Is it a good time to buy property in Spain?

Weighing up the evidence for buying in Spain

Conveyancing Thursday, January 29, 2015
Is it a good time to buy property in Spain?

Let’s look at the evidence. Spanish house prices have reduced dramatically and the value of the euro to the pound has dropped significantly too. We’re seeing a reduction in fuel prices, impacting on the cost of air fairs and more and more tourists choosing Spain as their holiday destination. Even the cost of borrowing is down, meaning that if you do need a mortgage in Spain  there is a much better chance now than for many years previously.

So, is it a good time to buy property in Spain? The short answer is ‘yes’ and here, in more detail, is why.

Good value property

It’s no secret that house prices in Spain dropped sharply from 2008 onwards. The equation is simple:

Too many houses on the market + not enough buyers = a very good bargain

Although there is more optimism in the sector at the moment, there is still lots of property to shift and people who do want to make their Spanish dream happen are in a very good position to do so.

The trend seems to be for second hand property, although the way that figures are collated here means that brand new, unoccupied houses over two years old are still classed as second hand.

If you have the money to spare there are some very good bargains out there whether you want a property for yourself or to rent. You can expect to find plenty to choose from at significantly marked down prices.

A weak euro

It might not sound an attractive prospect in itself but a weak euro means a good exchange rate for those countries still with their own currency. For example, at the time of writing this article, one pound sterling could be exchanged for 1.34€ – a rate not reached for seven years.

There are a number of factors that mean the euro is currently not as strong as it has been against the pound. The Greek election results have certainly caused some ripples. Although it was projected that Syriza would win, they weren’t perhaps expected to gain the amount of support that they did.

But the euro had been struggling against the pound prior to this as a result of a combination of factors. Recently, the European Central Bank injected upwards of 1.1 trillion euros into the Eurozone economy with the result that investment has tended towards sterling and US dollars.

The pound has been doing well against other currencies too. For example there have been improvements in the ratio of the kroner to pound. If you were thinking of buying a house in Florida, however, this might not be such a good idea. The dollar is still strong against the pound and you can expect less for your money over there if you’re trading in sterling. 

Of course, the strength of the pound and weak euro has positive repercussions for those considering the question, ‘is it a good time to buy property in Spain?’ If you are considering buying a house with a value of €100,000 you would have paid around £90,000 for it two years ago in comparison to £75,000 now – a very big difference.

However, the benefits extend even further than this. Most foreigners in Spain now have more euros to spend. This means more tourists and foreign residents eating out and spending in the resorts. All in all, it’s win, win if you’re thinking of investing.

Price of fuel

Another positive for those wanting to enjoy more of the Spanish lifestyle, is the fall in fuel prices. Cheaper flights also make buying in Spain more attractive.  

Ease of access is a powerful incentive for choosing Spain above other destinations. As travel costs mount from A to B in your home country, compare the cost of a two-hour flight that takes you to the sun. Tour operators are anticipating a bumper tourist year next year with fares to Spain reduced and holiday packages particularly good value.  

Increase in tourists

The figures are looking good. In 2014, 65 million tourists were estimated to have travelled to Spain. A figure that is equal to the total number of inhabitants of France. Not surprisingly those compiling this exciting set of figures see 2015 as pretty promising too with a projected increase of 2.6% visitors in 2015.

More tourists means more business and more facilities. It’s also good news if you are considering renting out your property.

Improved access to mortgages

Some people are in the fortunate position of being able to afford a house outright but most people do need a helping hand. The central statistics unit suggests that mortgage lending by banks is on the up. It was reported that in November 2014 15,900 mortgage loans were granted, an increase of 14.2% on the same month the year before.

There might be more mortgages granted but they do tend to be for less. Of course, with house prices less too, people don’t need to borrow quite as much. This does all seem to be part of a sustainable trend as monthly figures are showing around a 10% increase on the same months in 2013.

One of the factors making mortgages more attractive is the low level of interest being charged. The Euribor dictates the interest rate of most Spanish mortgages. Currently, it is at a very low level with the average rate being around 3.49% as opposed to 4.29% of the year before.

Convinced?

is it a good time to buy property in Spain? Really, we don’t need to convince anyone. The facts speak for themselves. Anyone who has been sitting on the notion of buying their own holiday home or permanent residence in Spain should see that the time is right.

More information

If you have found this article of interest we recommend that you obtain our more comprehensive guide to buying property in Spain which includes information right from first thinking about buying a Spanish property to being ready to move in.

Do you have any questions?

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