If you are looking to buy an overseas holiday home or even somewhere to retire to, then you probably know that sunny Spain is amongst the hottest spots for the British to buy overseas property. We examine some of the reasons why we form the biggest sector of foreign buyers, currently owning an estimated 170,000 Spanish holiday homes.
According to Knight Frank’s Global Property Search, online searches for properties in Spain increased by 29% during the first three months of 2014, compared with the same period in 2013. Why? A few key factors are enticing renewed interest in buying property in Spain.
From an investment perspective, it is widely believed that the economic crisis has passed and that property prices, which plummeted by 50% in some areas, will not drop much further after seven years of falling. The decline continues to slow and Standard & Poor’s ratings agency predicts that prices in 2014 will fall overall by 2% compared with 4.6% in 2013.
It’s now possible to buy a two bedroom, two bathroom property in Spain, not far from the beaches of Murcia for £89,500 compared to £135,000 in 2006. In Murcia, where over-building was most rife, prices are still falling at a rate of 12%-15% a year, with many homes for sale in 2014 at half of 2008 prices. At the peak of the construction boom, Spain was building 700,000 homes a year – that’s around four times the volume in Britain – but the developers then went bankrupt and many are now in the hands of Spain’s banks.
Many people agree that now’s the time to bag bargain holiday homes in Spain, before the prices rise and they can expect to see maximum returns on their investments. Christine Lagarde, Head of the International Monetary Fund, reports that Spain’s economy is at last recovering. “Spain has turned the corner,” she says, and predicts economic growth this year of 0.9% which should rise to 1% in 2015. Spanish property valuers, Tinsa, predict that the glut of properties on the market will be largely sold by 2017, and that new building programmes could begin as soon as next year to keep up with high demand in some popular areas. Therefore, initial growth is most likely to be seen in popular coastal areas.
Meanwhile, Spanish banks are offloading their repossessed developments and these can be viewed online on websites such as Santander’s Altamirainmuebles.com and Bankia’s BankiaHabitat. Servihabitat, La Caixa bank’s website, tells buyers: “You set the price … we’ll give you an answer in 24 hours.” It seems that people wanting to buy property in Spain are still making silly offers and the banks will sometimes bite.
Aside from exceptional prices and scope for long term growth for people investing in holiday homes, Spain is also favoured by the British for other reasons. According to a recent report from Rightmove Overseas which interviewed 3,000 people, top reasons for buying overseas were for better weather and a less stressful way of life.
Shameem Golamy, Head of Overseas at Rightmove, says: “Spain has always been a popular location for buyers and this report, coupled with it being the most popular searches show it’s set to become even more popular. As well as people looking for a place for their perfect holiday home, there are also those looking to buy as an investment due to the number of rental opportunities buying a property out there will bring.” Added to this, budget flights operating regularly to and from major UK and Spanish airports, mean it’s never been easier to pop over to your Spanish home in the sun.
UK buyers’ trends
According to the Rightmove report:
- 51% of British buyers will be buying a holiday home but will stay resident in Britain
- Just over a third of buyers plan to emigrate for good
- 13% buy mainly as an investment
If you’re one of these new buyers, don’t forget to look into cover for your new home abroad.