Spain – What is the outlook for 2012?
One month in to 2012 and many people are wondering is now the time to start investing in property in Spain
Despite all the headlines, one thing that remains the same is that more and more people are choosing Spain as there preferred location for a second home or to retire. According to the Foreign and Commonwealth Office, 38 per cent of over 55 are planning to relocate in the next few years. Spain remains one of the most popular locations and it is estimated that over half a million Britons aged 50-plus already live there.
The main reasons for choosing Spain has not changed, the close proximity being just a short two hour flight from the United Kingdom. This along with the great all year round weather and relaxed lifestyle makes it a firm favourite.
Spain’s economy has been very reliant on the Construction industry for many years. The recession has caused many companies to close creating high unemployment; as a result property prices have fallen by up to 40% in some areas, though this is by no means the whole picture.
Many parts of Spain have been overdeveloped and there is an abundance of holiday homes in areas where there is just not the rental demand. As with any country the most important factor when choosing a property is its locations. Properties in the right areas may have still dropped in price but not by the same percentage as other locations in the country. The most important point is that these properties still have a large rental demand and are paying for them selves on an annual basis.
Properties located near ports and seaside locations with an array of amenities are always popular with holidaymakers. The marinas on the coast are full of yachts all year round and the island’s economy is healthier than in other parts of Spain. There is also evidence that properties on golf developments are also very popular as most golf courses are situated in attractive areas and the facilities are usually excellent with swimming pools, tennis courts, restaurants at the club house and so on.
Properties purchases on the mainland by foreigners were up by 24.7% in the 3rd quarter of 2011, with the Sterling gaining strength against the Euro, property in Spain will be cheaper for purchasers from the UK, so 2012 would be a good time to contemplate buying a house in Spain.
The outgoing Spanish government had reduced IVA (VAT) on house purchases by 50% to just 4%. The good news is that the new government has said they will keep the low rate for the time being. This is a significant saving on any property purchase and is yet another sound reason for buying in Spain in 2012. Ernst & Young, the consultancy company said in December 2011 they believe a “Spanish recovery is likely in the second half of next year.” If that is the case, it could well prove a wise move to buy property in Spain before the end of 2012.
Spain’s largest English language property portal reported that in the 3rd quarter of 2011 the average asking price for property in Spain increased to €266,100 in September compared to €263,000 back in June 2011. This suggests a shortage of quality properties in the most popular regions. The Spanish and oversees investors realise that property prices can not keep falling in the way they have and they are looking to buy the right properties in the right locations now before they are snapped up.
There is no point in waiting for an additional 1% price drop, when there are already bank-owned bargains in three of the most popular areas of Spain which offer discounts of 43%
The Spanish Government is already cutting taxes and buying costs by an average of €8,000, the Euro is cheap compared with Sterling and many other currencies and the banks are taking the most toxic properties off the market to concentrate on the most saleable.
The over-supply of Spanish bank repossessions in recent years could turn to shortages in the best locations. Savvy investors returned to the Spanish market in the last quarter of 2011 as prices of well-located key ready holiday homes plummeted by up to 50% in Costa Calida, Costa del Sol and Costa Almeria.
From all the evidence, Spain is an excellent choice just now with the Euro declining and the pound getting stronger. It is expected that the new Spanish government will introduce measures to stimulate property sales and this can only be good for the UK buyer. VAT being at an all-time low on property purchase with much choice available, despite the words of doom and gloom, now is a great opportunity to buy in Spain.