November 22, 2005
The psychological tipping point
Property: Nowhere else is economic and emotional argument so
intertwined. I was sitting round the dinner table the other day with some of my neighbours and it suprised me how personal a thing the price of your property is.
My girlfriend and I bought an apt in May 2003. We love our home and I think its one of the best places in Marbella, the official website for the area is www.mairena.com
Since our purchase the developer has increased the price a total of 6
times. We bought for 269,000e: a similar property is now 435,000. We are taking about a 2 bedroom apartment here (albeit quite a bit
larger than the average size for Marbella)!
Funnilly enough sales at the development have been extrememly sluggish. The developer has a unique sales proposition but has simply made the property prices too high. As a result our estate totals 48 apts and 7 currently remain unsold.
This dramatic price increase is typical of the whole coast.
Back to the dinner time conversation with my neighbours. The favourite
topic of converstaion is 'what a special place we have bought in' and how this fact will keep the prices high. We all spoke at length about what we liked, and things were goign well up until we started talking about true resale prices. At which point everyones reactions started to become extremely personal. My suggestion for a realistic resale price for my property was met with some pretty cold stares and generally ignored. What was funny though was all my neighbours had bought at a similar time to me, had avoided the massive increase in prices but were now looking at the unrealistic value as part of their savings in their future investment portfolio. However, when asked would they themselves buy at todays prices everyone replied no!?!?!?!??!?!?!?!?
Price is the determining factor in the deal. Properties that continue
to sell well here offer good value for money on meter by meter basis.
I have read a lot of threads in forums and on weblogs about how someone spotted a bargain and
were dismayed when they phoned the Estate Agent that the property was already sold or under offer and therefore ended up by concluding that how can there be a price correction, etc.
Of course this will happen. Its basic common sense, there are still a lot of people willing to buy at this late stage in the market, provided they find something that suits them for the right price. Most EAs i speak to complain of stagnation, that they have clients but finding the correctly priced product is extremely difficult. When they do it tends to move very quickly. The flight to quality is already in effect that. Increasingly we will see certain sections of the resale market gather momentum, as well as an increase in the rental market due to increasingly competitive prices and more and more people renting and waiting to see what happens.
Category: The Great Housing Debate