Does "Buyers' Market" mean "Let's Not Buy?"

BUYERS' MARKET

"A market which has more sellers than buyers. Low prices result from this excess of supply over demand. also called a soft market. The opposite of seller's market."

I am asked by many customers if the Spanish real estate market is experiencing a so-called buyers' market now. The answer I give is that I think this is the case, but not in all of Spain and also only for people who actually want to be buyers. Why say this? It seems that people are confusing the idea of a buyers' market, as defined above, where the presence of more sellers than buyers puts the buyer in a strong position, with a situation where you expect sellers to negotiate price drops by a further 30 or 40%. And then not buy. The logic presented is that if they were willing to drop this much then they will probably go lower. Is this realistic behavior in the infamous oversupply situation that Spain has?

Think of your own property. If you were in a hurry to sell and had seen that prices had not risen in the past year or so, you would certainly be more hesitant to increase your price and perhaps more open to negotiating. But you would still have a bottom line below which you would not go. This is the same with Spanish vendors. More so in 2014 as the market is much more active than in 2013, with some areas like Costa Blanca reporting a very sharp uptick in sales to overseas buyers. Once there is activity in the market, a vendor can risk turning down offers now that they would have accepted a year ago.

In other areas, such as The Costa del Sol, property supply has been limited in the last few years as a result of the unfortunate corruption problems the town hall in Marbella and Estepona suffered. This actually translated into lower supply. However, prices were still artificially high due to the boom that took place from about 2001 to 2004. These prices had to come down. And finally, they did. If we take an area like the well-known road to Benahavis, just outside Marbella, there were developments there a few short years ago where a bargain hunter in the world of Spanish property could find an apartment for around 200,000 Sterling or even less. And we're talking good property: 2 beds, 2.5 bathrooms, air conditioning, central heating, and more than one hundred square meters. Developments such as Marques de Atalaya, Capanes del Golf, and Gazules del Sol all sold at great prices for good properties, yet many people who genuinely wanted a bargain passed because they felt it could go lower.

Yesterday's passing is today's missing out. This summer, you would be lucky to find anything up that road for that price, the average pricing for a two-bed, two-bath apartment there being closer to 250,000 sterling. Now we have seen some bank so-called "distressed" properties in places such as Condado de Alhama, by the company formerly known as Polaris World, for 51,000 Euros. These are bargains for anyone who genuinely wants a place to go on holiday with the family, spend time on a resort, and enjoy themselves. Yet already people eye these offers skeptically and will sit out the round of sales for the simple reason that they think something better will come along.

The truth is we have seen more people miss out on the deals in the last year or so because they had been "reliably informed" by the UK press that we are in a "buyers' market." Regrettably, the press gives the public reason to understand that a buyers' market is a don't-buy-now-because-prices-will-drop-market. My advice to buyers is to look seriously for the property they want, be sensible with the budget, and when they find the property they do like, bargain like mad for it. Don't let it go just because you think it might drop in price.

The market is clearly more active now. It is no longer just hype to try and drive sales. There are many factors that contribute to the market becoming more active. Many speak of the Euro/Sterling relationship favoring the latter in the last few months. Others speak of the perception of value that people are seeing in the market with the new price changes. Still others, mainly Spanish, claim that people are now remembering again how good Spain is for holidays, protracted visits, or even retirement.

Personally, I believe we give too much credence to these macroeconomic explanations of what the different buying groups do. Perhaps the positive growth in UK buyers in Spain is merely the result of the worst winter the Brits have seen in decades? Making offers "just to see" is not useful for anybody. A vendor has as much a right as the buyer to be treated fairly. If they want to sell, they will soon come back with counteroffers. Either way, in the market so far in 2017, we are seeing the good properties are selling and the true buyers are having their day in the market.