6 reasons why 2018 is the year to buy a property in Spain
Times are a changin’ on the Costa del Sol. The metaphorical property stars have aligned, and the conditions are finally right. 2018 is the year for action. If the thought to buy a property in Spain has ever crossed your mind, the circumstances have never been better than right now. You don’t have to take our word for it, the facts are widely reported and the evidence is all around us. We have summarised everything you need to know to help you take that first step towards that end goal. A new dream home in the sun. Remember that owning your dream home in the sun, does not have to be a dream.
Improved quality and professionalism
New buyers entering the market are finding an amazing number of new projects for sale of a substantially higher quality than in the past. A more sophisticated, experienced and caring developer has arrived. Bucking the pre-crash trend, new developers are keen to give excellent value for money to their purchasers and invest more time and effort into producing properties of a superior quality. This offers significant rewards to the buyer and developer alike. Developers with projects underway are enjoying much more interest from buyers and substantial success in sales as a result. Buyers are finally receiving an increasingly broad choice of top end properties with an incredible range of luxury features, prices and locations. Unlike properties built 15+ years ago, developers now focus on quality rather than quantity. New builds are now characterised by large open-plan living spaces and individually designed floor plans to suit the needs of the international buyer. They are energy efficient, saving you money in both heating and cooling season and will also be hassle free to rent out given the new laws requiring properties to fulfil strict health and safety regulations.
What does this mean for me?
As a buyer- off plan, new developments now provide the most interesting propositions on the market. If you have decided to buy a property in Spain, off-plan now equates to high standards and low risk. Purchasing a property in Spain no longer means investing in property of dubious credentials. Construction standards are moving from strength to strength inline with European legislation. New developments provide key ready, fully installed, luxury living spaces often finished according to your specific selections. The developments are financially secured, guaranteed and risk free. Not only that but the prices quoted for off plans properties offer great value for money compared to completed projects.
Spain’s property market is a far cry from the fragile bubble that existed before the financial crisis of 2008. Increasing government regulation of financial institutions and more effective regulations on banks and lenders has prompted a culture of financial safe practice. Base rates continue to fall in the Eurozone and currently sit at an all-time record low. Mortgage rates in Spain are now cheaper than ever. In addition, lending by the banks increased by 17% in January 2017 against the previous year. This demonstrates that Spanish lenders are keen to lend to non-residents and overseas investors.
What does this mean to me?
Not everyone is fortunate enough to be a cash buyer, but that doesn’t mean you are excluded from having the home of your dreams. As long as your finances are in good shape, and you have a positive credit score there is a now a higher chance of acceptance on a mortgage in Spain. Spanish interest rates are amazingly low, leaving more in your pocket each month to spend on the lifestyle your new home in the sun provides. If you need a mortgage to buy a property in Spain, take advantage of the attractive lending options available now.
Property Prices Increasing
Much like the economy, Spanish property sales are on the rise. After 7 years of falling house prices, the market has now returned to pre-recession levels. Banks are predicting record property sales in the coming year. With confidence back in the market and demand steadily growing once again it’s inevitable that prices will increase. Current prices are still far from their 2006 peak, but sales volumes are back to pre-crises levels. Most distressed properties are now sold. According to data published on March 8, 2017 by the Spanish Instituto Nacional de Estadisticas, the price of private (unsubsidised) housing rose in Spain by 4.7% on average in 2016.
Next year’s anticipated growth will usher in an average national price increase of 6.1%. Affordability will still be the name of the game in 2018, however, because even with the expected price increase the average Spanish home value will still be 27% below 2007’s peak.This data from Anticipa, a leading real estate analyst and provider in Spain also compares next year’s projections with last year’s performance and found a 21% increase in home sales between 2016 and 2018.
There really is only one likely direction from here, and that is up. If budget is a key driving force for purchase then there is no time to waste as the last of the bargain buys and bank repossessions are snapped up.
What does this mean to me?
Buying low is a smart investment. Right now, Spain is very much a buyers market. It makes sense to purchase now while the market is in the early recovery/stability phase of the real estate cycle. This means that you benefit longer term from the increase in value, and don’t find yourself priced out of the market at the later stages of growth. The motivation for buying a home has always been a mix of practicality, lifestyle and financial gain. The Costa del Sol easily ticks the lifestyle box. There are a huge range of property styles to suit a variety of practical needs. Purchasing early in 2018 provides the opportunity for long term financial gain.
