Spanish Property Prices Are Still Falling, but the Costas Are Perennially Popular

Property prices in Spain are still declining, but the Costas have always been popular with international buyers and prices in these regions are seeing lower price falls.

According to Tinsa, who is one of Spain's leading appraisal companies, prices have fallen most in regional capitals, and have declined by an average of 8.1% to the year ending in October.

Prices in metropolitan areas have declined by 7.5%. However prices on the Mediterranean coast have fallen by 6.9%, while the Canary Islands and the Balearic Islands have seen price declines of just 3.4%. Property prices have fallen by 30% on the coast and by 20.5% in the islands.

Data from the Department of Housing paints a slightly different picture as it shows property prices fell by an average of 5.6% to the year ending in the third quarter.

This data shows prices having fallen by 9.1% in Costa Dorada, by 8.5% in Madrid and by 8.3% in Murcia. Prices increased in Tenerife and Extremadura by 1.7% and 1% respectively, but data from the Department of Housing is usually regarded as being pretty unreliable.

However the declining prices are attracting overseas buyers, with Russians proving to be the most ardent purchasers followed by the Scandinavians, Dutch and Belgian buyers. One of the most popular regions is Murcia due to the new Paramount theme park, the new international airport at Corvera and the prospect of the AVE train network extension.

Work on the new theme park is due to begin in March next year, and the new international airport will see a number of scheduled services next spring. Work on the train network extension is also expected to begin next spring as the European commission has deemed the link to be a priority, and as such it will receive financial backing.

EasyJet Gives Boost to Holiday Homeowners in Spain

Low-cost airline easyJet has just announced a new programme of 20 new flights to Europe from Southend International airport in Essex, with five of those flights going to the Spanish Costas. The new flight schedule is due to take effect in April 2012, and fares could cost as little as £26.

These flights are bound to be hugely popular as the routes include Malaga, Majorca and Alicante, and should be a great boost to anyone who owns a holiday home in these areas.

Having cheap and easy access to holiday property is essential, and the estimated 800,000 people who will fly into Spain from Southend will be looking for somewhere to stay which is great news for anyone choosing to rent out their property, as well as those looking for somewhere to buy.

Sales of property in Murcia have already started to increase, albeit slowly due to the Paramount branded theme park which is due to be built in the region. It's certainly a great time to buy as property is at its cheapest for a decade, and local estate agents are hopeful that prices have finally bottomed out.

The new theme park is due to open in 2014, and has been predicted to attract up to 3,000,000 tourists annually. Although this may have a positive impact on property prices closer to the time of opening, as yet property prices are not rising. It looks as if some people are waiting for construction work to begin before taking the plunge to buy a holiday home here.

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Sellers in Spain told to set realistic prices to achieve sales

According to a property expert in Spain, people need to be more realistic when pricing their property if they really want to sell. José Luis Jimeno, who is the managing director of Noteges, a property education website feels that many owners of Spanish property have failed to grasp how far prices have fallen here, and he thinks that some sellers may need to drop their price by as much as 50% in order to attract a buyer.

Anyone trying to sell property on the coast may need to cut their price even further as there is a huge oversupply of residential properties in these areas. Unfortunately Jimeno also thinks that prices could have further to fall, and although he understands that this isn't a good time to sell, those who have no alternative need to do everything possible to attract a buyer.

Latest reports from the Spanish property market index confirm that this gloomy view as they reveal property prices in Spain fell in June compared to May, and the largest decreases were seen on the Mediterranean coast where prices dropped by 8.7%. The Balearics fared a little better as prices fell by 7%, but prices in the major cities fell by 7.3%.

On average Spanish property prices fell by 6.6% in June when compared to June 2010. The number of sales is also dropping as the National Statistics Institute in Madrid showed that numbers declined by 18.3% in May compared to May 2010, and that the number of transactions had fallen for three consecutive months.

