After the Spanish real estate bubble burst back in 2008, foreign buyers accounted for 50% of purchases in Las Palmas de Gran Canaria city.
Most were cash buyers because the local banks didn’t have the credit to hand out mortgages. Now, after a decade-plus boom in the property market fuelled by low interest rates and generous mortgage conditions, the foreign buyer is back in the headlines.
Canarias 7, the local newspaper, reports that foreign and non-resident buyers again account for 50% of transactions in the Canary Islands.
I’m not sure that this is good news for the property market in general. It suggests that local buyers are dropping out of the market.
While transaction numbers are back at pre-crisis levels this statistics is likely due to a rush to snap up the last ultra-low fixed-rate mortgages.
If you do have one of those 30-year fixed rate mortgages with rates below 2%, it looks like a historically good deal.
Property prices and the Las Palmas property market in 2023
Interest rates are up (the Euribor was 2.63% today) and the ECB has made it clear that further interest rate rises are on the way. This pushes mortgage rates up with with no sign of a ceiling.
Many will be priced out of the property market especially with inflation so high. Sellers will choose not to sell a property with a low fixed-rate mortgage (which last for the duration of the mortgage in Spain).
With less active buyers in the market Las Palmas property prices are unlikely to keep rising. In fact, I’d be very surprised if they don’t fall during 2023. Even local estate agents admit that the market looks challenging. Remarkable because there is normally nothing more optimistic than an estate agent discussing next year’s prices!
What does this mean for property buyers and sellers?
If you plan to sell a Las Palmas property any time soon, there is no time like the present. There are still cash buyers buyers looking for property and mortgage rates haven’t yet risen to prohibitive levels. Just price your property accurately and market it well. Make sure your estate agent understands the foreign market because those cash buyers are key.
For buyers, a cautious approach is best. Property prices are likely to be close to a peak and some are overvalued by optimistic owners and agents. The last thing you want to do is buy an overpriced property at the top of the market. That said, many owners and agents have accepted that the market is slowing. There are properties appearing at lower prices and bargains will appear as mortgage repayments rise and rental yields drop.
With the market in flux my advice is to get good local advice from an experienced estate agent who knows both the local and foreign buyer market.
Now, where would you find one of them?
By the way: Please contact me before you contact property sellers via a portal. Otherwise, in many cases, I can’t act on your behalf.
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