Bargain prices in some areas of Spain are attracting more overseas buyers and in the luxury market the introduction of a residency visa for non European Union nationals is awaited with bated breath.
There are high hopes in Spain that this renewed interest from overseas buyers could help to increase sales and eventually revive the country’s hard hit property market. And with major banks estimating that prices will fall another 8% before bottoming out next year the number of bargain hunters is set to continue. However, buying in Spain is not without pitfalls and although the days of properties being sold without proper planning permission are deemed to be over, agents point out that international buyers need to be aware of the buying and selling process.
Figures from Spain’s College of Property Registrars suggest that the percentage of Spanish property sales to foreigners doubled between 2012 and 2011. Some 33% of all property sales in the Alicante province last year were to foreigners showing that it is still very popular with overseas buyers. The figures from the College of Property Registrars also shows that property prices fell 13% in 2012 and from the peak of the property market in 2008 prices are now down by around 30%.
Quote from PropertyCommunity.com : “I read an article that if I buy a home that costs about $200,000 U.S.D. I’ll get automatic Spanish Permanent-Residency which I imagine will lead to Spanish citizenship after a few years even though I’m not European.”
The latest figures from appraisal company Tinsa, suggest a similar drop in prices year on year. Its report says prices are down 12% compared to a year ago although there are considerable regional variations. Home prices are down 21% year on year in Navarre, and down 19% in Catalonia while other areas popular with overseas buyers saw slightly smaller annual price falls with Andalucia and Murcia down 12%. Tinsa says that peak to present, national house prices have fallen 35% and are now back to where they were in 2004.
Figures from the Department of Housing, often regarded by analysts as being overally optimistic, shows that in the first quarter of 2013 year on year house prices were down 8% to €1,519 per square meter. Prices fell the most in the Canaries where they were down 13%, in Catalonia they fell 10.4%, in Madrid they were down 10.2% and in Valencia down 9.9%. At the other end of the scale, prices actually rose by 1% in La Rioja.
The Swiss bank UBS estimate that Spanish house prices have fallen 35 to 38% since the peak of the market and will fall another 8% before bottoming out at an affordable level. BBVA, Spain’s second biggest banks also forecasts that prices are set to fall by another 8% over the next two years. However, they do not expect prices to fall in all areas, as prices have already adjusted enough in some regions.
Kieran Byrne, managing director of English speaking estate agents HomeEspaña which has four offices on the Costa Blanca which is popular with overseas buyers, advises sellers to be realistic about pricing. ‘Your property could be competing with bank repossessions on price and finance availability,’ he explained. In these financially constrained times, the firm also advises sellers to be mindful of any fees and capital gains tax that will be deducted from the proceeds of a sale.