2013 Spanish Property Update
As many wealthy
Among the most popular tourist destinations in Europe,
Spanish Property Prices Q1 2011
The bad news is that prroperty prices across most of Spain are still declining according to the Spanish IMIE index.
The accumulated decline since the peak for the different areas are as follows:
Mediterranean Coast -26.5%
Spanish House Prices April 2010
Spain’s official annual property index fell by 13% in 2009 giving a combined fall of over 20% in the last two years. However the experience of most home owners in Spain has been that prices have fallen by up to 50% since their peak in 2007.
However, according to the Spanish Institute of statistics there is some movement in 2010. There appears to be a small general rise of 2% in the first few months of 2010. This is the first positive growth in three years. The growth areas appear to be Cantabria, Navarra and Madrid.
Spanish House Prices February 2010
February 2010 could be the turning point for Spanish house prices.
When I last did an article about house prices in Spain I used data from the official Spanish price tracking model, Indice de Mercados Inmobiliarios Espanoles, the IMIE index. This house price tracking system showed that property prices rose from September 2002 by 15-20% per year until September 2006 then started to decline to a lower 5% increase in 2007, then -5% in 2008 then -10% in 2009. On checking this database again by February 2010 the slide to the bottom has now decelerated to -5% year on year decline. This is actually indicating an increase in prices over the last few months.
The Costas are still lagging behind as the property slide decelerates as they have seen a -7% drop year on year to February 2010. The lowest decline has been in the country municipal areas which did not benefit from the property boom, they have slowed to under -3% year on year decline.
Kyero the large property agent has another database of asking prices and their index is showing an average drop of only -1.4% with some modest and some spectacular increases in December 2009 as opposed to September 2009. They report small rises of 2% in Alicante with a large number of areas static or down slightly. However on the up side they report some winners with large rises of 19% in Caceres, 14% in Badajoz albeit from a very low base, 10% in Gran Canaria and 8% in Barcelona. The losers are Cordoba with -3%, Cadiz with -6%, Fuerteventura with a massive -17% but the prize for the biggest drop in only three months is a whooping -23% in Huelva.
It would not surprise many to learn that Spanish banks are hiding their true losses by not declaring properties in negative equity on their balance sheet. In order to off load some of the repossessed homes on their books, Bancaja’s has issued a new mortgage deal which requires no interest or capital repayment for three years, has no administration fee and offers a LTV of 90%. However it is only available on homes that belong to Bancaja. The properties are mostly located on the costas if anyone is willing to take the risk.
Selling Spanish Property into the Russian Property Buying Market
Selling Spanish property direct to the Russian property buyer is no easy task but the Russian buyer has been one of the few who have not been adversely affected by the recession. This is a tricky market to sell into and has stumped most agents. Are new websites in Russian required. Are local agents required to resell. The most successful have been those who have translated their websites into Russian or employed Russian agents on the ground in the Russian property market.
Top tips on selling into the Russian Property Market
Thus in summary develop a Russian language version of your property ad and advertise as widely as possible.
Spanish House Prices
Spanish House Prices September 2009
Prices for Spanish property in September has fallen again giving an average 10% drop across the country, with variations along some parts of the Mediterranean coastline.
Statistics from an official Spanish price tracking model, the IMIE index, shows that property prices have fallen from September 2008 to September 2009 by over 10%.
According to estate agents in Spain, it is currently possible, in September 2009, to negotiate up to 70% discounts on 2006 quoted prices. Other commentators are quoting that popular resorts along the Mediterranean have fallen between 30% and 50% from their peak in 2006.
Data from the official Spanish price tracking model, the IMIE index, shows that property prices rose from September 2002 by 15-20% per year until September 2006 then started to decline to a lower 5% increase in 2007, then -5% in 2008 then -10% in 2009 Thats the official figures.
However my own experience and probably that of many others, was of buying in 2004 at €175,000 rising to €220,000 by 2006 then selling for €100,000 in 2009. That's a 50% plus fall. The IMIE is a valuation index not market price. So sellers be warned the market is still desperate with very few buyers.
