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Is now the right time to purchase Spanish property?

Friday 24th February 2017

Written by Roy Weatherby, The Overseas Investor

Spain has been riding some tough economic times in recent years. The whole economy was hit hard while the property market suffered considerably – it was a testing time for the country but things are on the up again.
The banks are in possession of repossessed property and prices still lag some way behind what they were in their heyday, however, the economy is picking up.
Now is a good time to purchase because the market is showing encouraging, early stages of recovery following 8 years of barely staying afloat. There are some areas that have recovered remarkably well such as Barcelona and Ibiza and so, property here is no longer considered a bargain.
The crisis also lead to some positive outcomes because the sector has become more efficient and professional while developments are now built with high standards and quality in mind. In the same way as other countries in Europe, Spain seems to have entered a stable period as its government is settled, the economy is growing and the streets are safer than they have been for decades. This all points at 2017 becoming a great time to purchase property in Spain.
As we look back at 2016, we can see that they year has been a real success, in particular the property market. During 2014 and 2015, the market collapsed but now, moderate price rises are being seen in many of the key regions in Spain. Through 2016, the recovery continued and many of the price increases have been seen across many different areas and now just limited to the likes of Barcelona and Madrid. Therefore, an economy that is growing, low finance costs and excellent rental returns along with capital appreciation will see sales continue to rise throughout 2017.
Buyers are now attracted by the low interest rates, increasing prices and a real indication that the economy is on the way up.
The Euribor is the rate that is used to calculate mortgage repayments in Spain and over the last 12 months, this has been below zero. This has enabled homeowners to benefit from low interest rates and fixed rate mortgages. Usually, these mortgages would only make up around 10% of all mortgages but over the last 12 months the number has grown to almost 54%.
Data for November last year, shows that mortgages had grown by 32% year on year with sales increasing by 14.5% during the first eleven months of the year. The low interest rates, increasing prices and hints that the economy is showing promising signs of recovery are helping to lure buyers back to Spain. Prices are still attractively low and as more mortgages are being approved, now is surely a great time to purchase property in Spain.
In contrast to this, Turkey was the worst place to purchase for first-time buyers as the gulf between wages and property prices has grown considerably.
For more information or to browse a range of Spanish property investments, please contact Hopwood House.

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