Boat prices and inflation. Is it a good time to buy? The expert’s opinion

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Archive image – Genoa Boat Show 2022

Inflation and boat market. What is happening and how scenarios will change. Is it the right time to sell a boat? And to buy it? To answer all these questions we asked for help from a leading expert in the field, Luca Bosazzi, Maritime Mediator in Abayachting, author of the following article.


“Cross seas” in boating: is the boat market ready?

I take my cue from an article that came out in Sole 24 Ore on Feb. 26, 2023, and quote verbatim an excerpt, The ‘mortgage purchasing power’ of Italians continues to deteriorate . As an inexorable effect of the path of monetary tightening initiated by the ECB last July 27.” The same theme was also addressed throughout the week by CdS, Repubblica and La Stampa.

In simple words that everyone can understand, the effects of inflation (albeit at a trot, if not galloping at times) can be seen well in almost all markets. Specifically, the boat market has always had a close connection with the market related to investments, especially equities, and real estate, which is somewhat of a litmus test on the purchasing ability of the average and high-spending Italian.

What is happening. The cost of money, set by the ECB, continues to rise, and is scheduled to rise another 50 basis points by April 2023.

Investment returns in 2022 were bad, and we don’t know what will happen in the next two years.

What, then, will change in the boat market?

 

Uncertainty, a lot of uncertainty. For those who decide to purchase a boat, new or used, through a mortgage or lease, the financial burden of the installments will weigh heavily on the final decision. I tried to do a little calculation, and compared to 2021 or early 2022, if a potential buyer was thinking of buying with a 12-year mortgage or financing a 250,000-euro boat, today with the same installment and duration they would be able to buy a boat for about 200,000.

A dry 20 percent less.

The situation obviously gets even worse for longer amortization plans, where the incidence of interest rates is higher.

The same applies to those who use their own cash: purchasing power has decreased.

It is a bit like going on a trip to the U.S. in the years when the dollar is very strong: to pay for travel, hotels, restaurants and 5 pairs of Nike or Levi’s I have to be prepared to spend more. Italians’ money in 2023, albeit in equal currency, worth less.

So the scenario is quickly done, and it is divided into three options:

  1. the buyer decides to buy the same boat, but with a considerable increase in the installment or a worsening economic burden. Possible? Sure, but only for those with “capacity” and great determination to purchase.
  2. the buyer decides to “tack” on an inferior boat: older, smaller, or less equipped
  3. the buyer will try, when possible, to buy the same boat originally, but at a lower price.

Because on the other side of the table are the owners-sellers-dealers-shipyards who are coming from a couple of golden years, where everything (or almost everything) was sold at prices completely out of proportion.

But the market is no longer what it was in 2021. The peak has been passed, and the price decline, though not vertical, has already begun since last fall. And often times they do not realize it.

They don’t want to feel dumber than the dock neighbor who sold in May 2022 at a high price, and they want to try to get the most out of it too. New boat prices have risen significantly and deliveries are long.

 

“Cross seas” because on the one hand there are fewer potential buyers than in the recent past and with less money to spend, and on the other hand a large group of sellers trying to keep prices high.

What will happen? Sailors, the real ones, know this well: in cross seas, standing still is bad, and even the most accustomed are likely to vomit and get sick. The best solution is to move: choose one direction, the least worst, and move elsewhere.

Those who are trying to sell the boat will probably have to keep it, to resell it in the future, who knows when and who knows how much, and especially how (2011-2015 docet. Tempus fugit….)

Those who really want to sell will have to study the situation well, and get the best result, but parameterized to this moment in the market, because that of the previous two years, alas, is gone.

Ditto for buyers: bargain hunters are bound to wait for quite a while.

But for those who really want to buy, the space and solutions to buy a boat from an average forward-looking owner are there. Always.

And a maritime ombudsman can often be helpful.

Happy browsing.

Luca Bosazzi – Maritime Mediator in Abayachting

PS Stock up on Biochetase Effervescent Granules, just in case….

 

 

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