A Time to Buy

The old adage that 'the early bird gets the worm' describes Tenerife's property market pretty well at the moment.  Two months ago nobody could see an end to the property slump but now we are at least beginning to see the light of dawn at the end of a black night.  Analysts are starting to be cautiously upbeat about property in Tenerife and beyond, many forecasting the turnaround point.  In layman’s terms, this means that the property market is currently ‘bottoming out’.

According to the Financial Times, some forty percent of economists now believe that 2009 will be a good year to buy property.  Jonathan Loynes of Capital Economics says: "The experience of previous housing downturns suggests that, even after prices stop falling, it could be some time before they start to rise again at any meaningful rate."  The actions of vulture fund managers, who snap up bargain properties from distressed buyers would seem to agree.  Bargains will become increasingly scarce, possibly drying up as early as the spring.

David Miles of Morgan Stanley comments, "Assuming that credit availability improves somewhat, a further sharp decline in house prices over 2009 does not seem the most likely outcome."  Academics such as Patrick Minford of Cardiff Business School, believe 2009 will be a good year for buying property. Dieter Helm of New College Oxford sees 2009 as a good time to buy because "house prices are likely to be much lower and the real assets may increasingly be seen as a protection against currency debasement".

Property owners can take some heart from the growing number of analysts that support a recovery.  Those with sufficient assets may even consider increasing their portfolio now: When purchase prices were high, it was harder to get a decent return because of the original cost of the investment. Now that property prices are low, it's possible to get a steady 8 or 9% yield, which makes shares look very unappealing. Although there is guarded optimism that property prices may have ended their fall, it will still be some time before it is a ‘good time to sell’.  2009 looks like good time to buy, while there are still bargains on the market, but we will still have to wait until 2010 / 2011 when buyers return in force… good news for the early birds buying right now at rock bottom prices.