Over the past seven years, Spanish property prices have fallen dramatically – especially in the areas where the banks are offloading repossessed homes very cheaply.
Towards the end of 2013, property prices were beginning to stabalise and are were even rising in some districts of Madrid and Barcelona, as well as in the more up market areas on the coast. Current prices are now at levels last seen in 2003 – before the meteoric construction boom, which fuelled the higher prices – but on average are still around 31.07% lower than they were in 2007; in many places this is closer to 50% - so excellent deals still abound!
During 2013 there was a large increase in foreign buyers, Brits as well as French, Russians, Belgians, Germans and Scandinavians. Experts suggest this may account for the stabilising market, as with Spanish unemployment remaining around 26% and wage cuts still common, the home market remains stagnant.
Many local authorities have put together initiatives solely to attract overseas buyers. In Comunidad de Valencia, a team was sent over to Scandinavia specifically to find buyers interested in the Spanish market – to great success. Areas such as Alicante, Murcia, Estepona and Valencia, as well as the Costa Brava, are still the most popular, as British buyers seek sun and the Mediterranean lifestyle. Costa Brava in particular is home to a number of bargains, thanks to the declining house prices.
More recently it would appear that older expats living in the smaller coastal villages have moved to smaller properties in local larger towns – making it easier for them to access the local amenities – and these vacated properties have been sold to younger expats seeking sea views.
Also as a result of the property crash, new rules governing agencies for estate agencies have been introduced, tightening up controls. Those that have been able to get through this are generally professional and most have English-speaking staff – making it incredibly easy to buy a property in Spain. IVA (VAT) on property purchases has risen to 10% in some autonomous regions, although this has not had much of an effect on the market.
The biggest issue with the Spanish property market at the current time is that Spaniards are not buying property – and prices will remain low until this changes. Properties offloaded onto the market by the banks are at extremely low prices, and really Spain is relying on foreign buyers to kick-start property sales. If you are looking for a property in the bigger cities or smarter coastal areas, now is the time to buy as the market has stabalised here. However, in areas such as Andalusia and La Rioja, they are still falling substantially.
The next six months are crucial for assessing if the market is recovering, but in the mean time we expect there will be excellent bargains for some time to come.