Who’s buying now?

Battle weary Brits stumble off planes in Tenerife, squinting at the first bright sun that many have seen for ages.  Downhearted by the barrage of negative press in the media, they are a disconsolate bunch, shuffling towards the baggage carousels, so pessimistic that they seem half surprised that their baggage was not lost on the journey.  Could these be the buyers that that are now returning to the Tenerife Property Market?

Strangely enough, the answer is “Yes”.  But unlike the brash, confident property investors of recent years, these new buyers seem to be purchasing with grim determination.  They are not the “flip it, mate, and make loadsa money” aspiring property tycoons, but normal people for whom Tenerife has come to symbolise much more than just a return on investment.  For these new buyers, the decision to purchase a home in Tenerife is a calculated and rational one.

Another wet summer and a long winter looming ahead, surrounded by all the recession doom and gloom are conspiring to make 196,000 people leave the UK this year.  The numbers have soared, despite the credit crunch… or maybe because of it.  Emigration, for many people, is the logical answer, as long as they can find the right place to live. 

Tenerife is thought to be one of the prime candidates for relocation.  As the warmest place within Europe, it enjoys the political and economic stability of the EU.  Here, the British and Irish are equal to any other citizen in the eyes of the law.  A safe environment for children, the island has escaped the blight of teen crime that has been the scourge of countries like the UK.  A safe, sunny place to live with schools and healthcare is a powerful incentive for many to make the move.  Many of the new breed of buyers that have been visiting Tenerife this autumn have been looking for property to make their permanent home.

“But what about property prices?  Aren’t they going down?”  The fear that property prices will go down has almost evaporated.  It is not simply that Tenerife has some of the most stable prices in Spain, according to an article in the Daily Mail this week.  It is not even because many predict that prices on the island are unlikely to decline in the south of Tenerife due to a history of low mortgage lending, which creates a very stable market.  No, the real reason, according to the Times, is the ‘Icesave Effect’.

The Icesave effect is otherwise known as the “Somehow I feel safer in property than in a savings account” effect. Although the Government has pledged that none of the 300,000 UK depositors in Icesave, the Icelandic bank, will lose money, its failure comes on the heels of Lloyds TSB's takeover of HBOS and all the other bank problems on the markets and it seems that people are still short of confidence. 

Even in the struggling UK, estate agents report that buyers of both decrepit and deluxe properties are now saying that they see property as a safer investment than a savings account, even though they also admit that they expect the UK market could subside further, as the jobless numbers rise.   In Tenerife, without the fears of a plummeting market, cash buyers are suddenly not uncommon.  Not only are they keeping their hard earned savings away from the avaricious claws of the fragile banks, but they are also able to go bargain hunting on Tenerife’s property market.  Though the bulk of properties hold prices firmly, there are still some who have been squeezed by the crunch and need to sell quickly: Perfect opportunities for the cash buyers, as they find safe homes for their hard earned nest eggs.  It is hard to tell who is more relieved: The seller, who may now be able to use the proceeds to pay their other debts; or the buyer, for having found a safe haven for their life savings.  The Times report on one typical response from a property buyer:  “I would rather put my cash into a boarded-up terrace and wait for the recovery than get involved with Icesave, or anything like it.” The Icesave effect underlines the influence that cash buyers are now having.

But it is not just people who are looking for a safe home for themselves or their money who are causing the recent burst of activity on Tenerife’s property market.  There is a third group that has been formally dubbed by the Daily Mail as the BARBies.  ‘Desperate first-time buyers are giving up the idea of owning property at home and looking overseas instead’, reports the Daily Mail.  This growing trend has created a new breed of BARBies - Buying Abroad Renting in Britain.  But there is more to it than another anachronism for the press to play with.  The dismal summer weather has encouraged people to buy homes in places where sunshine can be relied on.  A study by National Savings & Investments found that 84 per cent of 18 to 24-year-olds believe buying abroad is a more viable option than buying in Britain.  36 per cent of aspiring first-time buyers renting in London would consider buying abroad, and of those, 43 per cent consider Spain and its islands as the most attractive option for ease of travel.  At the moment they constitute the smallest group of buyers in Tenerife, but their numbers are set to grow. 

Research by Barclays Bank reveals the number of Britons keen to buy property abroad has doubled to 18,000 in a year, despite the credit crunch.  The availability of mortgages has already started to ease, allowing many more of these dreams to turn into reality.  As turmoil hits the markets and global recession bites, there is one thing we in Tenerife can all be sure of.  All the fuss and hoo-hah of the global financial crises seem a world away when you are watching the sun set over the ocean in Tenerife.