THE SPANISH PROPERTY MARKET IS BOUNCING BACK AFTER A FEW TOUGH YEARS, OFFERING BETTER VALUE THAN ITS EURO COUNTERPARTS
The Sunday Times of London, March 2015
Observing the Spanish property market is like looking at that famous optical illusion of a face. Do you see the beautiful young lady or the warty old woman?
The picture varies dramatically from one region to another, between the sunshine coasts and hilly inland villages, and from whitewashed town to whitewashed town. It also varies wildly between economic indices, as Spain’s official sources are notoriously open to interpretation.
But here’s what we do know. Possibly. Tourism in Spain is booming. Last year saw record visitor numbers — 64m — and where there are tourists, there is demand for holiday homes and villa rentals, tapas bars, furniture shops and all the rest. Everyone wins.
Spanish unemployment is still stratospherically high, particularly among under-25s, the best educated of whom are migrating. Yet the economy grew by 2% last year — a fact that led the head of the International Monetary Fund, Christine Lagarde, to praise Spain for having restored confidence through its economic reforms.
Then there’s the euro. Its fluctuations have steered our desire for Spanish holiday homes: from the boom times, 11 years ago, when the pound bought €1.50, to the dreary days of 2009-11, when near parity put us all off. Now we’re back in the happy zone, with £1 buying €1.38.
“Our office in the Costa del Sol is seeing first-hand the resurgence in appetite for Spanish property,” reports Marianne Gilmore, commercial director at the foreign-exchange broker Moneycorp. “A year ago, a €250,000 property would have cost about £204,000. Now it’s about £182,000.”
As for the eternal question “Are we nearly there yet?”— in this case, whether house prices have hit rock bottom at last — there is disagreement. Some fund managers think they have further to fall; some agents in Barcelona think they reached it two years ago. Tinsa, a property valuation firm, believes the Spanish market is back on track and predicts no change in average prices — when you even out all the regional differences — in 2015.
Typical values dropped by 5% in 2014, but transactions rose significantly (although still to only a third of the number seen in peak 2006). Purchases by foreign buyers in 2014 were up by 28% on the previous year, and one in five of them was British. The property portal Kyero reports that January 2015 saw the highest number of online Spanish property searches since the company launched in 2003.
In the province of Alicante, which includes the Costa Blanca, foreign buyers accounted for 47% of total property purchases in 2014, while in Malaga province, which includes the Costa del Sol, they accounted for 40% across the board and 75% at the luxury end.
Mortgages are cheap again — Euribor, the interbank rate charged between European lenders, is about 0.3%. Banks are newly buoyed up by the forthcoming quantitative easing measures, which are designed to boost the flagging eurozone economy, and are battling to offer the best deals. Yet about 85% of overseas househunters buy with cash.
Anyone considering entering the Spanish property market should also bear in mind the high buying costs — 10%-13% of the sale price — as well as agents’ fees of at least 5% when you come to sell.
For most people, however, buying a home in Spain isn’t about second-guessing the market. It’s about loving the climate, the landscapes, the beaches, the food, the festivals and the lifestyle so much that the only way to handle leaving is to start sneaking looks at property portals as soon as you get back home.
What is not in doubt is the huge array of property for sale in Spain, from high-quality new-builds on the beachfront to wonderful old fincas in the hills — extraordinary value in some cases; eye-watering expense in others.