Spain’s financial and economic woes may have left a huge glut of new and repossessed properties sitting empty and struggling to sell, but some bargain basement prices are turning heads, particularly those of the British, and there may never be a better time to buy a Spanish home.
According to the Bank of Spain and the Real Estate Registry’s annual report, foreign investment in Spanish property increased by 17 per cent in 2012 – the highest level since 2004, and British buyers accounted for more than 16 per cent of the foreign market. In total, €5.54 billion was spent by foreign nationals last year compared with €4.7 billion in 2011. In the last quarter of 2012 alone, €1.8 billion worth of property was sold to foreign investors, a 56% increase on the same period in 2011, and a 92% increase compared with the final quarter of 2010.
Taylor Wimpey Espana, the Spanish house builder, has also reported an increase in sales to British buyers. It’s year-on-year sales were up by 123% in April this year, with a quarter of second home buyers coming from the UK, up by 50% compared with last year.
Regional estate agents and tourism boards have been making big efforts to improve Spain’s tarnished image among prospective investors, and this together with falling property prices has been contributing to the increased levels of investment the country is seeing from overseas buyers. The growing strength of the pound against the euro over the last few months has also been helping in terms of what you can get for your money.
The Swiss bank UBS estimates that Spanish house prices have plummeted by up to 38% since the peak of the market, and that they’ll fall another 8% before bottoming out. BBVA, Spain’s second largest bank also predicts that prices could fall by another 8% over the next couple of years, although this won’t be in every region as some areas have already adjusted enough. There are high hopes that this interest from foreign investors will continue and eventually help to revive the country’s property market. The market should also be boosted when a new law granting automatic residency to non-EU nationals buying property worth at least €500,000 is passed, with big levels of interest expected from Russian, Chinese and Asian buyers.
It may be a good time to buy property in Spain, but as always, it’s essential that you seek the right advice and you should always go through the same process that you would follow if you were buying a property in the UK. Take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer. It’s most certainly a buyer’s market, but you must choose carefully. There’s nothing to be gained, and everything to lose by cutting corners and failing to carry out due diligence.