The latest Spanish house price data makes gloomy reading. In the second quarter of 2009, according to official Ministry of Housing data, prices fell by an average of 8.3 per cent against the same period a year ago. The decline quarter-on-quarter has slowed down, but there's a fairly unanimous view in Spain that prices have got further to fall before a recovery comes along.
A Reuters' poll of economists found that on average, they expected prices to fall a total of 32 per cent from their 2007 peak; and reports from Dun & Bradstreet and the Spanish research company Asesores Financieros Internacionales (AFI) both predict that prices will not begin to recover until 2012.
So where's the good news? Put simply, it's a great time to find a bargain in Spain. All this negative data means that developers, individual vendors and banks looking to dispose of repossessed properties are all having to become much more realistic if they want to sell. Property auctions are booming, and buyers have an unprecedented opportunity to make an offer for any property.
John Scott, who runs agent Best Buy Spain which has been in Spain since the late 1980s, says: "On average, we've gone back to the property values of 2005, so there are a lot of people who wanted to buy a couple of years ago and didn't manage to, who've done themselves a massive favour." Scott says that official property figures are distorted by the enormous volume of poor quality, poorly-located homes which have been built in recent years, and in some cases are unsaleable. "If you're looking for a well-located, well-presented property from a known builder, somewhere like Marbella or Puerto Banus, then I think those properties are probably now as low as they are going to go," he argues.
As well as marketing high quality properties that vendors need to sell, Best Value Spain is also offering properties available for auction through the court process – but Scott stresses that this system is really suitable only for serious investors.
Official figures in Spain refer to the entire housing market and have so far failed to show the extent of price reductions being accepted for holiday homes on the costas, where anecdotally, prices are commonly reduced by 25 to 40 per cent from their 2007 peaks. It's certainly time for buyers to gravitate towards quality; whether they can expect to see further price falls, though, remains to be seen.
Alexander Garrett is a freelance property writer who contributes regularly to The Observer and British Airways' Business Life.