Buying a property in Spain?
Thinking of buying a property in Spain?
We have been hearing since 2010 that house prices were going down in Spain and that many owners were finding themselves with the burden of having negative equity in their properties. We keep hearing that Spain is currently a buyer’s market and that we can pick up really good bargains, but… Are things really as they seem? Apparently the country is now in recovery and property prices are, at long last, starting to go up.
There are several factors regarding the housing market that you need to take into account when buying a property in Spain.:
- The Spanish housing market is not regulated, as it is in other countries. The asking price for newly built properties is based on the sale price of similar properties in the area, and it’s not really based on the building cost.
- When it comes to resales, we really are in no man’s land. Prices have been artificially inflated over the years depending on how much the banks were prepared to lend to the buyers…On a 100% mortgage, where the bank would lend us the full asking price, we only needed to have the house valued a lot higher to be able to borrow, not only the needed amount to pay for it, but extra to furnish it or carry out improvements.
- When a bank’s valuer assesses the price of a property he mainly compares the prices at what other similar properties in the area have been sold recently…So it could be the case that in that area there are several properties that have been sold very cheaply because, perhaps, the owners wanted a quick sale. But this doesn’t mean that other properties in the same area will not be sold at higher prices.
- MMV or Minimum Market Value (Valor Fiscal in Spanish). This is simply a value assigned to the property by the Government, and it is the minimum price you should declare when buying a property in Spain and paying the corresponding Transfer tax.
In short…we think that house prices are not really coming down. It’s only that there have been quite a Buying a property_New 2017 few worried owners out there that needed to make a quick sale, so there has been an influx of cheap properties. However, this situation will settle soon (in fact, we are already seeing how prices are creeping up in our dealings with clients) and we feel that they will reach a middle ground…Not as high as they were a few years ago, but also not as cheap as we have seen. Also, let’s not forget that banks have been under pressure, due to the huge bailouts received by the Spanish Government under the Troika’s directives, to get rid of as much of their toxic assets (repossessed properties) as possible, resulting in an influx of extremely cheap properties.
So, if you have doubts about buying a property in Spain because you are worried about the future, we are confident that real estate is still one of the best investments you can make. And when you find your dream house, why don’t you contact us? We’re always happy to help!