IS THIS NOW THE TIME TO BUY SPANISH PROPERTY?
So, 2011 was officially the worst year for property sales since the Spanish property crash began in early 2008. Sales were down 20% compared to 2010, which means they were almost 60% down from the halcyon days of 2007.
Of course, this is no surprise given the parlous nature of the Spanish economy and the continuing climb in unemployment in Spain, which now stands at a horrifying 5.3 million people with almost one in four workers lacking jobs. Meanwhile Spain’s economy shrank again during the last quarter of 2011, meaning that Spain is almost certain to fall into a recession in 2012, the inevitability of which may be assured as the savage austerity measures of the new Spanish government under Mariano Rajoy are applied.
What does this mean for anyone interested in buying Spanish property?
Well, one important effect of the Spanish property crash has been the massive reduction in sale price of Spanish properties, which are now some 35% – 50% less than they were in 2007. Indeed, prices are probably around their 2004 level, when they were providing good value for money in comparison to their counterparts in Northern Europe.
The Ultimate guide: How to Buy Spanish Property and Move to Spain – Safely!
So, in terms of raw value for money, Spanish property is now worth buying and you can get some wonderful properties at unthinkable prices (in 2005-07 terms), that are well located, fully legal and ideal either as holiday homes or for permanent living. However, you should not expect the property you buy to be a good investment in the mid-term, as Spanish property price growth is unlikely to occur for a long time and the Spanish property market has yet to stabalise. Indeed, it may not do so until the banks across Spain stop dumping their vast portfolios of properties onto the Spanish property marketplace and unemployment in Spain becomes markedly less.
Meanwhile, as a buyer of Spanish property, you should recognise two contrary things: one positive and the other negative!
The negative thing is that the economic crisis in Spain is going to impact adversely upon the infrastructure of Spain, as the austerity cuts take effect. These will affect everything from education and healthcare to local policing and the upkeep of the roads, all of which are likely to suffer and all of which will have some bearing on anyone living permanently in Spain. However, of course, as a holidaymaker or someone buying a Spanish property for holiday use, the cuts to the infrastructure will be largely irrelevant and have little effect or no upon your enjoyment of your property in Spain.
Excellent property for sale Gandia and Valencia region
On the positive side of things, I am constantly reminded by people coming to Spain from other countries about how cheap day to day living in Spain is. This is an important plus to buying property in Spain and goes to the root of why Spain will continue to be justifiably popular – amongst such other things as its fine climate, proximity to Northern Europe and political stability. Certainly, there are few places in the First World where you can live so cheaply, whilst enjoying an al fresco life within a safe country that benefits from having everything that you need. Where else in Europe, for example, can you enjoy (even in the capital city) a coffee for well under 2 Euros and a three course menu del dia for under 10 Euros?
Sadly, this is a bad time for anyone who wants to sell property in Spain. In fact, it is hard to think of a worse time to sell Spanish property and this is not likely to change for some considerable time. As the figures above show, the numbers of property sales in Spain are still dropping in volume – and Spain is in the fifth year of its property crash. This is very bad news for sellers of property in Spain and I suspect that most commentators would agree with me that Spain will be hard pressed to see its property market stabalise this year. Indeed, as I have written before, I think prices will continue to drop (perhaps by 5% or so) this year, before hitting rock bottom next year – with holiday homes in Spain being particularly badly hit due to the ridiculous number that were constructed during the boom.
What can you do as a seller?
Well, most properties are now selling on price and so, however, hard it may seem, if you are having problems selling then you need to either drop your price further – or resign yourself to not selling for possibly a long time to come.
Certainly, one of the secrets to selling property anywhere in the world is to be ahead of the market not behind it. By this I mean that you should not follow a market down but jump ahead of it. If it looks as though prices are set to fall then be bold and drop your price lower than anything equivalent around you. That way you are likely to sell. However, keep dropping your price little by little as the market falls, always a bit behind the reality of the marketplace and you will never have a property that looks totally compelling to buyers and you will not get rid of it.
So, recognise, as a seller, that the Spanish banks are not lending money, that the figures for last year (in terms of sales volumes) were terrible and that the Spanish property market is unlikely to stabalise this year, with prices likely to drop (a little) further before going ‘flat’ for possibly some years. It is all bad news (damn it!) if you are a seller but if you need to sell then be radical with your price – because buyers of Spanish property have everything on their side. This includes the desperation of the Spanish banks – who need to get rid of their huge property portfolios and who are now having to do so aggressively, not just by dumping their properties on the market but also through offering lending only on their own properties!!
Nick Snelling – Culture Spain
The Ultimate guide: How to Buy Spanish Property and Move to Spain – Safely!
Buying Spanish property – the right time to purchase?
Selling Spanish property in a crisis