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Spanish theme park is set to open sooner

The new Paramount theme park in Murcia is apparently scheduled to open a year earlier than originally planned. It had been scheduled to open in 2015 but construction plans have been brought forward due to increased interest from foreign investors and the anticipated opening of the new international airport in Murcia. The completion of the airport which will have capacity for 3 million passengers a year, including many who currently use the airport at Alicante was vital in securing this theme park. The theme park will be huge as it will include several Disney type worlds and six, four and five-star resorts as well is a 15,000 seat auditorium.

It's now expected that work will begin early in 2012 and will be completed by 2014. The new airport is due to open in spring 2012, and should ensure that Murcia is well and truly on the tourist map. Estate agents are already experiencing increased interest from those seeking to buy property due to the enhanced rental opportunities which will be available in the near future.

Foreign investors who have taken an interest in the theme park include the Russian billionaire and casino operator Oleg Boyko, who visited Murcia earlier on in the year to assess the areas potential. Another €1.3 billion are needed to complete the Paramount theme park, but there are to be several international roadshows in the UK, the UAE and China later on in the year, and it's anticipated that these should raise the necessary funds to complete the park and the attached retail complexes. The completion of this project will also coincide with a new high-speed AVE rail link to Murcia.

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Mallorca is Beating the Mainland

Buyers are choosing to look at property on Mallorca rather than the mainland with the visitor numbers and enquiries having steadily increased over the last year.

The sales and marketing director of Taylor Wimpy de Espana, Ignacio Osle believes this is because the island has so much to offer with beautiful architecture, a wide range of sport and leisure activities and wonderful beaches. The island's capital, Palma de Mallorca was recently voted one of the five best towns for travel and tourism in 2010 by Exceltur.

The airport at Palma de Mallorca is the third busiest in Spain and handles more than 21 million passengers, and the airlines have been quick to respond to this increased demand with new flights beginning this year.

Ryanair will begin operating flights from Birmingham while EasyJet will be flying from Manchester. Jet2.com is due to start flying from Glasgow and Eastern Airways will be flying weekly from London Oxford airport from this June.

Mallorca is also becoming more popular with cruise ships and received over 500 last year while a 28 million Euro designated birth is currently under construction and will be able to accommodate up to 5 larger ships.

The Balearics as a whole have seen 145% increases in property sales last year when compared to 2009. Average asking prices in Mallorca are the second highest Spain at €428,300, although overall, asking prices have dropped over the last two years as the market has realigned itself.

Taylor Wimpey has two new developments on the island, one of which is to the north of the island eight few minutes from a Pollensa beach while the other is to the south-west of the island at Las Altos del Golf in Andratx.

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Investment in Spanish Property Expected to Pick Up in 2011

Spain’s property market is expected to draw investors this year and perhaps even the next couple of years due to predictions that its economy will experience more stable growth.

CEO Pere Vinola stated to Reuters last Wednesday that there would be significant opportunities in Spain because it will be easier to rotate portfolios.

Also reported was that Spain’s savings banks have had a lot of change and have consolidated to more than half their numbers to clean up their balance sheets.

The ailing property market has had its negative effect on banks and the economy as a while, but experts believe that the market will be beginning to pick up this year.

Experts also believe that the Spanish property market will recover quicker from its debt crisis than the wider economy because of low rent prices and the demand for properties increasing. Spain is in strong demand for tourism and people looking for vacation property, retirement homes, or second home.

Rents are low right now and may even continue to see slight decrease for awhile but it is predicted that an increase will occur this year, according to Thomas Beyerle, IVG’s head of corporate social responsibility and research.

Developers are hoping that the positive reports are true, as plans to push forward with construction of properties move forward. According to Taylor Wimpey de Espana, a large developer in Spain, 25 percent more properties sold last year, in 2010, than the previous year. This is good news for developers, as the percentage of completed and built property stock being sold comes in at nearly 100 percent.

A good example of the kind of investment property that will draw investors: Azure Overseas is currently marketing 2 bedroom 2 bathroom apartments in Costa Calida at just £121k. The bank repossessed properties are available with 100% finance and an interest rate of just 2.5%.

