Are Tenerife Property Prices going to go down this year ?03/02/2021
Are Tenerife Property Prices going to go down this year ?
I have been asked this many times recently ‘Are property prices in Tenerife going down ? Another question many are asking is ‘Will Brexit affect Tenerife Property Prices ?
Both questions important if you are buying or selling as everyone wants to buy cheap and sell for the highest price possible.
Without having a crystal ball here are our business thoughts on what we feel is happening and also the prospects for 2021:
2020 Report & Comments :
Due to the lockdown from March 2020-June 2020 in which our 2 offices were shut sales for 2020 were down in comparasion to what we did in 2019 given that 2019 was a record year for us. In saying this 2020 given with all of the travel restrictions and further lockdowns in Europe for most of the last 3 months of the year I think our office performed quite well. If we did not have the Corona virus issues, we could have had a record year too in 2020 and this is based on getting more enquiries in 2020 than 2019.which was up 20% year on year. In saying this a lot of the enquires were for buyers looking for a ‘deal’ and opportunity to find properties which have been greatly reduced.
Predictions for 2021:
Again due to travel restriction we have seen at the start of January many holiday rental accommodation / self-catering holiday flats cancel. But this does not mean that this has died completely as while many hotels are shut we have had on our rental size a 50% occupancy level which is low when you think that the same period 2020 we were at 100% occupancy. With regards to sales, to date we have had 4 sales for January again this is down on last year when we had 11. Although the figures for our sales and rentals are down they are not too bad and unlike some gloo and doom messages I see on social media things are slowly progress forward especially since the vaccines were announced. Another reason for sales and rental being down are travel restrictions as we have some reasonably priced properties that clients want to buy if only they can see them first. In fact we have recently done sales where a video was sent to the buyer and using the video as reference the purchaser paid their deposits and completion to be done mostly in May when the flights will resume and the sales can be concluded at Notary.
Our barometer is judged on ‘enquires received’ from potential clients ‘ and this does not appear to have dropped with the % similar to the previous 2 years. We are very motivated to receive enquiries as this shows that interest is still there to invest in property. Also a number of clients wishing to come over as soon as the lockdown situation eases which we are expecting to be end of March 2021. While video sales are up the majority of buyers wish to see the property ‘the old fashioned way’ and whilst lockdowns are still in place this makes our jobs selling very difficult but we are very optimistic that from March 2021 we will be generating the same % of sales as 2019.
There´s a lot of pent up demand from all over Europe and our offices we caters for British, French, Spanish, Italians, Russians, Dutch and shortly will be opening a China Desk.
For 2020 the average sale price was 220,000€ which is slightly lower than 2019 and this was also due to more sellers accepting reductions which in normal circumstance they would not have accepted.
Currently we are seeing enquires coming from all over Europe everywhere and while this has fallen (only slightly) from the UK market this is being compensated by other buyers mainly from the Eastern Europe and even Chinese.
At the moment we are seeing the GBP appreciate against the Euro, and this will probably lead to seeing more UK enquires & buyers.
Brexit & our opinion :
With the new 90/180 day rule coming into effect from the beginning of this year this has got some people rushing to do their residency papers to enable them to stay longer but it does not appear to be causing concern as owners can still spend up to 6 months a year. The case for most property owners is to come here for maybe the winter if you are lucky to be retired for a few weeks every 3-4 months is still within the criteria of the Brexit agreement.
Are prices going down ?
In recent years most sales have been bought by clients using their own resources what we call ‘cash buyers’ and not having a mortgage does help as now they are not desperate to sell their property here in Tenerife. These sellers can hold on to their property, wait till the vaccine is administered this year to most of the public at which time Tenerife property demand will increase. Even those clients who have bought with a bank mortgage are being cautions in dropping the sale prices as unlike the 2008-2016 recession when banks were repossessing properties when their ciients were failing to keep up with their repayment this time the banks are giving these clients in need a mortgage holiday. This is very different to the financial crisis as it allows sellers who have mortgages also to say ’it may be best to hold out for a few more months’ in the hope of getting more for their property.
Many buyers were expecting to suddenly make offers of 30%-40% lower than the asking price and to have this accepted which has not happened and from the above commetns we do not expect this for 2021. The sale prices also have to be realistic as recent years have seen a big increase but we are seeing a leveling down since 2020.
To be honest they are not increasing either at the moment due to the pandemic and fear of what the future offers. The vaccine imminent arrive has brought with it an upbeat mood and more positivity but still a certain amount of caution remains. As we mentioned earlier Tenerife property prices did increase substantially over the last few years and asking prices from sellers did in some cases feel high. We are seeing a lot less of this now which is good and most of what is coming on the market is priced more realistically and hence why we feel that the latter part of 2021 will see a high increase of property sales due mainly to these reasonably priced properties.
Will price drops?
In our opinion we do not cannot see this happening and this is mainly due to to the fact when we contact any client they are on the edge of their seats to travel as they previously did. It does not seem or any justifiable re