2009 has seen the desperate flight of those on fixed incomes from the UK who have had to return home and many from Ireland who have lost their jobs in a massive surge in unemployment there, having to sell or mothball property. Thus many sellers are being forced to sell to get something out of their property or in a lot of cases with negative equity simply walking away. This has led to many banks repossessing property but holding onto it to see if the market returns slightly.
The Spanish banks will probably try to offload many of those properties to take a loss in 2009 to try to make 2010 look better on their risk portfolio. So expect a further drop in price when those cheap properties hit the auction market in 2010.
The French, German, Japanese and Sweden are the first to officially get out of recession.&amp;nbsp;I spoke to a senior economist, and apparently the UK should rise above negative growth in the last quarter of 2009 taking it out of recession. However the Spanish economy has a €50bn deficit and the prime minister has admitted that unemployment will reach 20% by the end of 2010, double that of Ireland and four times the UK rate. He stated "Signs that the deterioration is slowing does not mean that a recovery is here or will be fast There are signs that the worst of the recession has passed, but we are still suffering an intense crisis".
So the bad news for those having to sell their property in Spain in September 2009 is that prices are still down and by more than official statistics for distressed sales.
Spanish Property Recovery
Spanish Property Recovery
According to a number of commentators and leading property portals there are signs of recovery in the international property market. However, they do have a vested interest in trying to convince people to buy and sell in order to increase their web traffic or agent fees. So is it true or is it hype that the foreign property market is showing signs of recovery.
I suppose the easiest way to identify the truth is to look at objective statistics, but then that is probably a contradiction in terms as the infamous quote lies, dam lies and statistics which bears witness to the manipulative properties of data.
For instance, an official Spanish property price source the IMIE index shows that property prices have fallen by only 15% from their 2006 peak to September 2009. This sounds a little low given my experience and I am sure that of a lot of foreign owners. In reality the Spanish market, along most of the mainland coast, is down 30%-50% on 2006 prices. It is only when you read the small print that you find out that the official statistics refer to property valuations which bear no resemblance to reality in Spain.
Taking into account bias and misleading statistics it still appears that most countries are still on a downward spiral. However there is a small glimmer of hope for all those optimists among us. Mainly it has to be said in those countries that appeared to come out of recession first or were not that badly affected by it. There around ten countries which have shown a modest growth in property prices in the first half of 2009. These are Australia, China, France, Hong Kong, Israel, Indonesia, New Zealand, Norway, Sweden and Switzerland.
The largest growth was in Israel with growth of 8% on 2008 prices. Switzerland was next with a 5% increase and China with a 2% increase. The rest were marginal increases or arguably temporary blips.
This all sounds very encouraging but contrast this positive spin with data that shows that other countries, which are more popular investment sources for the UK and Irish investor, are still falling. Latvia tops the pole a thumping 60% year on year fall for 2009. The next worst fall was Dubai, a very popular spot, with a fall of 49%. Other substantial drops include Iceland, Bulgaria and Singapore all dropping over 20% in the first half of 2009.
Other popular investment spots such as the US are down 5%, whilst Spain was still down another 8%. On the up side Portugal is slowing to an encouraging 0.4% decrease. However, with the UK falling by 17%, Ireland by 8% and the main property drivers of the US still down 5% and Japan still in freefall at 13% only an eternal optimist would predict a complete bounce back any time in 2010.
In summary are there signs of a recovery in world property prices. The key indicator of improvement is the markets momentum, thus the question is has the number of countries that did better this year, than the previous year, increased. As ten countries improved their year-on-year performance in 2009, compared with the previous year, then it might be argued that there are signs of an economic recovery. However, I will not be celebrating until the UK and Ireland slow down and there are definite signs of recovery along the Med.
The Marbella fiasco
The Marbella fiasco started during the boom of the early part of this century when builders and local officials colluded to avoid planning laws and when the corruption was exposed in 2006 almost 20,000 properties were found to be illegally built. This was widely reported in the Spanish and English speaking expat publications and caused a confidence loss for the Spanish property market.
On 29th January 2010 Marbella’s local authority and the regional planning authorities agreed an amnesty for most of the illegal developments around the Marbella area. This still left a number of developments where UK and Irish investors have property in limbo. Legal action is being taken by some owners and developers but the authorities are retaliating by threatening to demolish the sites, not part of this new amnesty. The issue could continue to put a cloud over the Spanish property market for years to come.
