Lanzarote Property Gripped by British ‘Brickor Mortis’

The market for property in Lanzarote is currently being infected by growing ´brickor mortis´in the UK. As property paralysis appears to be gripping Britain – according to new figures just released by HM Revenue and Customs reveal a 60% decline in UK house sales during August. Whilst the British Bankers Association has reported a fall in mortgage approvals of 63% for the same month. All of which is having a knock on effect for the islands property market – which is heavily reliant on British buyers.

Traditionally, British buyers have usually invested in apartments and holiday villas in Lanzarote for rental purposes. As the island is one of Europe´s only genuine winter sun destinations – with a clement year round clement that generates twelve months worth of returns.

As a result overseas buyers have snapped up thousands of villas and apartments over the last decade. Whilst the British expatriate community now accounts for around 6% of the island total population of 127,000 people.

But despite the fact that British visitor numbers are up so far this year by 7.9% property demand and transactions on the island have been heading in the other direction for some months.

As a result all leading island based estate agents catering to the British and Irish markets have reported a decrease in transactions versus 2007, with some smaller operators even being forced to close their doors altogether.

And mortgage approvals in the Eastern Canary Island province of Las Palmas – of which Lanzarote is part – have also fallen by 35.8% in the first quarter of 2008. According to Spain’s National Institute of Statistics. As local banks follow tighten their lending criteria.

As a result of these factors property prices on the island have softened considerably in recent months and the market has become becalmed – with many local agents reporting a growing quantity of price reduced property on their books. Although price falls for the province of Las Palmas are still some way below the much bigger drops being experienced in mainland Spanish coastal areas.

Despite the growing affordability of island property and the resilience of Lanzarote´s tourist industry the outlook remains decidedly uncertain until consumer and investor confidence is restored in the UK and Ireland.