Living under a blue sky

Buying property for sale in moraira

Moraira Coast

Over the past eight weeks or so many properties have been sold in Moraira. The majority of which have been of low value. Anything under 350,000 euros is considered low value in Moraira. Average is around the 500k mark and you don’t get much for that! Unless you drop lucky.

We speak with many estate agents and the really good properties at low prices seem to be selling fast. If only there were more! There seems to be a big problem finding quality property of low value in Moraira or Javea. Recently we have all been inundated with property hunters many of which go back slightly disappointed and wondering exactly where the recession is around here. That was a comment made to us the other week
from some clients with 500k. Believe me we have experienced 20-30% price reductions on today’s advertised prices. Make’s you think just how easy obtaining money use to be!

And there lies the problem. “Liquidity” not many people have it and not many can raise it to the level required to satisfy their expectations. Those that do have liquidity are chasing the bargains and snapping them up. But what’s a bargain in Moraira’ well if you can get a “quality” 3 – 4 bed villa (not a project) with a good real sea view from pool level on a useable flat plot near to amenities for under 600k you are doing well!! We have several clients wanting just that. So remember a good sea view and that’s nothing wow cost 100-150k minimum. Sea view plots cost upwards of 340,000 euros!

This leads me to a reoccurring problem that we never used to see very much but it is becoming more common because of the low offers some vendors are having to swallow.

Basically once you manage to find your dream home and agree on a price you usually put down a 3000 reservation deposit and then instruct lawyers to do the due diligence etc…This takes a couple of weeks. Meantime the property is still on the market with several other estate agents and if they have a cash buyer wanting to take a look the vendors hardly ever refuse. They try their luck and see if they can get a better offer.

You see it’s only legally binding once the 10% deposit is paid and the private purchase contract signed by both parties. Other than that you can easily get gazumped. Don’t leave it to chance.

To save the heartache there is a very simple way to avoid this. We have just recommended it to a client and it has been done with ease.
Instead of putting down a reservation deposit which doesn’t mean anything in legal terms, you instruct your lawyer to issue with immediate effect a private purchase contract and make it “subject to due diligence”. Then both parties sign it. This now legally means that the vendor would have to pay you back the double if they sell it to someone else!
It’s worth ensuring this common “pay back the double clause” is in the contract.

The 10% deposit is held within a lawyers client account until all the searches have been completed to your satisfaction. If they are good you continue with the purchase. If they show a problem and the problem can not easily be rectified it is within your right to back out of the deal and get your 10% back from the lawyer. You can not back out other than for legal reasons, otherwise you would risk losing your 10% deposit which is understandable because you may have prevented them selling it to someone else..

Lawyers have standard private purchase contracts that can be tweaked accordingly and used. This means within a couple of days you can secure your deal even if a inventory is required!
It’s also worth mentioning title deed insurance It’s new and well worth while for peace of mind. It’s called Safe Purchase Scheme

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Javea Property For Sale update

Sketch of Javea Montgo Villa for Sale

The Euro zone nations have recently been leading the way as far as Javea property for sale and Moraira property for sale is concerned. Buyers from the UK still think that property for sale in Javea or property for sale in Moraira is overpriced even though there has been a significant price reduction.

The recent fall, yet again, in sterling means the UK buyers are no better off regardless of a 20 –30% price drop on average. The UK media coverage says that the prices have fallen sharply in Spain and you can pick up villas at a fraction of the original cost.

This generalization is not true of the Javea and Moraira property market. In all fairness the prices have held up very well. I think a lot of this is more to do with the fact that Moraira and Javea are very well established areas full of villas of a more bespoke nature for the more discerning client. Yes there has been a property boom here too but it has not been built up in the same way as the massive purpose built housing estates to the south of Alicante, created at a price to sell to the masses.

This is where we see massive problems and consequently massive price reductions. Unfortunately the media rarely make any distinction between the prosperous areas and the not so prosperous areas. Remember bad news sells papers!

There are various articles about Moraira and Javea that may go some way to explain why these areas are so highly desired. If you are thinking about investing in a holiday home it is well worth while to do as much research as you possibly can and hopefully this website will aid you in some way. If you prefer to speak with one of us directly please feel free to do so, we don’t bite! Or you may want to view some properties for sale in javea or properties for sale in Moraira

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Trip To Galicia

Mo & Ali Segovia

Ant & Sal in Segovia

Our first stop was Segovia, north of Madrid – a beautiful city with a stunning cathedral and Roman aquaduct.