Spanish Developers Lure Buyers with Great Deals

Despite the fact that Spanish property sales have reportedly been improving for the last several months, developers continue to take seemingly extreme measures to lure buyers.

Costa Almeria development Balcones de Palomares is a good example just added to the Azure Overseas portfolio. Anyone not bowled over by the price; just £68,469 for a key-ready 2 bedroom apartment in a quiet and secure development near the coast and with white good included, probably will when they realise that 100% mortgages are being offered with properties in the development.

Most buyers of Spanish property in the last 2 years have been cash buyers, equally because wealthy individuals made up the majority of buyers, and because mortgages were scarcely available. Slowly but surely buyers who need mortgages (low budget buyers) are returning, and thankfully more mortgages are coming up as well.

The price is the most impressive thing here though, well designed, quality 2 bedroom apartments in a nice development with a communal pool in Andalusia, Spain for not much more than you would pay in Turkey is truly a bargain.

Low prices like this in an established market like Spain is always good news for investors; the low price means you can set your rental rates lower and sill make a strong yield. Not to mention capital growth potential, in the fact that Spain will recover, and when it does these units will quickly double in value, then go to 150% of their current price.

Spanish Property Benefiting from Resurgence of Low Budget Buyers?

When it comes to overseas property purchases reliant on mortgages, the market is very much dominated by just three countries. That is, according to the latest data from Conti, which said that of all mortgage applications received this year 85% have been for just 3 countries, namely France, Spain and Turkey.

With 43%, French property has been by far the most popular with the British buyers seeking mortgages through Conti, Spain takes second place with 24%, and Turkey third with 18%.

Conti has previously told us that France is currently the dominant force among British buyers looking for mortgages on overseas property, people see that the years of restraint in the French banking and mortgage sector is now paying dividends for France, with low interest rates and stable liquidity.

But isn't this significant news for the Spanish property market. We all know how the Spanish market was devastated by the exodus of British buyers because of the financial crisis, which compounded the emerging over supply problems and at the same time caused the latter problem to worsen to the nth factor because developments started had to be finished (where possible).

Reports began turning positive last year, with developers discounting prices between 25% and 40% and cash rich buyers snapping up the bargains. However, as I said this was predominantly cash buyers, and predominantly wealthy buyers buying in prime areas like Marbella etc.

The data from Conti indicates that Spain could be benefiting from the resurgence of low budget buyers seeking mortgages, which we know from other sources is happening across the industry. This should spread demand out into other areas of the country.

Speaking of bargain properties in Spain, Azure Overseas has just added the Alcazaba Hills Development, offering 2 bed 2 bath apartments, in a luxury resort near the Costa del Sol's ever-popular Estepona from £191,363. The development is located just a short drive from Marbella and Gibraltar, making the prices even more incredible.

Spanish Property Sales Bouncing at Bottom as Government Denial Starts to Crumble

According to Spain's National Institute of Statistics, sales of Spanish property were 48% lower last year, than in 2007, at just 372.000 sales excluding social housing. This represented a year on year decline of 27%.

That said, according to their data, month-on-month transaction numbers have been hovering around the 30,000 mark since November 2008, which is less than half the sales recorded month-on-month at the beginning of 2007.

The INE data also showed that sales of new developments outstripped resales throughout much of 2009 but have more recently started to reach similar levels. This is likely because of the high prevalence (well dominance is a more apt word) of lifestyle buyers during the last year, and the increasing number of investment buyers now looking to snap up bargains.

The Spanish property market and economy have their own set of problems, not least because the economy was built solely on the strength of the property boom, as Spain saw more construction starts than Germany, Italy and France put together.

Spain seems to have remained in denial far longer than most; and rather than admitting the problems so that the populous can learn to deal with the tough measures necessary to fix it, the Spanish government has continued to parade around price indexes that show only slight decreases in prices, and other positives, without any negatives.

According to the government Spanish house price decline has yet to reach double digits over a year, and even the index ran by Tinsa, regarded as most accurate put the price decline at just 5.5% in the year ending January 2009. In reality developers and agents have only been selling at a discount of 25% or more. The 1.8% increase in mortgage approvals recorded by the INE in November is another example; 1.8% of very little is not a great deal.