Rental Income Potential
After surveying thousands of holiday makers in popular destinations, the INE found that all forms of accommodation are on the rise, but most particularly holiday apartments which rose 23.2% for tourist apartments. This has a direct impact on the strength on the holiday rental market and fantastic opportunity for those wishing to invest in property. Spain is the worlds third most popular holiday destination. Latest figures show that more and more holiday makers are choosing self catering apartments over hotels on the Costa del Sol. Demand is high, with tourism figures on the Costa del Sol breaking all records in 2017. More properties are needed to cater for this demand. Holiday apartment bookings command prices of 400% more than monthly long term rentals over summer months.
The majority of our clients look to buy a property that gives them both an overseas holiday home as well as highest possible return on their investment. There can be conflict between these two goals, but our experienced real estate managers deal with these scenarios on an everyday basis, and can present you properties which cover both aspects.
Thanks to the unique micro-climate that the Costa del Sol offers, there are 2 full rental seasons spanning the year. During the summer, absolutely any property can be rented, but the key to renting year round is capturing the golf market. The Costa del Sol boasts more than 80 golf courses, with the world renowned golf valley spanning the coast between Marbella and Estepona. This zone provides the key to renting for more than 25 weeks per year.
What does this mean to me?
An average 2 bedroom/2 bathroom apartment purchased for €250,000 on the Costa Del Sol can bring in a rental income of approx. €20,000 per year (based on 26 weeks occupancy.) With this income potential the buy to let is an option should not be taken lightly. If you are concerned about taking on the additional cost of a 2nd home, holiday rentals can provide a massive contribution towards your own overseas lifestyle. It also easily covers the cost of finance, with mortgage rates at an all time low. Not only that, but an investment in a market heading upwards offers greater rewards compared to funds kept in low interest rate savings account.
Positive economic climate
The outlook in Spain is looking sunny in more ways than one. As of April 2017, Spain has shown 14 consecutive quarters of growth. The economy has recovered well since the government implemented a series of reforms including overhauling the banking system and reforming the labour market. Growth remains much higher than that in the Eurozone overall, thanks to tourism and exports thriving. Unemployment has fallen from a 27% high in 2013 to 18% in April 2017, and likely to drop during the summer boom months. Positive moves in employment means higher gross disposable household income. The national budget deficit is reducing and GDP is positive. Major international funds are investing hundreds of millions of Euros into the purchase of development land on the Costa del Sol. With historically low-interest rates, investment in land and development promises investment yields far greater than that obtainable elsewhere.
What does this mean for me?
After a turbulent few years, Spain is emerging from the global recession with strength and stability. Property prices are more realistic and growing steadily and modestly. Spain has learnt a great deal from the boom and bust years and is making more cautious moves to avoid a repeat performance. The vote of confidence represented by international funds and developers in the Marbella area serves not only to ensure well-planned, higher quality properties but also to attract further investors and individual buyers, generating market confidence all around. The economy is demonstrating all the right signs of a stable base in which to buy a property in Spain.
Beat the winter blues!
With this years holidays very much at the forefront of mind, there is no better time to get away from the Northern European winters and head South! Spain has ranked as the worlds safest, cleanest and cheapest holiday destination so treat yourself to a break from it all, while familiarising yourself with whats on offer property wise. The winter weather is glorious on the coast and this brings visitors and potential property purchasers in abundance. Those with their feet on the ground and finger on the pulse take the first pickings of the quality new properties as soon as they are released.
What does this mean for me?
As the old saying goes, you’ve got to be in it to win it. Commitments may mean you are not in a position to spend countless days or weeks on location. Nevertheless, with eyes and ears on the ground in the form of a dedicated property agent, you can be alerted to relevant properties that suit your needs and budget. Once you have a selection of hot properties this becomes the ideal opportunity to treat yourself to a holiday in the sun and take your first steps to buy a property in Spain. Find out about our personalised viewing trips, and make 2018 a year to remember!
If think 2018 is the year for you, you are absolutely right. With the economy improving and quality standards better than ever, property prices are slowly starting to rise. Make 2018 a year to remember and take your very first step towards finding a home in paradise. Contact us today