The Spanish property market is now coming to the end of its fifth year in recession, and as with all previous slumps (the last one occurred in the early nineties), there comes a time when property prices stop falling, the market stabilises, and a certain confidence returns attracting once more a desire to purchase a property in Spain.
Upon reading the endless statistics from many official and unofficial sources it would appear that prices in Spain have fallen, on average around 40% across the board. If you listen to the banks in Spain, the reduction is even greater, perhaps as much as up to 60% when you buy one of their re-possessed properties. And just recently there have been reports that the Spanish banks are up to their old tricks in offering 120% mortgages to buyers of their properties in order to cover al the purchasing expenses.
The latest figures on property prices in Spain have just been published by Idealista.com, one of Spain’s foremost portals. Although scanning values across the country continue to show a decline in prices, there are now some signs of a turn-around in the last quarter of this year in certain towns where prices have actually increased:
In the province of Málaga: Benalmádena up 4.4%, Nerja up 1.5%, Ojén up 1.3% and Marbella up 0.1%. Other towns in Spain also show increases, particularly in coastal regions and on the Canary Islands.
It’s a very small beginning but the tide turns in all cycles. Will 2013 be the year that the Spanish property market begins to steady itself, which in turn will be news in itself, and begin to attract the buyers as before?
Increase in VAT
As from January 1st the VAT on the purchase of a new property rises from the present 4% to 10%. As in the last quarter of 2011 when property sales increased due to the fact that the VAT would increase 1st January of this year (which was extended), there are already signs to indicate the same trend will continue in the last quarter of this year. One of the problems that Spain has at present is the huge amount of unsold stock of new property which is unlikely to reduce to any great extend next year with the increase in VAT. There are rumours that the Government, after reviewing figures when published for the last quarter, may decide to revise the law once again and decrease the VAT to a level to attract buyers for this stock pile, much of which now belongs to the “Bad” bank, recently set up in Spain.
This is perhaps a key factor to the forces controlling prices in Spain, so long as there is such a quantity of unsold property available, especially from the banks, general resale property prices cannot rise by any significant amount.
Estate Agents in Spain
The recession has brought about the demise of thousands of property agents in Spain. As a result, their now exist a hard-core of professional estate agents who have been able to ride the storm and are best placed to offer the best possible advice to new purchasers. This is positive for the sector, as before there were simply too many agents, and secondly, too many with insufficient experience to provide professional advice for what is the biggest investment that most people make in their lives. This confidence, between client and agent, is another key factor in the present scenario and will help in revitalising and assisting the market… perhaps in 2013?
- House prices in Spain fall by 15.2% in the third quarter, the biggest drop since 2007.
- Buy a house in Spain and obtain a residence permit.
- Average house price in Spain fell by 16.5% in August, according to the Notary Association.
- Spanish Property Prices have fallen 40% since the Peak.
- New rates of VAT in Spain to take effect as from 1st September 2012.