Opinions on Property Market.

[PuertoPimp]

Hello everyone,

I would just like to express my thoughts on the property market in Mallorca (especially Alcudia/Puerto Pollensa) at the moment. And hopefully a few of you can enlighten me on the subject aswell!
Heres my 2cents for anyone thinking of purchasing a property or anyone that has one wishing to rent/sell there one.



Property sales/Prices: I predict (personally) that property prices will drop anywhere from 20%-40% (more likely 40 than 20!) within the next 3-4 years. Meaning property owners are going to LOOSE money if they are buying as a investment or to sell. But of course, as everything prices will go back up after that.


Why?!: Simply because no body can afford anything at the moment. Everything is going up except for earning (food, petrol, mortgages, etc) and people cannot afford this, mainly the Spanish living and working here all year round.
Also the English are not buying with the €/Pound situation (I have heard various theories on what will happen with this, I would like to hear what you know )

Concussion: Now is a right time to buy your HOME (not investment property) where you are going to live and enjoy for a few years. Which will gradually go up in value over a period of time. But it is also a bad time to sell, as if you bought your property just a few years ago you will more than likely loose money, eventho properties on avarage go up 5-6% a year.


Holiday Renting: There will always be a good market for this. If advertised half-well you can book up at least the whole summer season for sure. Weekly or monthly rentals have good potential and will always earn a reasonable income.

All Year Rentals: People will always want to live in Puerto Pollensa all year round, from working local Spaniards to retired people from the UK. So my opinion is there is always a good market for this. But then again let it be known your place is up for rent. Word of mouth is not the best method for this, agencies and “Se Alquila” signs are a must.

I hope this will help someone, and I look forward to hearing your opinions on this aswell!

Regards,

pp

 

[PuertoPimp]

40 vies and no replys yet!!

come on, my posy wasent that boring surely!

 

[shotokan]

Much of what you say makes some sense, but PP is unlikely to see the level of fall that you are predicting as it is a prime location and has a high (if seasonal demand).

The property market has been over valued for several years and certainly will soften, with the main losers being the few that wanted to make a quick buck and move on. Fortunately these are in the minority in PP, so most will hang on and try to ride out the storm...in a pleasant environment.

Certainly the great location fuelling constant demand will support prices to a level not seen on many of the Costas who have a major issue (land grab etc). This means the panic on the mainland will not hit the Balearics as hard.

Spending power is a problem and no-one can predict which way this will move over the next 12-24 months, so assume that the £ and $ will remain weaker that the Euro.

Those that have stretched themsleves for their 'Place In The Sun' lifestyle in the last couple of years will have problems affording their anticipated lifestyles. But the PP market is at the upper end so adjusting expectations will allow most to ride it out.

I was looking at possible purchase for a couple of years and decided against it as I could see this bubble bursting...the macro demographics do not suggest the property gravy train would keep accelerating infinitely.

My gameplan is now long term rental... less maintenance responsibility, on costs and no capital risk. Good plan in an uncertain market.

 

[Project]

I am inclined to agree with Shotokan. I was visiting friends on the mainland last weekend and they mentioned that they are finding it difficult financially and have their house up for sale in a market that is not moving. Although some larger construction companies have closed their doors, most of these were companies that constructed new developments which due to licenses etc. has slowed right down.
One of the Spanish papers was saying the other day that basically the housing market is finding it's balance after the few boom years it has experienced and therefore there will obviously be some knockon effects to other sectors.
The ones who bought at the top end of their budget for a "capricho" in the sun will, I feel, be the ones who will find it hardest to ride out this unpredictable period, however I have heard some banks are offering fixed euribor etc. my question is would they do this if they predict a steady increase of mortgage payments? I doubt it.
En fin, live simply and to what you can afford, it's kept me out of problems up to now!!

 

[El Gordo]

Hola all

I agree with the overpricing of property. I am one of the purchasers caught up in this when we bought in 2005. But isnt this the same the world over!! Just look at the state of housing at home.

Puerto, you mention the advertising of property to rent.

We were stung by the demise of a local Holiday Rental Business called Sunquest Mallorca, operating out of an office in Gotmar. When we bought we had to honour some rentals over the Summer of 2005.

When we were finally "allowed" to visit our own apartment we found out that the operator had died, going bankrupt after millions had gone missing in both Mallorca and Britain!! We saw nothing of the 3000 euros owed but had to pay all of the bills for water electricity etc. This stirred up a hornets nest because of the amount of money(both declared and "Black" money) owed to Malorcan apartment and villa owners. There is a site on the internet, one of many pages available: http://www.martinfrost.ws/htmlfiles/sunquest5.html if interested.


I am worried about the legality of renting out especially after the above case highlighting local Pollensa tax avoidance. This must have attracted the attention of the "Tourist Police".

By law I believe you are not allowed to rent out unless you have a licence from the Tourist Organisation, despite the patrimony tax? (assumes you rent out but dont declare it!) levied by the government!!

From previous posts on this site My understanding is that no licences can be granted for Residential Apartments (the majority) and no future licences will be granted for villas. This is because of the influence Holeliers on the island have on the government. In fact some apartments offered for rent on this site may be illegal. Time will tell if/when the Tourist Police call!!!

This is why I dont rent out but find it difficult finding the running costs!

I think I've gone off at a tangent here but am concerned if people rely on rental to support a mortgage etc. It may not be sustainable and you may be prosecuted.

 

[PuertoPimp]

About the holiday rentals:

You are quite right about this.

My company had 60 VILLAS and CHALETs not apartments... that were only used for holiday rentals through out the island. and now guess how many we have.... 6, all with liscence, lucky these are of the most popular ones to.

I am really sorry to hear about the problems you have ahd and the money owed to you. I also heard similar stories about the death/money owning.

I hope all turns out well for you!

 

[Vanhelsing]

Interesting

 

[CocoPuff]

not really

 

[pollensa]

This is a post about the state of the Property Market which is bound to interest a lot of members. Please do contribute if you have genuine information, queries, opinions etc.

Thanks. Webmaster

 

[shotokan]

Just back from most recent trip and it's very obvious that the market is dead property-wise. An estate agent friend told me that she hasn't sold anything in the past 6 months and that there is little on the horizon which suggests things will improve over the next 2-3 years.

Many folks are desperate to sell, having bought 'investment properties' at the top of the market, but have only dropped prices marginally (hoping for a golden buyer). In the current depressed market, PP is now well overpriced compared to most other Mallorcan resorts and this must realign in the coming years.

Many Brits in particular have been hit by the double whammy of diving home equity in the UK, combined with the drop in Euro values... many homes for sale in Majorca have so far only been marginally reduced on a scale equivalent to the Euro fall, so UK buyers will be very few.

The conclusion is that the market is likely to fall significantly more to reflect true (over) supply and (limited) demand dynamics.

In truth the 'Place in The Sun' is more and more likely to be viewed as a very high risk investment by those not moving out full time!..

 

[Belladonna]

What is the Mallorcan/Spanish local buyers market like at the moment? If fewer British are buying, perhaps they will take advantage to buy more?