UK Recovery and the Spanish Property Market
October 15th, 2009
A while ago, I predicted that there would be a Spanish property feeding frenzy as the UK economy recovered ahead of the Spanish economy.
In an article I wrote in December 2008, entitled Unbridled Optimism About Spanish Property, I said:
“Next year, I see an opportunity for European buyers to acquire Spanish property at bargain prices. In fact, this has already started with the more adventurous vulture funds snapping up entire developments in Spain. Now is probably too risky for most private buyers to take the plunge, but the signs are that the time will come sometime in 2009.”
Perhaps that time is now?
Two articles from the UK this week, make the case for the UK economy recovering faster than the Spanish economy and that investment in property is a sound choice.
In Hopes rise for economic recovery, we read the following statements:
“Hopes of a rapid economic recovery were dramatically lifted today thanks to a raft of positive news. The prices of shares, oil and gold and other commodities all soared.
The FTSE 100 hit a new 2009 high during the day of 5,256, up 2%.
The mood in the City was also helped by a lower than expected rise in unemployment. While the claimant count rose slightly, the overall jobless rate stalled at 7.9%.
The number of young people out of work actually saw a slight fall to 946,000.
A spokesman for Gordon Brown said: ‘The Prime Minister knows this is a very important issue for the country, and the fact that these figures show a significant slowing must be seen as a promising sign.’
Work and Pensions Secretary Yvette Cooper said the jobless total may peak at a lower level than in previous recessions, adding: ‘It may be that the traditional lag… between what happens to growth and what happens to unemployment may be narrowing.
‘For a series of reasons it does look as if the economy is behaving in a different way compared to the early Nineties.’”
Another article entitled There won’t be another housing crash provides 5 reasons why buying UK property now makes sense:
- Seasonally adjusted house sales show an increase in activity
- Salary multiples are reasonable
- Bank base rates will stay low
- Mortgage rates will stay low
- Houses are a good way to store value
“Property is a better store of value than money. Think about it. You can print more money, which makes it worth less, but you can’t easily print more houses. And we’ve been printing a lot of money. Putting a large chunk of your savings into your own property is a good safety against the possibility of high inflation.
You’ll struggle to match inflation by moving cash from one top savings account to another during rapid inflation! Property’s a good hedge in another way, too. If interest rates surprise and rise quickly, it will likely be to combat inflation. Higher interest rates could result in a temporary real fall in house prices, but inflation will mean a permanent real fall in the value of your mortgage!”
The case for Spanish property
So, if things in the UK really are looking up, and UK property is an appealing investment, how much more appealing is Spanish property as an investment?
True, the woeful euro buying power of sterling has taken some of the shine off this argument, but the fact remains that Spain, with an unemployment rate approaching 20%, is lagging the UK recovery by many months, possibly years.
That makes property in Spain, which is competitively priced for the Spanish market, more and more appealing to foreign buyers.
The trick, as ever, is to find realistically priced property in Spain – and make a cheeky offer.
Martin Dell, Kyero.com
Related Posts
- Spanish Property Market Recovery?
- Deflation in the Spanish Property Market
- Signs of Recovery in the Spanish Property Market?
