Agent predicts a 30% drop in upmarket housing values in the next months!

 

As a result of the coronavirus pandemic, the luxury real estate agency Barnes International, which has operations in Spain, predicts a 30 percent drop in property prices in the following months.

Barnes was founded in France and now has operations in Marbella, Madrid, and Barcelona, where it began its Spanish development. According to Barnes, based on their own sales, deals done in September in Barcelona were concluded with discounts of 10% to 15%. They claim that in the current market, prices at the high end do not exceed 7,000 €/sqm. real estate companies in qatar

According to Emmanuel Virgoulay of the Barnes office in Barcelona, published in the Spanish press, “price drops are inevitable in the next months, given the climate in which we live.” “In fact, the only way that Barcelona, and Spain in general, will become appealing again [to foreign investors] from a housing viewpoint is if prices fall, adapting to the current market realities and demand's financial capability.

Barnes argues that, at least until the Covid-19 pandemic is over, prices in affluent parts of areas where foreigners make up a big portion of the market, such as Barcelona, Marbella, and the Balearic Islands, will have to adjust to reality without foreign investors. This will put downward pressure on high-end prices in certain locations.

“Primary house buyers will not pay beyond market rates,” according to Virgoulay, “while investors wait for bargains that have yet to appear.”

A research released by Fedea, a Spanish think tank, highlights the decline of private property rights and legal clarity in Spain during the last few decades.

According to a report by the Research and Applied Economics Foundation (Fedea), private property rights in Spain are increasingly threatened by regulatory changes that “subvert private property in order to make up for shortfalls in public [housing] policy at no cost to the treasury, as is the case with foreclosures and adverse possession.”

The paper warns that “when countries reach a certain degree of success, they run the risk of forgetting that property rights protection is a vital condition for economic prosperity,” citing Spain as an example.

The paper, published by Benito Arruada, Professor of Business Organization at Pompeu Fabra University's Department of Economics and Business, uses the Ley de Costa / Coastal Law of 1988 as an example of government laws trampling on property rights. This law amounted to a "authentic expropriation without proper compensation" from an economic standpoint. When the government takes private property without recompense, it erodes public trust in property rights, which are a public good.

The research also highlights how authorities in Spain are increasingly condoning squatting and failing to enforce judicial decisions to evict delinquent mortgage borrowers and nonpaying tenants.

Although many people criticize the Spanish legal system for being too slow, Fedea contends that the more serious issue with the judiciary is the “low quality and unpredictability of many rulings.”

“The distribution of rights is contentious since owners' property rights meet with people's right to housing, which now preserves inhabitants' possession even if a residence has been illegally acquired.”

When it comes to squatters, the report states, "Assuming that the state should defend its residents' right to housing, it appears to make more sense to provide free or subsidised accommodation." Tolerating squatters is a bad idea since it violates private property rights and affects the incentives of all market participants.”

To put it another way, squatting is harmful for everyone except squatters, which is a well-known reality in most nations but not taken seriously enough by Spanish authorities.