buyabetterhome.co.uk

img

Latest Articles

 

 

 

 

sources

The Times (Bricks & Mortar)

telegraph.co.uk

spanishpropertyinsight.com

(Images courtesy of timesonline.co.uk

and spanishpropertyinsight.com)

 

 

The Spanish Property Crash

 

img

 

If you thought that things were bad at home, spare a thought for the Spanish property market. After a decade of boom, in which house prices doubled, the latest figures make depressing reading for the tens of thousands of Britons who have bought property there. The market shrunk by a massive 39% in March alone and sales by developers are down by 60% in comparison to last year. Combined value of sales has plummeted from £1 billion to less than £240 million.
What makes things even worse in Spain is the monumental glut of new homes that have been built at a rate of about 600,000 per year since 2002. That’s about three times the number of properties built in Britain over the same period. At the height of the boom in 2005, Spain had over a quarter of total new builds across the EU. There are now an estimated two million unsold properties in the country and many estate agents are going to the wall. Analysts are warning that many investors will be unable to sell their properties and will find themselves in negative equity. For some it could be even worse; those who have bought off-plan from smaller developers (that could go into liquidation) may well lose their money.

 

 

Mark Stucklin from Spanish Property Insight paints a grim picture: “The latest figures are a disaster” he says and then goes on to state: “Even those who bought desirable properties in Spain as early as 2000 could see the values of their assets shrink. Those who can afford to ride out the downturn should not consider selling at the moment if they can help it.”

 

During the past decade vast tracts of the Spanish coastline have been remorselessly developed in a construction boom that has made the nation one of the fastest growing economies in Europe.  One such example of this is Marina d’Or (pictured below), a resort on the Costa Azahar, 60 miles north of Valencia.  A maze of densely built blocks of flats, it has been relentlessly marketed to British buyers as the biggest holiday resort in Europe.  It has plans for three golf courses 40,000 more properties and a theme park.  None of which seem destined to become a reality as the resort’s plans are now bogged down in planning problems and the market has turned against it.  In addition to the owner being under investigation for corruption, sales have fallen by 60% and the developer has laid off 1,000 staff.

 

 

img

 

So what does this mean for people still desiring to buy a property in Spain? After all it is still one of the most attractive countries and climates in the world and there are lots of Britons who would be interested in owning a property there, given the right set of circumstances. The best advice seems to be to stick to quality developments and avoid densely built blocks of apartments in mediocre locations. Attractive developments in good locations should still be a good medium to long term investment, emerging strongly when the market picks up again in a few years time.