A reduction in tax paid on new properties and incredibly low prices are set to boost the Spanish property market, according to real estate professionals.
The Spanish Government has decided to try to create more demand for new properties by cutting IVA (VAT) from 8% to 4% thus saving a property purchaser a sizeable €8,000 on a €200,000 purchase.
The 50% reduction in VAT is applicable until 31st December 2011 and has been widely welcomed by the property industry. Nick Stuart, managing director of Spanish Hot Properties, located in Benahavis on the Costa del Sol, said it will help the country’s struggling real estate market.
‘A reduction in VAT will hopefully spark some movement in the market as new build properties become more affordable,’ he said.
According to Jose Blanco, Minister of Development, the measure aims to revive the construction sector and contribute to creating employment in the sector most affected by the recession.
Agents point out that prices are at bargain rates at present. Even beachside property which has always commanded a premium due to its desirability and finite supply, can be found for less than €100,000.
In Murcia, for example, €99,000 euros will buy you a two bed property within five minutes’ walk of Blue Flag beach. Such properties represent an excellent investment according to Chris Mercer, founder of Mazarron based estate agent Mercers.
‘The Ministry of Tourism revealed that 83% of foreign visitors came to Spain in 2010 for a sun and beach holiday and for holiday home hunters the beach is often the focus of their search. How close is it, how busy is it, how clean is it? In the Bay of Mazarron alone we have three Blue Flag beaches, an acknowledgment of water quality, safety, services and environmental management, and the sands stretch for a total of 35 kilometers,’ he explained.
‘Throw in a modern 210 berth pleasure marina inaugurated in 2009 and plenty of waterfront restaurants and shops and it really is a desirable location. It is incredible that we can offer apartments for less than €100,000, that’s around £87,000,’ he added.
Undoubtedly the current economic climate has helped to nudge prices downwards, even in these coveted beachfront locations. Leaving Spain’s less than reliable official price indexes to one side, Mercers themselves can cite some interesting discounted prices.
‘We’re currently marketing a two bedroom two bathroom apartment in a central location in Puerto de Mazarron. The home is fully furnished, has allocated underground parking, a communal swimming pool and is within ten minutes’ walk of bars, restaurants and beaches. In 2008 this property would have sold for around €150,000. Today we’ve got it for sale at €99,500, that’s a 34% discount in three years. A bargain in anyone’s book. As an added bonus, these properties fetch a premium on the rental market due to their beachside location,’ explained Mercer.