Segovia Cathedral

The walled city is perched on a rock rising out of the surrounding Castillian plains, and is a maze of narrow streets dotted with Roman monuments and noble mansions.

Mo & Ant Segovia

We stayed one night in a converted monastery within walking distance of the old town.

Wow Beef Rib En Route

Then on to A Pobra de Trives, near Ourense in rural Galicia, after an interesting drive north west through spectacular scenery. No postcards here (well no shops, actually), so just a couple of snapshots of the hotel, which was a luxuriously converted old manor house on a farm, set in beautiful lush pastures, woodland and lakes.

Converted Old Manor

Manor Views

Very green with lots of livestock, the cows and goats with bells so the herdsman can find them to bring them home. So peaceful, and no English spoken – popular area for walking holidays, but few foreign tourists come here so we were something of a curiosity!

Manor Gardens!

Space ship!

Our next stop was Vigo

Escudos Hotel

A busy commercial port on the south coast of Galicia (not far from the border with Portugal).
The city itself was busy and a bit touristy as many cruise liners stop here. But our hotel was a delightful, peaceful haven overlooking the estuary, another lovely old building with gardens down to the beach and all mod cons – we got a free upgrade to a huge suite overlooking the estuary.

Escudos View

Escudos Gardens

There are lots of traditional fishing villages in the many inlets, and summer resorts popular with Spanish holidaymakers. And fantastic seafood restaurants – every conceivable type of shellfish is caught or farmed off this coast.

Seafood Lunch

From Vigo, we visited Santiago de Compostella.
The buildings, especially the cathedral, were spectacularly ornate though rather gloomy.

Not difficult to imagine the throngs of pilgrims there in the Middle Ages, and what an awesome sight it must have been for them. We didn´t get to pay our respects at St James´s reliquary as the queue was several hours long.

Then on to La Coruña for 2 nights – this is where the Armada set sail from and the site of many historic sea battles and sieges. Another busy port on a rocky islet linked to mainland by a narrow strip of sand. Two sleepless nights in a beachfront hotel in sweltering heat – the only bad hotel choice I had made when I booked them all on the internet. The “English weather” we had been promised did not materialise, it was sunny every day and only a few drops of rain during the whole trip. More spectacular coastline, maritime museum and aquarium. The Costa del Muerte (coast of death) is here, very rugged coastline where many ships foundered on the rocks, and Cape Finisterre (heard of in the shipping forecast, always wondered where it was!). Finis Terra in Spanish, means “the end of the world”, which of course it was until Christopher Columbus came back. We celerbrated Mo’s birthday in the famous El Coral seafood restaurant.

Mo’s Birthday Bash at El Coral

From La Coruña we drove into the Picos de Europa, a spectacular mountain range in the province of Asturias, only 18 miles from the sea. A wonderful drive through deep gorges cut by gushing mountain rivers. It was a Sunday, and the area was busy with Spanish holidaymakers and day-trippers, every little town had canoes, bikes or horses for hire and there were hundreds of families enjoying a day out on the river and picnicking under the trees. We stayed overnight in Covadonga, a small village in the mountains with another spectacular church, huge monastery and convent.

Church close up

Another pilgrimage site, to a shrine carved out in the rocks to the Virgin of the Battlefield.

Covadonga Shrine

Covadonga Cave

Woodlands

Church in Covadonga

The legendary battle of Covadonga (not heard of it? Shame on you ….. neither had we!) took place here in 722, when Don Pelayo defeated the Moors and heralded the start of the Spanish Reconquest.

Mo & Ant Covadonga

Next stop was near to El Burgo in Castilla-Leon. Lots of old fortified towns and villages and lofty castles en-route, this being the oldest kingdom in Spain.

Rope Bridge En Route to Meseta

Then on through the “Meseta” – the vast central plains with acres and acres of arable farms, but strangely empty of people. We stayed in a delightful former convent in a quaint walled town where the locals looked at us as if we´d just landed from another planet!

