Sun & Sea Property Prospects in Spain
February 2nd, 2010
The European housing market hasn’t stopped attracting British buyers, with Spain, Cyprus and Poland among the hot spots.
Investing in property abroad is a daunting prospect at the best of times. Many Britons who borrowed heavily to invest in foreign properties have been left in negative equity, which may be enough to put off any new buyers.
Spain may be a surprise entry given that it is still struggling with high unemployment and a shrinking economy, but with average house prices falling by 8 per cent in the 12 months from September 2008, this may be the time to pick up property on the cheap.
Property Venture says that about 1.6 million apartments and houses are on the market, with some under construction and others with planning permission to be built within two years. Coastal property prices have seen the biggest declines while inland prices have held up somewhat.
“While Spain has been going through turbulent times, it is nevertheless still a firm favourite as a lifestyle holiday destination. Discounts on seaside property developments means that there are some great purchasing opportunities,” says Louise Reynolds, a director of Property Venture.
The British love affair with Spain shows few signs of abating. Spain came out as the top destination for international money transfers at the Post Office, as well as the cheapest place to live within the eurozone, according to its holiday costs barometer.
However, getting a mortgage may not be straightforward. In terms of finance there is currently a big divide between mainland Spain and the islands or coastal regions.
“Lending in mainland Spain is still hugely difficult with loan to value (LTV) limited to 60 per cent, but the islands are a different story. It’s a brilliant time to make an offer on top-end property but you need to be a pretty wealthy client to do it,” says Miranda John, the international manager at Savills Private Finance. She adds that interest rates are currently good, so buyers can borrow at about 3 to 4 per cent. However, there are concerns that the market has not yet bottomed out and there could be a further decline in prices as well as a surplus of stock.
“Spain has about one million properties unsold. It’s definitely a buyers’ market but I think it will stay that way for years, we just can’t see how they’re going to shift the stock,” says Stuart Law, a director at Assetz International.
Expect to pay: three-bed semi-detached villa in a complex with a pool, near the beach on Costa de Almeria, would cost from €200,000 (£173,000). Two-bed apartment in a complex with pool, near the beach on Costa de Almeria, starting at €127,900
Story from The Independent
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