Spanish islands showing signs of recovery

Spanish property valuation company Tinsa has reported that the Balearic and Canary Islands are the only regions in Spain where house prices went up in April compared to a year earlier.

According to the company, prices rose by an average of 3.3 per cent on the two island groups, but declined by 10.5 per cent throughout the rest of the country.

Tinsa’s research reveals that the average national house price in Spain has fallen by 37.2 per cent from the peak value recorded in December 2007, just before the bubble burst. The mainland Mediterranean coastline is home to the highest average falls at 45.1 per cent, with the capital and major cities with populations greater than 50,000 next at 40.4 per cent. The Balearic and Canary Islands prop up the table with falls of ‘just’ 24.5 per cent from the peak.

Balearic Garden

Balearic Garden

However, according to Daniel Chavarria Waschke, the Managing Director of Balearics Sotheby’s International Realty, the latest Tinsa figures show that a property market recovery is now underway in some part of Spain, as his company had been predicting.

“Earlier this year we made reference to the fact that Ibiza had its recovery in 2012, way ahead of the mainland, and was already ‘booming out’ again,” he said. “Meanwhile we said that demand for holiday homes in Mallorca had remained high throughout the ‘crisis’ largely due to the mix of nationalities involved, with more than 80 per cent of buyers non-Spanish. We believed that at the top end, the worst was over for Mallorca and recovery would accelerate in 2013.

“Our crystal ball appears to be spot on with April’s 3.3 per cent house price increase reflecting that recovery. Long may it continue.”

Market recovery may well be accelerated by Spanish Prime Minister Mariano Rajoy’s statement of intent to offer indefinite residency to foreigners purchasing a home priced in excess of 500,000 euros, significantly higher than the 160,000 euros first suggested back in November 2012. A more detailed draft of the proposal is expected by the summer but there has already been strong interest from China and Russia, nations keen to access one of Spain’s millions of empty homes in return for lucrative residence.

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