News & Facts
News & Facts
HOUSE PRICES REPORTS
Copy and paste these links in your browser:
http://prices.kyero.com/assets/kyero_house_price_index.pdf
http://www.tinsa.es/down/IMIE/2011/IMIE_02_2011.pdf
THE SPANISH PROPERTY MARKET
There has been good news for property sellers as the signs of property market recovery are filtering through to the national statistics office in Spain. The newly released statistics for February of this year show that new mortgage lending in Spain rose for the second month running, by 8.5%.
The news, of course, will be greeted with mixed emotions by buyers. On the one hand, it is great to see a more buoyant property market, but on the other it increases the urgency for anyone looking for a property to buy. More demand will undoubtedly strengthen vendors’ negotiating positions and knock on to price rises in the future.
Those looking for a property for sale will take heart that the mortgage market is starting to slowly loosen. The average amount borrowed rose to €135,113, a 9.3% increase on the previous month, but still 10.2% less than the year before. Overall, the total value of mortgages rose by 3.5%. The savings banks retain the largest share of the mortgage market (51.3%), followed by banks (37.9%) and other lenders (10.7%).
Needless to say, the property market in Spain has a long way to go before catching up with its previous highs, but it is inexorably moving in right direction. The average price of a home is Spain is currently equivalent to 2005 levels, so bargains are still available at all price levels.
February 2011.
IT IS THE RIGHT TIME TO BUY . . . .
The Spanish property market, like others, especially around the Mediterranean, is prone to ‘boom and bust’ due to it’s reliance on overseas demand for holiday homes and investment speculation. This ‘bust’ that we have now is not the first and neither will it be the last. In the last 30 years Spain has witnessed 5 real recessions that has had a negative impact on property values each time albeit to differing degrees.
But that does not make it always a bad risk; the surprise is that property appreciation has given rise to an annualized growth of circa 5% in that same period so it is really down to ‘when’ you buy rather than ‘whether’ you buy! The market always comes back; it’s just a question of how quickly and strongly. And the demand for Spanish property will not diminish; on the contrary recent research has shown that in the UK, as an example, an increasing number of folk are determined to move to the sun and Spain remains the No. 1 attraction.
Now it is a question as to when the confidence in the global economy and property markets return to prompt the continuing stream of Ex Pats, especially from the UK, moving to better climes. And timing is important! But not always critical, especially when you are buying long term, Sure, if you were buying today to sell in a couple of years, the possibility of continuing low values for a number of years would be a worry. But most purchasers do not buy for the short term; that is the domain of property speculators and they won’t return to Spain for a while methinks.
But long term, with property prices so low and with the amount of discounting and repossessions available, it is difficult to see why now is not the time to commit. Firstly, you have the potential of buying a property today some 30-40% less than it was a year or so ago. Secondly, mortgage rates in the Eurozone are low, circa 3% only as an average, and that trend is not going to change greatly for a number of years.
No property should really be bought for ‘cash’ irrespective of personal circumstances as a mortgage offers significant proportion against certain risks and tax exposures that we see in Spain that, as an example, do not apply in the UK. And the concern of the Euro/Sterling exchange rate is partially overcome by borrowing in Euros.
Buyers today and over the next year or so will probably be viewed as the brave ones, but it is they who will show the greatest returns in the years to come.