On through more meseta to another walled town at Mora de Rubielos, near to Teruel. A beautiful small town with mediaeval origins, immaculately cared for. Exploring the maze of narrow streets revealed beautiful historic town houses with balconies hung with bright geraniums.

Sally and I walked the stations of the cross to the shrine at the top of the fortified hill with a lovely view of the town below.

Mora de Rubielos Shrine

One of the locals chatted animatedly with Maurice, in sign language, about how cold it is there in the winter, like England! They do get lots of snow in winter and there are ski resorts in the mountains nearby.

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Mora de Rubielos

Local stonework

And then home to Moraira, after 10 days “on the road”, 7 different hotels, and having traveled about 3,000 km. Another huge area of Spain explored, and a breathtaking diversity of scenery, history and traditions experienced, but there is so much more to see ………..

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Property valuations in Javea & Moraira

3 bed 120m2 moraira apartment for sale

Recently I have been trying to make sense of property prices and valuations in Moraira and Javea.

There seems to be all sorts of data around with regard to valuations. The majority is not area specific relative to the Javea and Moraira properties for sale. Although we have seen, in some cases, a price reduction of around 20 – 30 % in advertised sales prices, it does not represent a true picture of the underlying value that was born during 2007 – 2009 financial crisis.

What the majority can afford will always dictate the underlying value of a property. It just takes a while for the reality to kick in. Many property owners out there simply don’t have to sell or can hang on to an unrealistic price until such a time when the majority of prices have been corrected. They then have to follow suit if they wish to sell. This process usually takes three years to bottom out to a realistic level. Some properties are priced to sell but the majority for sale still doesn’t reflect reality.

The properties that seem to sell are being substantially reduced when it comes to the actual deal done. Most never get to know how low the actual sales price was relative to the asking price. Many offers are refused but the ones that are selling are deals based upon a more realistic price level to start with. So how do you get a realistic valuation?

The process of valuation is arrived at by various means but rest assured, it’s always way behind the market when it comes to the reality of reductions! Most vendors already seem to know how much their villa is worth. They arrive at this in the usual way and this is based upon other advertised prices and what they think properties have been sold at next door or down the road over the past few months. Then by making adjustments for what they paid for their property and how much money they have spent on it, plus adding some on to negotiate with and “oh, the exchange rate is not in my favour” etc.

The other way is to ask an estate agent to come around to value the property. Estate agents are aware of the market conditions and will use slightly revised figures per square meter that reflect this but will still hold out in hope that the market will improve or will not be as affected like other areas. Historically there is a lot of truth in this as far as Javea and Moraira go. These desirable areas have been able to ride the storm far more than other areas, but of late there seem to be many people having no alternative other than to sell at low prices. In my opinion this time next year will see the low priced deals done today being the advertised sales price next year. So the initial figures estate agents arrive at will be similar to what the banks come up with to lend new money.The only difference is that estate agents are more at liberty to be a little bit more creative with the rest, usually increasing the valuation to please the vendor subject to how desperate they are to sell.

The truth is there is no rock solid formula and the formulas that exist in my opinion, do not reflect the true underlying value of a property or basically what the majority can now afford. Even the official figures are lagging behind what’s happening on the ground and what’s actually happening on the ground is lagging behind the financial crisis born during 2007 and it’s not over. It may take another year before we see some realistic prices being advertised, maybe even longer.

Estate agents talk amongst themselves and know, even if they are not selling much them selves, some of the properties being sold and at what price some are exchanging hands for. Many can’t believe the deals that are being done and it would insult many vendors out there wishing to sell if they knew. Consequently it’s easier to live in the past and avoid the confrontation when asked to put a value on a property! They allow the market to take its natural course.

Another way, though at cost, to value your property is to pay a bank to do it and allow them to be as clinical as possible. Don’t sell it to them! After all these guys will probably be financing the 70% mortgage to someone, somewhere down the line. Its inevitable banks will have their say because most buyers require some form of funding or at the very least an official valuation, so you might as well know how banks are going to look upon the value of your property before hand. At least you can waive an official bank valuation in front of them regardless.

