Real estate Spain

Real estate Spain

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  • Francisco González Aragón
    Francisco González Aragón    Group moderator
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    Why to buy now in Spain?… positive thoughts to keep into account
    By Mark Mountney (mortgage broker in Spain)

    The Spanish property market, like others, especially around the Mediterranean, is prone to ‘boom and bust’ due to it’s reliance on overseas demand for holiday homes and investment speculation.

    This ‘bust’ that we have now is not the first and neither will it be the last. In the last 30 years Spain has witnessed 5 real recessions that has had a negative impact on property values each time albeit to differing degrees.

    But that does not make it always a bad risk; the surprise is that property appreciation has given rise to an annualized growth of circa 5% in that same period so it is really down to ‘when’ you buy rather than ‘whether’ you buy! The market always comes back; it’s just a question of how quickly and strongly.

    And the demand for Spanish property will not diminish; on the contrary recent research has shown that in the UK, as an example, an increasing number of folk are determined to move to the sun and Spain remains the No. 1 attraction.

    Now it is a question as to when the confidence in the global economy and property markets return to prompt the continuing stream of Ex Pats, especially from the UK, moving to better climes.

    And timing is important! But not always critical, especially when you are buying long term, Sure, if you were buying today to sell in a couple of years, the possibility of continuing low values for a number of years would be a worry. But most purchasers do not buy for the short term; that is the domain of property speculators and they won’t return to Spain for a while methinks.

    But long term, with property prices so low and with the amount of discounting and repossessions available, it is difficult to see why now is not the time to commit. Firstly, you have the potential of buying a property today some 30-40% less than it was a year or so ago. Secondly, mortgage rates in the Eurozone are low, circa 3% only as an average, and that trend is not going to change greatly for a number of years.

    No property should really be bought for ‘cash’ irrespective of personal circumstances as a mortgage offers significant proportion against certain risks and tax exposures that we see in Spain that, as an example, do not apply in the UK. And the concern of the Euro/Sterling exchange rate is partially overcome by borrowing in Euros.

    Buyers today and over the next year or so will probably be viewed as the brave ones, but it is they who will show the greatest returns in the years to come.

    Source: The Spanish Brick
    • 11 Mar 2011, 2:20 pm