Are Tenerife Property Prices, in 2022, going up or down?

Are property prices in Tenerife going up or down right now, in 2022? How has the market been affected by Coronavirus? How has Brexit affected prices in Tenerife? (Updated November 1st 2022)

Here are my thoughts on what is happening with the property market and prices here, taking into account Coronavirus and the pandemic, travel restrictions and Brexit and the 90 day rule for British buyers:
2020 sales – Lockdowns, travel restrictions, doom and gloom in general, however…

The pandemic, lockdowns and severe travel restrictions started in March 2020. For three months the market was pretty much frozen. And yet, we did pretty much the same number of sales in 2020 as we did in 2019 – quite remarkable really, given all of the travel disruptions. I think without the Coronavirus issues, we would have easily had a record year. Property enquiries were up 24% in 2020, year on year.

2021 sales – two steps forward, one step back in terms of travel etc, but overall, it was a record year for us with sales:

In 2021 our sales volume increased dramatically. The busiest months of the year are always from January to April and whilst there was a lot of travel disruption in 2021, our sales volume was again very high over those first 4 months, and continuing into May. The Summer slowdown did arrive, as expected but there was definitely more activity that Summer than we usually see, probably because people who have been waiting to come over were finally able to do so. By the end of the year, with an extremely strong 4th quarter, 2021 was easily the best year for sales I have ever had in terms of transactions and overall volume in Euros.

The average sales price for me was 262,000€

2022:
January – sale, sale, sale, sale, sale, sale…. You get the picture!
Demand did not fall, in fact it continued to increase. By March, agents were selling out of apartments and by May of this year we had sold as many properties as the whole of 2021 (itself a record year.)

It has been extremely busy across the South of the island and at every level, from studio apartments to villas.

The average sales price for me this year was 454,000€ – a huge increase over 2021 which shows a huge surge in demand for houses and villas at the higher end of the market. One of our sales was quite possible the highest priced residential sale in the South of Tenerife – a large, modern villa in Costa Adeje Golf priced at over 6,000,000€!

The biggest issue in the marketplace now is a lack of properties. Enquiry levels have been very high, travel restrictions are a thing of the past (for now and hopefully permanently) so remote video sales are not like they were last year as most people prefer to travel and physically see properties before buying.

Who has been buying?

I work in all markets across Europe. I sell to lots of Brits and lots of non-Brits. From the huge number of sales we have had in 2021 and so far in 2022, the nationalities (of which there were 15) were very mixed. 43% of our sales were to British, 12% to Spanish, 7% to each of Belgian, German and Irish and 24% were across the rest which were Czech, Italian, Ukrainian, Dutch, Russian, Lithuanian, Swedish, Polish, Hungarian and Romanian

So the British market is still our largest but has fallen as an overall percentage of our sales:

38% of our sales in 2021 were at full asking price. That isn´t normal but they were all well priced, good properties in popular areas. So far in 2022, we have sold at full asking price in 20% of all sales. 

Somewhat more surprising was that in 2021, is that 34% of our sales were without a physical viewing – these were based on remote viewings, photos and video tours – which says a lot about demand that year. Many buyers were not waiting for travel restrictions to ease and were making offers before they had even seen the property.

What kind of offers are people making and accepting for property in Tenerife?

In 2021, the average asking price was 268,000€ and the average accepted offer was 262,000€. This is an average accepted offer of 97% of asking price over all of our sales.

In 2022 the average asking price has been more or less 468,500€ and the average accepted offer was 454,000€. This gives an identical figure of 97% of asking price being accepted on average.

It is more important than ever to be targeting buyers from the rest of Europe, as well as the UK. Countries like Czech Republic, Hungary, Romania and Poland are very active, as are the Baltic states. I massively increased our marketing budget in 2020 as the Covid restrictions kicked in and that paid off for me and for my clients who wanted to sell. Especially when many agencies pulled back and reduced their marketing spend (some to zero.)

Brexit effect, how has Brexit affected property prices in Tenerife?:

The 90/180 rule does not appear to be affecting demand – owners can still spend up to 6 months a year here. Looking at buyers from the UK, most of them tend to be of working age and generally looking to spend 2 or 3 weeks at a time here so aren´t really affected.

This is the same for all of the other buyers we have from outside the EU, from Russia and the US for example. Plenty of Brits have bought in Florida and manage perfectly well there without unlimited access.

One effect Brexit will have is that Brits now have to choose when to take their holidays here as many were used to arriving in October / November and staying right the way through until Easter. This is no longer possible and many will now forgo October / November and December and opt to arrive in January for 3 months which may result in a quieter 4th quarter for 1 bed sales in resorts but a much busier first quarter as this Winter crowd do account for a large volume of sales around the 170,000€ to 250,000€ price range for 1 bed apartments and make up a large proportion of our sellers which I will cover in more detail in the next section.

Brexit may also increase the volume of sales in excess of 500,000€ as many buyers who have the funds, will purchase and apply for Golden Visas – giving them more access year round to the Schengen Zone. We have already had sales this year driven very much by this 500,000€ threshold.

Sellers expectations on prices:

So far as sellers, since 2008 ish, 95% of my sales have been to cash buyers so most sellers I deal with now, don´t have mortgages – many have been paid off and those buying since 2008 didn´t take one.

This is very different to how it was pre-financial crisis when most bought with Spanish mortgages at high LTV (80% – 100% of price.)

