For those dreaming of owning their own holiday or retirement home at the Costa del Sol or in the Sierra Nevada Mountains now is the time to make that dream a reality. The latest Real Estate Confidence Index, which is compiled by the Sociedad de Tasación (the Evaluation Society) reveals that some 700 participating real estate experts believe Spanish house prices will decrease even further over the next 3 months.
The good news is that the surplus of repossessed, empty housing stock is stabilizing, meaning that over the coming months the glut of bank-owned homes will gradually reduce downwards.
The Sociedad de Tasación gloomy prediction for the housing market follow on from the IMF’s forecast for a 2-year recession for the country. Although the Spanish economy fell back less than anticipated in the first half of 2012, there are no signs that the economy will recover in 2013 – in fact, the IMF’s forecast shows the country’s GDP will contract by at least 0.6% next year.
In real terms this means that Spanish homes in Marbella, Fuengirola, Malaga, Torremolinos and the rest of the Costa del Sol’s famous resorts are effectively being sold at 2004 prices and less. The latest figures from the Ministry of Development show that the average price of a home currently stands at EUR 1,606.40 per square metre, compared to 2011.
One man’s misery is another’s good fortune in the property game. Since property prices peaked in December 2007, real estate prices have dropped by 39.1% in the greater Malaga region. This, together with 50% tax cuts on VAT and capital growth tax for new home purchases enables families from countries like Sweden, Germany, the UK and France for example to buy the holiday homes they’ve long been dreaming of buying but could not afford up to now.
Buying now when the prices are so low make for an excellent long term investment opportunity, said Ms Nessling , director at international mortgage brokers Conti. Buyers who envisage eventually moving to Spain permanently, should grab the opportunity with both hands. Sterling is performing better than ever against the Euro, making a purchase even cheaper.
Even with the imminent increase of VAT to 21%, living expenses at the Costa del Sol are considerably cheaper than they are in the UK, according to the latest Post Office Family Holiday Report 2012. In fact, the Costa del Sol is one of the cheapest destinations in Europe for a family holiday, when it comes to weekly food and essential household shopping. Families with children prefer self-catering holidays on the whole and when it comes to food shopping, Spain is still considerably cheaper than the UK – which can make a difference of nearly £30 for the weekly trip to the supermarket.
In addition to the lower costs there are also numerous government incentives the Spanish government wants to introduce – such as giving residence permits to buyers investing EUR 250,000 plus in Spanish real estate – to lure more foreign money into the market. The current tax breaks are likely to be withdrawn in January next year, as the government is trying to get its sovereign debt situation under control, but there are ways to tempt more buyers into the country that don’t require giving up tax revenue, some ministers believe.
Buying in Marbella for example doesn’t necessarily require the bank balance of a millionaire. The town is made up of very different districts, some of which are a millionaire’s play ground, but others are far more affordable than the average home in Cardiff, Ramsgate or Guildford.
Property in Altos de Elviria, Elviria, Marbesa, Hacienda las Chapas and Cabopino for example is not beyond the reach of UK families looking for a change in life style or a fabulous holiday home. Naturally, there are villas in the area that do have a price tag of more than EUR 2 million, but there are also 2-bed, 2-bath apartments with 90 sqm of living space that cost only EUR 185,000 (approx. £146,076).
The average price for a 2-bed, 2-bath apartment with 100 sqm plus of living space in Altos de Elviria is around EUR 200,000 (approx £157,525) and many of these apartments even include fantastic sea views.