Tenerife Property Market problem

There’s a problem looming on the Tenerife property market….

Tenerife Property Market Problem

You heard it here first. There’s a problem that’s already rearing its ugly head on the Tenerife property market: a shortage of properties!

The problem can be summed up pretty simply:

  1. There have been a lot of buyers over recent months, and fewer properties entering the market. The key to the Tenerife property market problem is this supply side.
  2. Hardly anyone built any new properties, planning permissions are hard to come by and the Tenerife property market problem of supply is not going to go away.
  3. The rise in buyers is going to accelerate, and with fewer properties on the market, prices are going to rise faster than you think!

Let’s look in a little more detail at those points to understand the Tenerife property market problem.

The official statistics tell us that 41% of property purchases are made by foreign buyers, far higher than anywhere else in Spain including the Balaerics and Costas. The vast majority of these buyers are only interested in very specific areas of the island, predominately in the south and only specific types of property, most of the grim urban blocks with few amenities just won’t cut the mustard. In fact, even with the most generous of estimates, less than 10% of Tenerife properties actually suit this market.

Translating this into raw figures, we can look at the size of the property portfolio offered by Tenerife Property Shop, as market leader in the South of the island, it is a fair assumption that they are representative of the micro-market in the southern area. The total size of the portfolio of properties for sale has dropped by some 40% in the last 36 months. And that pretty much sums up the Tenerife Property Market problem.

The rate of sales currently exceeds the rate of new properties entering the market.

We all know that markets work on demand and supply, as demand rises or supply reduces, prices rise and of course this applies to the Tenerife property market, like any other.

Unlike mainland Spain, there is no glut of newly constructed properties to fill the gap. Tenerife’s moratorium on new planning consents that was brought in during 2001 put a stranglehold on new development, which remains to this day. New developments will be scarce and certainly insufficient to fill the portfolios of estate agents. The Tenerife property market problem is not going to go away, it’s going to get worse.

One of the huge benefits of decades of experience in the Tenerife property industry is the ability to apply hindsight to the present… we have seen how the market ebbs and flows through several cycles, and we can accurately analyse the indicators.

Our investor clients are returning alongside many new faces from all around Europe, and investment is the purchase reason cited by 20% of Tenerife Property Shop’s buyers at this time. In a few years we’ll be looking back at this moment and saying, “THAT was the time to buy!”