A lot of the sellers I deal with are well into their 70´s. They are retired, own outright, have pension income and are under little to no pressure to sell other than they think it’s about the right time for them. So expecting them to suddenly drop their prices by 20% or more is not realistic. And we won’t insult owners whose properties are correctly and realistically priced by putting such offers to them – it just annoys people and does us no favours.

There may be people of working age who need to sell (cash flow issues with business back home etc) but I haven´t seen and am not seeing much of this at all.

One effect that has been noticeable is a lack of what we typically sell – for example, 1 bedroom apartments in Los Cristianos in the 170,000€ to 200,000€ are in short supply. A typical owner of this type of apartment would normally arrive around November for the Winter months and list their property for sale. But Winter 2020, almost none of them made the journey. And there was a noticeable absences during Winter 2021 so many may wait until next Winter (2022) before putting their properties on the market.

Are prices falling in Tenerife?

So far, definitley not! They have been increasing overall as supply has tightened. The market is very buoyant and the lack of properties for sale combined with enormous demand from buyers has squeezed prices higher this year – as might inflation across Europe.

Prices rose a lot between 2012 and 2019 and in these scenarios, asking prices and sellers expectations can get too far apart causing a slow down. I blame agents partly for this as they shouldn´t list properties they know are way overpriced – I don´t, why would I? I am only making money if I can sell the thing so I just don´t see the point in putting all that effort into marketing a property that is way overpriced and unlikely to sell.

We are seeing quite a lot of this now unfortunately – 1 bedroom apartments in complexes like Victoria Court for example, coming onto the market at 240,000€ and from the photos, in dire need of a full refurbishment! Will these sell this Winter= I am sceptical. Paying 240,000€ plus around 20,000€ in taxes and fees and then having to fork out 25,000€ to 30,000€ for a complete refurbishment? Is 285,000€ for a fully refurbished 1 bed in these complexes a good deal? I struggle with that one personally, I guess we´ll find out over the next 6 months!

Will we see huge price drops on properties in Tenerife?

I really don´t think so. I just don´t see much of anything driving prices down. Hopefully, we´ll see a lot less of the daft pricing though. Because a lot of sellers look online at properties like theirs, see two or three ridiculous prices and convince themselves that must be what theirs is worth – they can then often waste a year or longer trying to achieve it, which is no use to anyone. Given the demand at the moment, anything priced sensibly will attract interest and very likely sell, so the impetus to drop prices further is simply not there. We are now over 2 years into Covid, lockdowns, travel restrictions etc and prices have not fallen, demand is higher than ever and sales are booming! It really does look like those sitting on the side-lines waiting for a huge crash have been left far behind.

Advice for buyers:

If you want to buy a well-priced property, find one that is for sale at a good price and make a sensible offer on it. Or use an agent to find one for you – we have huge networks of agents that we send requests out to when someone is looking for something specific, that’s pretty much the quickest way of finding something.

I had some buyers recently who we narrowed down to 2 or 3 complexes, they knew that was where they would buy and I ended up showing them every single property for sale on there. After all of those viewings, they knew those complexes inside out, understand prices, what things were going for, what they should be paying etc.

We found the best one on there (by far…) and they bought it. The owner had priced it really well and it was immaculate. He didn´t want to negotiate at all and had turned down several offers already. The buyers paid the full asking price – it was worth every Euro and they are very happy with their purchase. Had they messed around trying to get 4% or 5% off “just because”, they could have lost it and spent the next 12 months trying to find something as nice and as well priced, which might never have happened.

Whilst I wouldn’t usually advise people to just offer the full price, in the right circumstances, it can be justified and in this case, it definitely was.

Another just this week – perfect villa for the owners, well priced, exactly what they were looking for in the half-million Euro range – owners offered 10,000€ off the price and met the owner in the middle of that offer and asking price. Very smart – why lose the ideal property for the sake of 5 or 10 grand?

Low ball offers:

We have all heard stories of how a friend’s brother´s mate got such and such for a bargain price after putting in a “cheeky offer” – blah, blah, blah…

As such, there are many would-be buyers who believe they must start really low – insultingly low “just in case…” I receive offers like this via email on a regular basis and in most cases I either just delete them or send them a link to this information about prices. There is simply no justification or reason to email a daft offer to me on a property that they haven’t even visited – and I won´t take it seriously, or bother the owner with it.

Keep in mind, if you see a property that looks a decent price at say 250,000€ – don´t waste yours and the seller’s time offering 190,000€. If they were going to be happy with 190,000€ and they were “desperate to sell” for some reason, it is very unlikely it would be listed at 250,000€…! It can really annoy the owner and if you are genuinely interested, its a really bad way to open negotiations.

If you still want that 250,000€ property for 190,000€ – the only way you may possibly get it is by waiting several years for prices to fall that low (which is very unlikely) or be in the right place at the right time when there is a desperate seller looking for a quick sale – but most of the time these will be snapped up by people who live here / are involved in property or who have very good relationships with the agents here who get them – it doesn’t happen often.

Take-away from all of this:

I wrote this paragraph almost two years ago after flights had restarted and sales really ramped up again and it has turned out to be very accurate:

If you have a good budget and know what you want and it comes up for sale – buy it. Because if you don´t, someone else will, especially if it is in a popular area and well priced.

That’s how I see the market, that’s what I have seen last year and so far, this year.

If you are selling a property in Tenerife and want clear advice on the best strategy, drop me an email or fill in the form below. What I am doing right now is very effective, it works and it is getting excellent results. I have a very different approach to most other agencies here – not going to go into details on how we have become so effective at selling as obviously, other agents read this website but if you would like a chat about how I can help you market and sell your property in Tenerife, contact me now and I will show you what we do.