The Spanish Property “Crash”
Along with corruption scandals and land grab issues, overdevelopment and oversupply have led to Spain’s current property situation. According to industry figures more than 800,000 new homes were built last year (2006) which is four times the amount buy in the UK.
Experts say that the main problems stem from the “glut of properties available after the furious building spree of recent years”.
A recent article from Gavin Stamp looks at how people see Spain’s recent property crisis.
Richard Leigh, from Wiltshire comments that “There are a lot of negatives around and I have no doubt that property values will go down in the short term”… “In the long term, I think prices will come back quite quickly. For those who hold their nerve and hang on, I don’t think there will be a problem in a couple of years time.”
On the other hand Ron Sillett, a retired teacher comments “The market is virtually dead”. He’s been trying to sell his property he bought near Malaga on the Costa de Sol for quite some time now.
The Spanish Property Market
Spain’s dramatic growth has been spurred on by low interest rates, rapid economic growth and an almost insane demand for properties from both Spaniards and foreigners.
Many people have made a lot of money investing in Spanish property, particularly off plan investments, which are normally sold off at a very handsome profit, upon completion.
But things have changed…
Overdevelopment has led to mass saturation levels, and this has logically occurred in the most popular resort areas. Prices are stagnating and properties are going unsold. Some UK buyers have even reported making a loss on their investment.
While this is true, and there is much uncertainty about the Spanish economy it has still consistently enjoyed growth of more than 3% in recent years.
Lesser know parts of Spain like Costa Calida in Murcia now appear to be showing strong capital growth, according to Andrew Ward, managing director of Equity Property Portfolios.
The Canary Islands too, Tenerife in particular, remain strong, with property sales still rising. Year round sunshine being their major selling point.
The future
For the first time in years Spain is a buyers market. You simply have look at it as a long-term investment. Buying a good quality property while prices are affordable (not spiralling upwards) could yield a profitable investment 10-15 years down the line.
Many experts agree that talk of an outright “crash” is premature and that the market is just slowing down and will eventually pick up again in a few years.
Astrid Schilo, chief European economist at HSBC comments that “Investment in the Spanish construction sector and consumption will slow,”…”But I don’t think there will be a collapse in the Spanish economy.”
Economic considerations aside, Spain will always be popular (especially with UK buyers) because it’s, quite simply, a very nice place to live.
Spain has been a “home away from home” for the Brits for many years. It’s got everything; the beaches, the climate, the nightlife, the landscape, the cuisine, and a very relaxed pace of life.
It’s also an incredibly cheap place to live, especially compared to the UK. Most of the people speak English in the resort areas and there’s a huge ex-pat community of English homeowners, so prospective buyers often feel at home, as soon as they arrive.
Spain is more than just a “fly by night” property investment location; it’s a real and genuine place to live.
Richard Leigh seems optimistic… “People will always want to go to Spain because it is a nice, sunny place,”…”The golf courses are great and it has great shopping for those who don’t want to play.”
