We all know what HAS happened to property prices on the Costa Blanca and property prices in the rest of Spain – they have skyrocketed upwards just like most areas of the UK. In fact this is no coincidence because the Spanish property market and that of the UK (in my opinion) are very much dependant on each other (for now at least).
The BIG question is what will house prices in Spain do now? Will house prices in Spain go up or down?
The true answer is that no one knows. As much as so-called experts think they know – they don’t. They have frequently been totally wrong so you will just have to analyse your own circumstances and go with your gut instinct.
When considering buying property in Spain question why you are buying. If it is for investment then the outlook for house prices in Spain is crucial to you – if however you are buying a property in Spain as you want to live in Spain, then long-term, property prices and house prices in Spain are not important.
WHAT’S HAPPENING WITH PROPERTY PRICES IN SPAIN?
This is only my opinion but the word on the street is that it is flat and buyers are scarce. You either take the view that prices will drop or that this is a great time to buy as sellers WILL take offers if they are really keen to sell.
I’m frequently hearing stories such as villa on for €535,000 – sold for €385,000 or villa on for €620,000, went for €580,000.
I’ve seen many places on the market for a year now although houses priced much more sensibly have sold. Much depends on the seller’s circumstances and their appreciation of how the market works.
So how did we get from boom to, well not bust, but let’s call it reality check?
* Mainly it seems the British who are the main buyers (the Germans used to be 10 years ago before they went into recession) slowly ran out of credit – they had already remortgaged to the hilt and maxed out on their credit cards. With prices hitting insane levels they just couldn’t afford to keep pushing them up any further.
* As prices leveled out in the UK, people naturally became less enthusiastic about buying abroad.
* As prices got so high people looking to buy for investment backed out as yields got so low i.e. the rents would not cover the mortgage payments or it made sense to park their money in the bank and get more in interest payments.
* The TV programmers realising they had overdone the move abroad ones, suddenly began the backlash programmes with new features on the nightmares that people had endured. Buildings collapsed, land was grabbed, criminal gangs were on the rampage – and that was just the mild ones!
* As always happens in a property boom, the supply exceeds the demand – there are so many new villas being build, so many blocks of apartments, that there are not enough buyers to fill them all.
WHY DID PROPERTY PRICES ON THE COSTA BLANCA GO SO CRAZY?
Some of the main reasons property prices on the Costa Blanca have gone so crazy (generally acknowledged as doubling in the last four years) are:
* As the British have seen their house prices soar, they have remortgaged heavily and taken some of the equity out of their main home in order to buy a second home in Spain.
* The Spanish have seen this influx of money and have raised prices – people have paid the higher prices – so the Spanish have raised them more – again they have been met and so the cycle keeps on going until finally buyers are exhausted and stop buying. Are we at that point – well see below.
* People retiring have sold their main home in the UK and have increasingly had larger and larger sums as the UK prices kept increasing. People in Spain see this and ask for more (and get it).
* The Costa Blanca is a fantastic place and so of course it is desirable. It is said to become the California of Europe and as people have cottoned onto its great potential they have come here in droves, driving the prices up.
* The Costa del Sol, seen as the place to be got ahead of itself and suddenly the Costa Blanca property seemed cheap in comparison. The Costa Blanca has much better beaches and a better climate especially as it is not as unbearably hot in the height of summer. The Costa Blanca is not so overdeveloped.
* Low interest rates have meant a second home on the Costa Blanca has become much more affordable.
* The development of Europe has meant that people are more comfortable with the thought of buying abroad and the European laws on paper offer more protection (although try telling that to people affected by the Land Grab Law in the province of Valencia!).
* The emergence of all those low-cost, no-frills airlines has made travel to the Costa Blanca more affordable and accessible. Now people can commute from Spain to England!
*Keeping-up-with-the-Jones’s factor. Lets face it – if your neighbour has just got a weekend bolt hole in sunny Spain and you have just endured another rain-soaked weekend then it’s odds on you will start to want one too!
* All those TV programmes such as A Place In The Sun have made buying a second home on the Costa Blanca seem as simple as doing the weekly shopping.
* To us British the comparison in property prices has been a no-brainer. A bigger house, more land for half the price of that in England has seemed a bargain. Of course now that prices have gone up the difference is not so obvious.
Page Summary: This page investigates property prices in Spain, including house prices in Spain, apartment prices and villa property prices.
Is the property market set to continue upwards or is a correction in house prices and property prices in Spain due?
Property Section Index:
- Buy a B&B (Costa Blanca)
- Mortgages in Spain
- Property Prices
- Free Inspection Trips
- Renting Long-Term
- Repossessed Property
- House Surveyors
- Property Tax
- Sell Your House in Spain
- Buyers Guide – Costa Blanca
- Buyers Guide – Spain
Popular Related Reading…