The latest figures released by the Valuation Society show the average cost of buying a home in Spain fell by 5.5 per cent in the first six months of this year, compared with the same period in 2011.
This means Spanish house prices have dropped to an average price per square metre of 2,286 Euros for a property located in a provincial capital. An average 90 sqm home would therefore cost 205,740 euros.
All of Spain’s regional capitals experienced price falls, with Soria, Pamplona and Huelva seeing the largest declines at 10.7 per cent, 9.6 per cent and 8.5 per cent respectively. The Valuation Society believes the best way forward at the present time may be to simply letting the empty homes across the country for rent, allowing tenants an option to buy in the future. Such schemes avoid the thorny issue of finance, which is still hard to come by thanks to cash-strapped Spanish lenders tightening their belts and making less mortgages available.
Unfinished developments at the Costa del Sol, Costa Blanca and elsewhere in Spain’s coastal regions would certainly benefit from such rent-to-buy schemes. Many developers had to hand back their projects to lenders, when sales dried up and loans couldn’t be repaid. No immediate improvement of sales for key-ready villas, penthouses and apartments is expected, according to the Valuation Society’s report.
With so many bargains on the market and Spanish lenders now selling off whole developments to raise cash quickly, there are plenty of opportunities for investors with ready cash. Record rainfalls in Britain coupled with the favourable exchange rate of the Pound versus the Euro are beginning to provide food for thought to those Brits who can afford to buy without a mortgage and are eager to leave the UK’s high taxation and damp climate behind.
Buying a home in Spain at the Costa del Sol, one of the country’s prime locations, is going to be a long term investment. Buy-to-let can be risky, if the local market isn’t assessed meticulously before making a purchase. Across the Eurozone unemployment reached a record 11.1% this May, a time when typically part-time jobs in the hotel, catering and tourism industries absorb quite a few temporary workers. This means that Spanish nationals will not be in a position to buy their home for quite some time to come.
The Costa del Sol is one of Europe’s most visited regions. With breath-taking beaches, stunning inland and plenty of city-based tourist attractions the area at the Mediterranean Sea is famous for its sunny climate, relaxed, easy lifestyle and party atmosphere. Buying a home anywhere in the world in the current economic climate can be a risk, but with Spanish house prices being at their lowest level since 2007, the temptation to at least arrange for a viewing or two is great.
Potential investors should do their homework about associated buying costs, possible exchange rate gains or losses, taxes at the time of purchase and later, when an annual tax is due, maintenance charges for holiday lets and cost of flying out to inspect the property on a regular basis between lets.
The quarter 2 house price index shows that the average asking price of a Spanish property fell from 267,000 Euros to 245,000 Euros in the past year, a drop of 8 per cent. This is partly caused by market conditions and partly by sellers finally pricing their properties realistically. As a result, enquiries for properties at the Costa del Sol, in the Granada province and other parts of Spain have risen by around 65% over the last year.
For people who are looking to buy at the Costa del Sol’s best resorts like Marbella, Fuengirola or Torremolinos, the time couldn’t be better, provided they can get finance approval from Spanish banks. Cash buyers are snapping up the best bargains and high-spec real estate.
Potential buyers should look out for experienced estate agents who arrange not just viewings but facilitate pre-approval for finance through their banking contacts. This enables investors to see the best bargains first, particularly on sought after golf developments in the Marbella region.