The now world famous motto of the S.A.S “He Who Dares Wins!” would also be a fitting way to describe the savvy buyers who are jumping in to buy in the Canary Islands now instead of delaying their decision as many are currently doing.

However, with so much information, gossip, rumour and talk of property crashes flying around its no wonder that a lot of people are confused at the moment about what is happening. So in this feature we are going to separate fact from fiction and look specifically at the property market in the Canary Islands.

Mortgages
Firstly, where did these current global financial problems stem from? Put simply, banks in many countries including Spain and the UK but mainly it must be said in America, lent too much money to too many people who couldn’t really afford it!
With a good mixture of stupidity and greed the banks over exposed themselves to ‘risky’ loans which is fine when everybody pays but throw in some inflation and interest rate rises and all of a sudden you have millions of people worldwide that can no longer afford the monthly repayments.

The banks then start racking up billions in bad debt and begin to bolt the doors and windows and pull up the drawbridge even refusing to lend money to each other. This then results in the so called ‘credit crunch’ or ´credit squeeze´ that we see now, but what do these terms actually mean?

Well, all it really means is a return to sensible, responsible lending practises which is what the banks should have been doing in the first place. Gone are the days when the banks would accept a valuation way above both reality and the actual purchase price and also gone are the days of offering non residents 90 percent mortgages.
The fact is though that if you have a 30 percent deposit a good credit rating and a provable income sufficient to service the loan, the banks will lend to you. Now that may mean that you need to buy a more modest property than you had hoped but surely knowing that you can comfortably afford it rather than stretching or even over stretching yourself is a good thing?

Currency
I shall not even attempt in this piece to look at all the issues that may affect the exchange rate between Sterling and the Euro or discuss whether the UK should already be in the Euro. The fact remains that on the face of it at least, if you are a Sterling buyer, the prices appear to have gone up by 10-15 percent over the past few months.

There are other factors relating to this perceived price increase that I will discuss in the section on property prices below but there is another way of looking at the current exchange rate situation. There are always a large number of UK residents looking to sell their property in the Canary Island as well as others looking to buy.
When a UK resident sells they generally want to take their money back to the UK and therefore will need to exchange it back into Sterling. They can therefore comfortably adjust their Euro sales price down by 10-15 percent and still end up with the same amount of Sterling that they would have had if they had sold at a higher sales price a few months ago.

So a purchase like this will see you paying more for your Euros now than previously but you will need less of them and you will end up paying roughly the same Sterling figure.

Spain V Canaries
There are always constant reports on the Spanish property market and yes it is absolutely true that at the present time the property market in mainland Spain has massive problems, FACT! It is however also a fact that the property market in the Canary Islands is totally different to the mainland and with the exception of the issues covered in this piece, does not share the same massive and serious problems.

The simple reason is that on the mainland they have built too much property. Now some of you may say that there has been too much property built in the Canary Islands as well, but until you have spent some time driving along the Costas in Spain and in other popular regions, you have no idea whatsoever what TOO MUCH really looks like.

Try and imagine what three quarters of a million new and empty properties looks like and then compare that against the Canaries. There really is no comparison so whilst commentators may report on sweeping price reductions throughout Spain you mustn’t think that this will extend as far as the Canary Islands as whilst some small adjustments are taking place, there are simply always too many potential buyers for the volume of property available for there to be meaningful across the board price reductions.

Property Prices
As mentioned above, mainland Spain will see price reductions in certain over stocked markets but it will still take some time to mop up the excess of property that currently exists.

When looking at the pricing throughout the Canary Islands what we are seeing is a much needed and welcome adjustment. Prices have risen too high and too fast for these constant increases to be sustainable so over the next few years we should see modest, sustainable growth.

However there is another issue with regard to pricing that now thankfully appears to be slowly changing. For far too long, properties have not been valued by real estate agents, they have been valued by the vendors. There have been so many ludicrously high asking prices set by private vendors that it has mislead the market as to what the true values really were.

As a result, what we are now starting to see is these over ambitious vendors beginning to listen to professional advice regarding the true market value of their property, with resulting price reductions bringing things more in line with reality and where they should have been priced in the first place. But this process in itself, whilst much needed, is also helping to create a false impression.

Technology these days is so amazing that at the click of a few buttons, any of us can, over the Internet find out almost anything. Many property websites can be interrogated to provide average prices across the properties on its site and these ´statistics´ are often then reported in the media as “actual” figures and trends.
But there is of course a glaringly obvious problem with this, which is not reported.

Lets look at an example by way of explanation:
Take a website with 1000 properties listed for sale. At least 40 percent (400 properties) will have been on the site for over 12 months as they were simply priced too high in the first place. Now assume half of these (200 properties) have their prices reduced to the ´correct´ market price.

If you were to interrogate this site, before and after this process to find the average values you would at a stroke see a price reduction of 5-10 percent or more across the board. This then gets reported in the media as “prices drop 10 percent in one week!” with the net result that people panic and stop buying as they think the market is falling, when in reality nothing has happened at all.

The right time to buy?
As far as the Canary Islands are concerned the answer to this question has to be yes it is and this is why!
As a result of the reasons stated above, whilst there simply is no crisis in the Canary Island property market, many buyers have been confused by negative press reports and have delayed their decisions whilst others keen to buy have been caught up in the banks temporary reluctance to write new mortgages.

This has led to an overall drop in the level of sales across the Canary Islands over recent months, which in turn has meant that bargains that would normally be snapped up straight away are often overlooked.

To highlight the incredible value that is out there right now, waiting for you, we have provided details of some amazing bargains and superb investments throughout the Canary Islands. But if you are one of those who prefers to think “ I want to wait until the banks sort themselves out, and interest rates come down and the exchange rate improves etc” then I have only one thing to say to you!

In the words of that annoying game show whose name I can´t remember “ lets look at what you could have won!”

The only thing that remains to say in closing, is that the offers you can see in this feature will simply not be available in a few months time, so when you do eventually decide the time is right to buy and you cannot find bargains like this anymore, just remember “I love to say I told you so!”

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