British ‘Brickor Mortis’ Impacts Upon Lanzarote Property

British ‘Brickor Mortis’ Impacts Upon Lanzarote Property
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By Lanzarote Guidebook .Com - Oct 2, 2008 - 4:41 PM
Darkening conditions in the UK property market are starting to impact upon Spanish hot spots.

As demand for property for sale in Lanzarote is showing signs of decline, despite the fact that visitor numbers to the island continue to rise.

Britain’s worsening case of ‘brickor mortis’ was amply illustrated yesterday by the release of new figures showing a steep decline in UK house sales and mortgage approvals during August. As the British Bankers Assocation confirmed that only 21,086 new mortgages were approved last month – a fall of 63% in a year. Whilst HM Revenue and Customs revealed that only 62,000 homes found a buyer last month – down 60% on August 2007.

Many overseas property markets are heavily dependent upon UK investors.
But as confidence starts to dissolve domestically what are the prospects for these places in the sun?

The Lanzarote property market has traditionally been driven by British buyers.
The island welcomes around one million visitors annually from the UK, as well as hundreds of thousands of tourists from the Irish Republic.

Where tourism leads, property investment tends to follow. And thousands of British and Irish buyers have snapped up apartments and holiday villas in Lanzarote over the last decade. Attracted by this ready made rentals market and the fact that the island enjoys a year round clement climate. So delivering a full twelve months of rental returns.

Tourism to Lanzarote is in fact on the up – despite the current credit crunch and weakening pound. With total foreign visitor numbers up 3.4% to date versus 2007. An increase that has been led by British tourists – up by 7.9% for the period January to August end, totalling 571,851 visits.

Property prices and transactions however are headed in the opposite direction.
As many agents catering to British buyers have reported a pronounced decrease in transactions.

The situation has not been helped by the fact that local banks have tightened their lending criteria. And as a result mortgage approvals in the Eastern Canary Island province of Las Palmas – of which Lanzarote is part –fell by 35.8% in the first quarter of 2008. According to Spain’s National Institute of Statistics.

All of these factors are now combining to exert downward pressure property prices on the island as the market has become becalmed. With many local agents reporting a growing quantity of price reduced property on their books.

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