As a real estate agent in Spain, we have a good idea of the developments and opportunities in the real estate market. Many of our clients buy a property in Spain primarily with emotional arguments. They would like to spend more time in Spain and enjoy life more. Sometimes this is with a view to their retirement, but more and more people already opt for a second or even permanent home in Spain at an earlier stage. The enjoyment of a warm climate, plenty of blue sky in winter, the liveliness of the Spanish evenings and escaping the hectic UK are common sayings. So people often buy primarily for their own enjoyment, with some occasionally renting out their homes to cover costs.
Owning your own property in Spain therefore has many advantages for people who want to enjoy life, but there are also various investment opportunities. Anyone who has a savings account knows that there is little return to be achieved here at this time and with larger amounts the interest can even become negative at some banks. You can of course invest in shares, but many international stock markets are at record highs, while many companies have yet to process the real impact of the corona pandemic.
In recent years, the UK real estate market has become an attractive alternative for many investors. With cheap loans and a growing housing shortage, buying a home for rent quickly turned out to be an attractive investment. However, now that UK property prices are stabalising the expected return is decreasing. An eventual future increase in value will also be more limited with a purchase at the current price level.
The situation is very different in Spain. In 2007, the real estate bubble burst in Spain after 10 years of massive construction and price increases. In the years that followed, construction companies and loans were considerably restructured and mortgage requirements have become much stricter. Banks are critical of the buyer's income and part of the purchase has to be paid from their own resources. Builders must also show solid figures and finance part of the project themselves, so that there is currently no surplus of new construction projects. In addition, the Spanish economy has grown faster in recent years than in many other European countries, which has increased the purchasing power of the average Spaniard. As a result of all these positive developments, Spanish house prices have returned to an upward trend since 2014. Despite this, the price level in many regions has not yet returned to the level of 2007.
This growth of the Spanish economy has suddenly come to a halt due to the pandemic, with consequences for property prices. The tourism sector, one of the most important sectors in the Spanish economy, is currently at a standstill. It is hardly possible to rent out in the tourist areas and also in the Spanish cities, the rental through Airbnb comes to a halt. Many holiday tenants temporarily switch to long-term rental. At the same time, corona has increased unemployment in various sectors and it is currently difficult for many Spaniards to get a mortgage. This has led to a slight fall in prices in the cities and often to a somewhat higher fall in the tourist areas. So this can be an interesting time to buy real estate on the Spanish costas. It can be expected that tourism will soon resume when people can travel again, and the economy will also quickly recover once a large part of the population is vaccinated.
Moreover, we notice that the interest in owning a property in Spain is increasing. Instead of being in a hotel with many other tourists, many people like to be able to go on holiday in their own environment. The advantage of Spain is that you can also get here by car. Within Spain, too, interest in a property on the coast is increasing now that teleworking has become normal. So once the corona crisis is over, we expect an increasing demand for houses and apartments on the Costa´s, which will lead to price increases in the long term.
In short, if you are looking for an interesting investment, a property in Spain is a good alternative to a savings account or a second home in the UK. Moreover, you can also enjoy a place under the sun when you are not renting out your property as an investment!
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