Green shoots, economic activity increasing, deflation risks diminishing, stock markets rising, business and consumer confidence on the up etc etc. We all read the news papers and listen to the news but the big question for those of us in the real estate market, and in my case the Mallorca property market, is what does this mean for activity levels and property prices?
With unemployment levels some way off touching bottom, expect foreclosure levels to increase further, household disposable income to remain under severe strain and consumer confidence to take a knock again. When potential buyers see that the prospects of rising values are a long way off, that activity will also fall back again.
Result? Expect house sales activity and prices to remain depressed for a long time and until some stability can return to the market. This is going to be a slow and painful process.
Want a positive spin? Underlying values may well be near the bottom (+/- 10%) but remember what I always say about “asking prices” and “values”, they are NOT the same thing! In Mallorca the decoupling in these two figures which should of course be intimately related, has created an inherent risk in the market where buyers must “beware”. Find a property where the asking price and value are the same, or there and there abouts, and it may be a good time to buy. Purchase a property with an inflated price tag without first checking it’s underlying value, and you may well be regretting it for a very long time, all be it while sitting on the terrace with an appetising G and T!