Tinsa’s latest report showed that accumulated drops in house prices for the coastal regions reached 37.2 per cent in July 2012, while El Economista’s figures show that the costal towns at the Mediterranean Sea saw house prices decline by 11 per cent since July 2011.
There are still some 675,000 unsold homes waiting to find a buyer, but not all are in prime locations like Marbella, Malaga or Granada. Many homes were built in out-of-the-way developments that neither tourists nor Spanish residents want for their holiday or permanent home.
The headline-grabbing “bargains” therefore need to be viewed with caution, as not all parts of Spain are equally affected by the housing market crash. Investors taking the long-term view for example will find bargains in Murcia will turn into cash-cows in due course, when the Paramount Studio theme park has been built. A luxury 2-bed villa in an exclusive golf development with close proximity to the theme park may have had a list price of EUR 260,000 once, but now they’ll sell more typically at EUR 105,000.
In Marbella the new marina development will attract many more visitors to the region in future, bringing in better holiday letting returns as well as gains on capital growth. A rise of Spanish house prices is not expected until a larger proportion of the housing surplus has been sold and Spanish banks have managed to get their finances as well as their balance sheets back under control.
It is quite possible to currently buy a 3-bed, 2-bath villa in Mijas, Malaga province for under EUR 100,000 and town houses as well as villas in the Alicante region can sell for as little as EUR 29,000. Large 4-bed, 3-bath villas in Coin, Malaga region for example can cost as little as EUR 298,000 for a resale property with lovely countryside and mountain views and its own swimming pool.
Bank-owned property at the Costa del Sol will often allow buyers to get up to 109% finance with their purchase. Discounting of up to 60% of the original list price is not uncommon either. A new 2-bed penthouse located just a 6 minute walk from the beach may cost as little as EUR 121,000 with a 100% mortgage thrown in as an extra incentive to buy. There are even some interest only options being made available to foreign buyers.
As 11.5% more Spanish unemployed head to Germany to find work, more homes are becoming vacant on the rental market. Germany is actively recruiting from a well-trained, well-educated workforce, since many regions in Germany are experiencing staff shortages. Many foreign buyers choose to initially rent in the area they later wish to buy in, so this is a development that may in the short-term benefit potential buyers from the United Kingdom.
With Sterling being so strong against the Euro, rents in Spain are currently far more affordable in Spain than they are at home. Combined with the desire to purchase a Spanish home in the not too distant future, such a move could turn out a life-changing and investment-enhancing idea for potential first time buyers who have given up trying to get on the housing ladder in Britain. The high cost of living in the UK makes it difficult to save up for the huge deposits required by UK banks, but a move to Spain for those who can work from home or can arrange to “commute” for part of the week to the UK may be the answer.
People who are new to the Spanish property market can find out plenty of useful facts at the UK government’s website www.ukinspain.fco.gov.uk, where a list of English speaking lawyers can also be found.
While 2 to 4-bed, key-ready luxury apartments in Puerto Banus in Marbella may cost around EUR450,000 to EUR 1.200,000, it is possible to get a more affordable 2 to 3-bed home for under EUR 250,000 in Elviria, a district of Marbella. Even the glamorous resort of Marbella has seen its fair share of repossessions and bank-owned property is often sold with discounts of 50% from the original list price.