Does this mean that the tale of the Marbella property fiasco will finally come to an end and all those with illegally issued building licences, who have been worriedly waiting to hear whether or not their properties have been legally recognised, will be shortly put out of their misery? It is understood that developers have had to pay compensation to the regional government but the amount is undisclosed. The Marbella local authority had said that only property developers would be expected to pay and that expats who had bought properties in good faith would be exempt. However, the regional government is reported to have said that all owners of the illegal properties would have to pay.
Other news for the Marbella area includes the announcement that Taylor Wimpy is to invest over €8m in a new development in the area. This will provide in excess of 50 homes and is targeted for completion by 2012. Wimpy state they sold a total of 175 new homes on the Costas last year which is why this new development is surprising, when developers and sellers are struggling to find buyers. Is the the first sign of recovery in the Spanish property market.
Recent statistics on property enquiries puts Spain in first place with nearly 20% of enquiries according to a leading property portal’s research. France came second with 14%.
Cost of Property in Spain
Buying Property in Spain - What is the Real Cost of That Investment in Spain
15% More than the Property price
Buying property in Spain is different to the UK or Ireland. There are a number of hidden costs which could add as much as 15% to the cost of the property you decided to purchase.
As a buyer of property in Spain there are a number of costs and taxes over and above the property price you originally negotiated that you will have to pay. These are not necessarily hidden if you know what they are and in what circumstances they are incurred.
Buying New Property in Spain
If you are buying a new property from a developer, you will have to pay IVA, a form of VAT and Stamp Duty. There will usually be an annual community tax for the development. There is also the local property tax which depends on the local authority. Add to that Spanish income tax and the level of taxes you will have to pay can make your nose bleed and empty your pockets. In addition you have your lawyer fees, your notary fees, your bank fees, your insurance fees and the cost of making a will, as the Spanish intestate law is a nightmare.
Buying Existing property in Spain
If you are purchasing a resale property from a private individual, you will have to pay IVA and a transfer tax as opposed to IVA and stamp duty with a new development.
With a little bit of forward thinking and research before you start you can significantly reduce the risks of stressful problems later on.
The whole conveyancing process is a specialist field in the Spanish legal profession, since the property laws are often highly complex. Buying a property in Spain should be a very straightforward affair however in so many cases it turns into a complicated nightmare because buyers aren&amp;rsquo;t really aware of what they are getting into.
Add the specific incidents suffered by individuals to the corruption scandals in Manilva and Marbella on the Costa del Sol and the land grabbing by the Valencian government and the process of buying property in Spain and the real cost is not just monetary but stress and possibly sanity. Add to these issues the unscrupulous agents who have no real interest in the buyers and incompetent lawyers who just dont do their jobs properly, again the hidden costs soar.
What are the real cost of buying property in Spain? About 15-20% extra than anticipated and depending on your experience potentially a loss of sanity.
Recent Developments in the Spanish Property Market
So concerned are the Spanish government about the swath of unfinished developments and idle housing stock all along the Costas that they have set up a platform to off load 60,000 housing units.. This has been supported by the Andaluc;ian regional government ;The scheme has attempted to certify that these developments are up to standard and have all the necessary government permits and support ; This is an attempt by the Spanish government to regain it reputation to foreign investors. However putting 60,000 units onto the Spanish property market at this point may just stall any progress that had been made in recent months.
Reports from mortgage brokers are indicating an increase in mortgage applications for overseas mortgages including Spain Mortgage applications are alleged to have risen by over 50% it is argues driven by the big freeze in the UK and Ireland with people heading for the. Another stimulus is perceived to be the fall in property prices especially in Spain of up to 50%. However the euro is still strong and any talk of a massive influx of buyers is optimistic at best. At this point the Spanish market is overflowing and there are many bargains to be had if someone is investing for the long term and prepared to haggle to get the best of a distressed market.
Most UK and Irish buyers use websites to view properties and may are looking to buying direct from owners to get the best bargain possible. Many websites are reporting increases in traffic from the UK and Ireland looking at purchasing property in Spain.