News that the resale asking prices for Spanish property were stable in January after 36 consecutive months of declines, has led to the question being raised again about whether it’s a good time to buy property in Spain.
According to the Fotocasa (property portal) database, resale asking prices averaged 1,890 €/m2 in January, almost the same as in December, and this is the first time there’s been no monthly decline in prices in almost three years. And prices actually increased in regions such as Murcia, The Canaries, Andalucia and the Valencian Community.
According to a report by lovemoney.com, one problem for prospective British buyers is that Spain currently has a two-tier property market. There are the prices you see advertised, and then there are the true sales prices, which are often up to 25 per cent less. And some Spanish banks have been off-loading repossessed properties at discounts of 60-70 per cent. With such deep markdowns on offer, it suggests that there should be no need to rush into buying, especially if prices continue to weaken this year. It also says that while the arguments for investing in post-crash Spanish property are growing, only fools would rush in to this bombed-out sector without doing their homework first.
It’s a buyer’s market, there’s no doubt about that, but you can still buy with confidence if you buy wisely (you should also be considering it as a long-term investment), and the point about doing your homework is absolutely right. Bitter experience has taught thousands of overseas property buyers that scrimping on independent legal advice can effectively cost them their holiday home. You should always go through the same process that you would follow if you were buying a property in the UK.
It’s essential that you take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer, and ensure that an independent valuation of the property is carried out, even if you’re buying in cash.
You should also be very selective. Many so-called bargains are being offered at bargain basement prices because they’re of poor quality and in undesirable locations. It’s very easy to be pulled in by descriptions of ‘knock down’ prices, but you really don’t want to end up with a toxic asset simply because you didn’t do your research or tried to cut corners.
There’s nothing to be gained, and everything to lose by cutting corners and failing to carry out due diligence.
It’s clear, however, that the British love affair with Spanish property is far from over. Spain currently accounts for around a third of Conti’s enquiries, up from just 14 per cent back in 2008, and there are still many good reasons for buying property there.
Here are ten of them from A Place In The Sun:
10 reasons to buy in Spain this year
1. Everyone still wants to visit Spain. Between January and October 2012, 52 million tourists went there – a 3 per cent rise on the same period in 2011.
2. Plenty of people still want to buy there. Brits are leading the way (30 per cent), according to the Ministry of Public Works, but Russian, Scandinavian and Benelux buyers are also major purchasers according to Knight Frank.
3. Proposals by the Spanish government to offer residency rights to non-EU buyers who spend more than 160,000 euros will be positive for the market if it goes through in 2013, according to Barbara Wood of The Property Finders.
4. It’s also easier to get there. New flights include new British Airways routes to Alicante, Barcelona, Palma and the Canaries; whilst Monarch are now flying from East Midlands Airport as well as new routes to Ibiza and the Canaries.
5. There are many reasons why it’s nice to live there: superb climate, great beaches, affordable dining out, the best football in Europe…
6. You can now reach Barcelona and that fine football by a new fast train from London. The new link-up will reduce the journey time by 1.25 hours and make the Costa Brava easier to reach too.
7. Properties are cheaper than they have been since 2002. You can get an apartment for under 50,000 euros and a villa with change from 100,000.
8. You can get a bargain ski property. Spanish ski property is down by 50 per cent. Tapas on the piste? What could be better?
9. The overseas market is growing. There have been five straight quarters of growth, in contrast with the domestic market which is stalling.
10. New-build properties in prime locations are selling. Whilst Taylor Wimpey Espana have sold 60 per cent of two of their new developments offplan, Savills sold the same of a new apartment block in Ibiza Town.
For many people buying property in Spain, it’s a lifestyle choice, and they’re attracted by the climate, amenities and culture, rather than earning a prospective fortune on their home there. If people enjoy whatSpainhas to offer, property can be snapped up there on better terms than have been seen for years.