Looking back at 2012 in our Market Analysis we saw that interest and sales were up last year, with buyers reacting to increasingly sensibly and attractively priced properties. As this process gathered pace during the second half and in particular the latter part of the year, we were cautiously upbeat enough to predict it to be trend that would continue into 2013.
Now, with a full first quarter of the year behind us, we’re happy to say that the trend has indeed continued, and seems to be gathering pace slowly but surely. “Again, visits to our website have risen, more people have contacted us for information and we have more requests for viewings, and ultimately, more sales,” says Holmes Sotogrande director Ben Bateman, who sees this as “the revival of market pipeline last seen back at the beginning of 2008.”
A good price means demand
“There is now a continued upward trend, but make no mistake, while it is clear that there is sincere interest in Sotogrande property and there are buyers with the means and willingness to commit their money, this remains a very price-sensitive market.” Indeed, in an almost text-book example of the workings of supply and demand, buyers are attracted to the properties available but only at the right price.
In this highly price-elastic market demand reacts strongly to price levels. Charge too much and demand ebbs away; charge a sensible price at the ‘going market rate’ and demand rises rapidly. “What this means for vendors is that they will have to set realistic asking prices if they want to sell their properties. It’s a question of putting yourself at the front of the queue, and I’m glad to say a lot of vendors are beginning to do that now.”
Interestingly enough the demand for homes in Sotogrande is currently very broadly spread, falling all the way across the range from small apartments to large villas. “There is now a market for every kind of property and budget as long as the price is attractive, and by this I don’t mean distressed super-bargains but good homes going for realistic market prices.”
Banks are starting to contribute to the process again too, for though the lending criteria are stricter than they have been for years and interest rates have risen a bit to around 4-4,5%, the number of mortgages issued is starting to increase again, even if borrowing is limited to 60% of the sales price.
Where from here?
Although he senses the market gathering momentum, Ben emphasises the fact that prices will remain largely level for the next year or more. “In Sotogrande prices have essentially stopped falling now, but this is a stabilising phase in which demand is growing gradually for well-priced properties. Buyers may not have the luxury of time and negotiation they had a year or two ago, but many are still willing to walk away from a deal and look elsewhere if vendors are inflexible. We see fewer and fewer silly offers being made, but by the same token today’s buyer still wants more house for his money.”
What’s more, today’s buyer is also very well informed, having spent a lot of time studying the market and its offering online before committing to a purchase and contacting agents. “Before the average sale used to take up to a year, even in the boom times, but now we find that people come better prepared and already have a shortlist of properties they want to see, to which we will add others before they make up their mind and make an offer.”
All in all, with a growing number of people willing and able to commit resources to owning a property in Sotogrande, Ben is confident enough to feel reasonably upbeat about the future. “The overall signs are that this recovery will continue, and by the end of 2014 we could begin to see the conditions for overall prices to begin to rise again. It means that those homeowners who do not wish to sell their properties at the current price levels should take them off the market, boost the current process by reducing supply, and wait for prices to rise. However, the current market trends also mean that those buyers who are looking for the best possible deal may not have as much time available to them anymore, so if you see a property you like, it is advisable to act resolutely or you may begin to lose out.”
By Jackie Cruz - Manifesto ·