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Real state going down?

24/07/08

During many years Real Estate prices have gone up and up but as of now, as in many other countries, prices are stale and most think they will go down quite soon. Will this happen in Mallorca?

The answer is yes and no. Second hand flats and apartments have already lowered their prices, and probably will keep lowering during the next year or two. The truth is that those have been overpriced for a long time and their going down to their real prices. As many real estate experts said, it didn't make sense to pay nearly the same for an older flat than for a new one. And well... it doesn't!

As for new ones, companies as still reticent to lower their prices because this will devalue their business value, which is what is backing up their bank loans. But the truth is that almost no one sells as house at this moment, so it is expected that at some point prices will go down.

But what about fincas and villas? This is a different market, and while these may go down a bit, it is not expected they will suffer big variations. In fact, it still easier to sell a 5 million Euro finca than a flat or anything below the million euro, due to the economy of the buyer: while many buyers will have to deal with the bank their mortgage, 5 million euro buyers won't have this problems.

The situation is not different in Menorca or Ibiza . A quick search in any of the different estate agents in Menorca , per example, will show up the situation. Prices are the same, but then looking deeper you'll see that simply, no one sells now, except for those catering the big budget market.

So what to do?: that's up to you, but if you're a small player the advice it wait a bit.

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