran Canaria property in 2019

While Gran Canaria prices have risen since 2015 they are still reasonable by historical standards. The average price per square metre in Las Palmas is currently €1400 per metre compared to the 2008 peak of €2061.

If the drop in buyer activity is anything other than a temporary blip, sellers will be more likely to listen to reasonable offers in 2019.

Buying a Gran Canaria property at the right price requires detailed knowledge of local prices and levels of demand. It’s important to work with a local agent who understands the market and understands you and your requirements.

Remember that estate agent fees in Gran Canaria are paid by the seller so you have nothing to lose by working with a good local agent and everything to gain.

Laura Leyshon: Gran Canaria estate agent

I’m Laura and I am an estate agent working with RE/MAX Cony Overseas, one of the island’s oldest and best-regarded agencies.

I specialise in helping foreign buyers and buyers all over Gran Canaria and am always happy to talk. Please feel free to contact me here, give me a call, or pop into the office for a chat.

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