Stalemate in Tenerife

It is not just the credit crunch that is stalling sales on the island, but also buyer expectations.  Bargain hunters in Tenerife need to adopt a different strategy.

An increasing number of Brits hoping to purchase properties on the island are running into a brick wall created by the doom and gloom reports in the media.  Egged on by media reports of property prices spiralling downwards, many potential buyers are putting in offers far below the asking price, on the assumption that Tenerife’s property market is suffering as much as the UK.  Naturally, these offers are always rejected.  Figures from the government and large private institutions such as surveyors and the internet based companies all agree on one thing: Tenerife has some of the most stable property prices in Spain.

Property prices in Tenerife have remained steadier than elsewhere in Spain for a number of reasons:
•    Average prices are already below those on the mainland.  Unlike many other areas of Spain and the UK, Tenerife did not experience meteoric price rises, so there is no large ‘price correction’ bubble to burst.
•    There is no oversupply of housing in Tenerife.  In fact the population is rising at a faster rate than the construction of new homes.
•    Many vendors have no imperative to sell.  Their property in Tenerife is often their second home.  If they are selling, they are normally in no hurry.
•    Many homes have very low mortgages, or none at all.  Therefore they are not a ‘drain’ on owner’s resources. 
•    Tenerife owners often receive very good rental incomes, which means less need to sell.

For a bargain hunter, all the above is not bad news, but simply requires an adjustment in strategy.  Clearly the tactic used in other countries of making low offers willy nilly does not work.  To successfully walk away with a bargain, you need to get the estate agent on your side.

Firstly, the market is very localised.  In some complexes we have seen drops in prices of as much as 10%.  In others, such as el Nautico, we have actually seen a 5% rise.  Specific local advice is needed to identify what is a real bargain, and what isn’t.  Every property needs to be evaluated in the context of its local micro-market.  Obviously this takes some expertise and experience, from an experienced advisor. 

Apart from this advice and local market knowledge, a good estate agent can help the bargain hunter in one more important way: identifying the sellers who might take an offer.  Squeezed by the economy and personal circumstances, there are buyers who are desperate to sell.  Only your agent will know who these are.  

So if you are looking for a bargain property to buy in Tenerife, think about your strategy.  Use the professionals who have the knowledge and the contacts, and your search is likely to be successful.  Go it alone, ignoring the market and the advice, and almost certainly, you will be back on a plane disappointed, having wasted your time.