This has now changed, analysts believe it is down to the Greece debt debacle, and in just the last 2 weeks, the government has started to come to grips with the economy's problems. It has announced some serious plans to tackle public spending, like cutting pensions over the medium term and cutting short term deficits by reducing infrastructure and civil service expenses.

The next steps needed are things like educational reforms to give Spain more strings to its economic bow than tourism and construction, as well as taking steps to eliminate the harmful split between permanent and temporary workers, which destroys any incentive for professional development.

Spain is in the fortunate position of being able to finance these reforms relatively easily, unlike Italy where the reforms needed to return to growth will cause substantial problems for the population and therefore the government. Spain has among the lowest levels of public debt in Europe, and Moody's just reaffirmed its triple AAA investment rating.

Outlook on Spanish Property Market Improving

The outlook for the Spanish property market has been improving in recent months. The rate of decline in house prices slowed in the third quarter, as it had in the second according to new data from the Global Property Guide.

Spanish house prices fell by 7% between Q3 2008 and Q3 2009 according to the GPG index of global house prices. This is slower than the 8.3% contraction between Q2 2008 and Q2 2009 recorded by the Knight Frank estate agency in its index of global house prices.

The quarter on quarter decline in Q3 was just 0.49% according to the GPG index, which is again a lot slower than the 1.9% quarterly decline recorded by Knight Frank in Q2. Based on this slowing in Q3 it is possible that quarterly price growth will run into positive territory in the 4th quarter.

Given the state of the Spanish economy it is entirely plausible that the positive data is because of the increased demand from foreign buyers, which has been seen since April.

New data from mortgagesolutions.com has said that Spanish banks are surprisingly willing to lend to overseas buyers. Overseas mortgage firm Conti has further said that 22% of its enquiries for overseas property mortgages have been for Spanish property purchases.

Recently overseas property portal Property Abroad.com have put Spanish property as second most popular with those searching for property on the site in October. Spain has held second place in the portal's top 10 chart for several months, since being knocked out of 1st place by the popularity of America since May. The Move Channel and Primelocation also put Spain as second most popular in recent monthly charts.

Spain has also been noted for its distressed and repossessed property opportunities. According to overseas property expert Liam Bailey, of sector specialist copywriting firm Write About Property, these opportunities have the potential to be excellent investments, if one chooses carefully, he said in a recent article:

"You simply need to consider who is going to buy the property from you when it is time to sell. If you are buying in one of the areas most popular with expats, and plan your exit strategy based on expatriate buyers, then you must avoid the most over-developed areas; sunbathing is not a spectator sport, and most people will want a half-decent view on at least one side of their holiday properties.

"But if you choose carefully you should be able to resell a property you buy now for at least a 30% profit in 2-4 years."

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Fractional Ownership Property - Fool-Proof Entry Level Investment

Most of you will have heard the term fractional ownership by now, it has increased massively in popularity since the credit crunch increased risk aversion in the field of overseas property investment.

Though there are different set-ups, fractional ownership is -- exactly what it sounds like -- buying a fraction of a property in conjunction with other fractional owners, each buying and owning an equal share with equal rights over usage and equal shares of any rental income.

It is an excellent entry level investment, because the outlay is minimised, and while the returns and split, so is the potential risks involved.

You can look at it like this, what you are paying out is cheap for a lifetime of holidays in top-notch accommodation, that way any returns are a bonus. For example:

I have just found a fractional ownership development on sale at azureoverseas.com, £16,000 buys you an 1/8th share of a 1 bedroom bungalow in a fully equipped Costa Caleta resort. The package includes 6 weeks of usage throughout the year for each of the owners.

For the six weeks holiday for 4 people in the level of (5 star) accommodation that it is, you would be paying at least £3,000 each year. Thus after 6 years of usage the property has paid for itself and any returns you have made during that time and from then on are a bonus.

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