Recently I thought I would compile 200 villa properties in Javea, taken at random from various websites. I made sure that the prices were reduced prices and that the properties had a similar build 150 – 175 and plot size of 850 – 1200. Then I totaled up the build size and divided it by 200, likewise with the advertised prices. Then I divided the average price by the average build and came to an average figure of 2,300 euros per M2.
I compared this 2,300 M2 figure with some recent bank valuations and arrived at a figure that was almost the same. Today I have spoken to a property valuation expert that does valuations for the banks. Banks use various registered organizations that specialize in such activities whom follow the guidelines laid out by central government.

One such organization is Tinsa and a report by them echoes my sentiment on this subject matter even though there info is dated relative to what’s happening on the ground.

Tinsa, a Spanish property valuation company used by several high street banks, has signaled that advertised house prices will drop a further 20% over 2009. In the same report, they have calculated the drop in 2008 as being 10.1%
If this figure is correct, Tinsa say that this will bring house prices back to their advertised levels in 2005. The monthly drop may be between 1 and 1.4%.
This is not news to many agents down here on the ground, who have seen price reductions of between 20 – 40% in the resale market. The official figures often lag behind the reality of business day to day.
A 10% drop in price does not really attract attention among the bargain hunters looking to purchase a Spanish home at a drastically reduced price. It is only those properties that have reduced to 2005 prices that are actually selling.

It may well take time for certain vendors and developers to catch up with the pricing downturn. It is only those that need to sell for personal or financial reasons that are pricing their properties realistically or accepting very low offers.

This translates into only a small percentage of properties available at ‘distressed’ prices. However, they are the only properties that are selling and selling quickly.

As there seems to be no accurate formula for property valuations, I asked how they establish a value on a given property. It was a little vague but here we go…..

Firstly, they have a valuation guide by province and this is broken down to some degree by area. The problem is that there are huge fluctuations from province to province and town to town. The system depends greatly upon each individual valuation officer having knowledge of a given area and the prices these areas are able to attract. For example a like for like property in the south of Alicante would be significantly less in price than say the north of Alicante in areas like Moraira and Javea.

The bulk of the valuation is based on the amount of actual living accommodation, excluding garages, terraces and undeveloped under builds. The plot is usually included in the price/calculation, unless it’s a double plot. The pool also tends to be included. Then adjustments are taken into account relative to the overall condition of the building, gardens, views and area. So it’s part science part art. One thing for certain is that properties with greater living accommodation have always valued up very well, where as smaller accommodation will not calculate favorably and therefore will be more difficult to sell especially if the buyer requires finance.

Some of the recent bargains I have come across are larger properties of 280 and 290 M2 build. As far as bank valuations go, they value up well and one was recently valued at 670k two months ago. But the prices they are being sold at are way below a bank valuation. The figures work out at 1,300 – 1,400 per M2!!
The reason for this is because that market for older properties that were once worth 600 – 750k has virtually gone, and what’s left of that market sector can buy something that was once worth 1.2million!

So to get back to property values in a real world, many of the once 600k – 750k properties are selling at around the 400k mark, some above and some below. This is mainly due to the fact that lending has become difficult and people have less value in their currency. Spain used to be cheap!

It all sounds like doom and gloom, but let’s not hide away from what is actually happening here on the ground. You might as well know because if you have a villa that you need to sell and it’s not too dissimilar to the many out there and amongst hundreds of others for sale within a given price band that 90% of the market can not even afford, through no fault of their own, how are you going to sell your villa?

If 90% of all buyers can only raise 300k – 400k at best, plus the additional 10% cost and you happen to have a villa that you think is worth 700k or 800k, think again!
Where is your market? Who are you selling to? The few buyers around with this higher budget can find amazing villa bargains that seem unreal and unfair but they indeed exist.
If one day the advertised prices are within the grasp of the many and sterling recovers to 1.45 against the euro, you may stand a better chance of finding a buyer. Either way, you will lose out on both the reduction in price and probably on the exchange rate if you need sterling!

One thing for certain is that resale properties represent amazing value for money. And are far less expensive than new build. You would be lucky to find a decent plot for less than 225k and anything with a sea view is at least 350k for a 1000M2 plot. With the cost of architects, building permissions and modern day materials and labour you don’t get much change out of 600k and that’s for something basic. Consequently, the future of new build looks grim and only prime and very expensive plot locations seem to be being built on for a more discerning customer.

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