12 Reasons Why Now is the Time to Buy in Spain

Dream property Marbella2014 has seen lots of positive news surrounding Spanish property with improvements in Spain’s general economic outlook, increasing sales to foreigners and signs that prices may now be at the bottom and already starting to rise in certain locations. This has led to a mood of optimism in the Spanish real estate sector with Solvia, the estate agency of Banco Sabadell, going as far as to raise the prices on 450 of its properties and its likely other banks will follow.

Here we list 12 factors why it might be the right time to buy in Spain:

1. Attractive prices: Prices have dropped around 40% on average and in some areas up to 70%.. The low prices decrease the risk when buying a property as potential downside is low to non-existent in most cases.

2. Choice: Oversupply has been one of the main factors forcing down property prices in Spain but it does have an advantage in that it provides a potential buyer with ample choice when choosing a property, with homes of all types available in all locations.

3. Positive economic data: Many economists are now pointing to signs that Spain’s economy is on the road to recovery with the Spanish stock market making impressive gains, unemployment dropping and government tax revenue increasing. This eases concerns of instability and insecurity.

4. Buyers’ market: Buyers are in a strong position in today’s market and can use this to bargain for lower prices although signs of prices having bottomed out could mean that this will not be the case for much longer.

5. Banks lending again: It is becoming easier to obtain a mortgage in Spain as banks regain their willingness to lend to consumers. High interest rates have been one of the factors driving customers away from mortgages over the past few years but new deals being advertised by banks include much more attractive rates of interest.

6. Rental yields: Annual rental yields are currently at an average of 4.7% and are rising. Many investors are starting to look at buy-to-let as a better investment than other financial products.

7. Bank bargains: Many banks have slashed prices aggressively to sell their real estate assets with discounts of up to 70% available. This situation will stay the same in the short term with banks still holding vast portfolios but will not last forever.

8. Cheaper to buy than rent: At the moment the average monthly payment of interest on mortgages is around ?250 which is less than the average cost per month of renting.

9. Entry of investment funds: This provides a sign of confidence returning to the Spanish real estate sector as investment funds have started buying up the country’s real estate assets and taking advantage of the current low prices. This is leading many individuals to plan on following these funds in securing a bargain property.

10. Benefits of ownership: Many people still see property ownership as preferable to renting. Buying a property is an investment in a saleable asset whereas rental is not and many see greater security in ownership for themselves and their family.

11. Prices already increasing in certain areas, especially prime locations such as Marbella, Puerto Banus, Mallorca and Ibiza.

12. Banks actually starting to increase the prices of their properties in the areas where there is huge demand

If you would like advice about how Spanish Hot Properties can help you take advantage of the property market in Spain then we would love to help you so please contact us directly.

Investors Take Positions as the Property Market in Spain is Set to Rebound

SPANISH HOT PROPERTY LOGOlinked inIf we haven´t hit the bottom yet, we will very soon. This opinion sums up the prevailing view expressed by several leading Spanish real estate agents including Nick Stuart Managing Director of Spanish Hot Properties and Simon Jones marketing director of Sundream Estate.

According to a recent report from Knight Frank, a property consultancy, international investment fund firms could invest up to 14,000 million euros in the Spanish property market in 2014, and they are particularly keen on acquiring offices and hotels but this is small fry when compared to the big Investment and Pension funds who have recently bought substantial assets from SAREB (The bad bank of Spain)

Andrés Escarpenter, managing director at Jones Lang Lasalle, thinks that Spain is currently experiencing a spring thaw, although this is not necessarily based on an improvement in key economic indicators such as GDP, inflation, or the rate of unemployment. He went on to point out that adjustments in house prices have triggered a surge in investor interest. And how far have property prices fallen? On this point there is a diversity of opinions. Santiago Aguirre, Chairman of Aguirre Newman, estimates that prices have fallen around 50% in general terms, although this figure may vary, depending on the particular sector of the market.

However, in general terms, the experts are confident that as soon as the economy starts to rally, house prices will start to go up again. Several reports published over recent weeks predict an upturn in prices. For example Caixa Bank thinks that house prices will start to recover in 2015. This opinion is shared by the rating agency Standard & Poor’s, which also believes that prices will improve in that year. This is a view shared by Spanish Hot Properties and a message that is reguarly sent to all it’s clients.

There are several reasons to be optimistic about the housing market. One is that the total stock of housing has begun to fall, as a result of increased sales of completed homes and a slowdown in the construction of new build homes. Sales are highest in coastal areas of Spain while in other areas, where there is a shortage of available housing, developers are beginning to renew their activities. Banco Sabadell alone has 60 housing developments currently under construction.

In short, the sluggish Spanish real estate sector is beginning to stir and investors, such as international investment fund firms, are showing renewed interest in the market, although no large investment deals have been completed so far. Spain is once again considered to be a good place to invest, although this change in the trend is not based on economic indicators, but rather on a shift in investors´ perceptions, and how they view Spain. For this reason the main challenge now is to ensure that property continues to be seen as an attractive investment option for a long time, so that investors do not decamp to other countries such as Greece, Italy, China or Latin America. According to the experts.

If you would like to know more about how you can take advantage of the Spanish property crisis then contact http://www.spanishhotproperties.co.uk/

3 Tier Spanish Property Market in Costa del Sol on the Way

Marbella

Marbella Property in 2013

With news that nearly every project on Costa del Sol is selling or sold out its very clear that there is a huge demand for new properties even  if they are more expensive than resale properties. Due to the shortage of land in good locations especially in and around Marbella and increased building costs we are going to be seeing properties in 3 distinct price categories as we come out of recession.

Currently we have two very distinct types of properties with the first being prime location in Marbella and Puerto Banus which actually is now more expensive than a year ago and a mixture of discounted key ready new developments, distressed sales and bank repossessions that are selling below market value but more importantly below the cost of construction.

The reality as the majority of the good stock is taken for the market we are going to see properties in three price brackets and this is already illustrated in La Cala de Mijas. Here you can buy a bargain 2 bed apartment key ready new development at 145,000, a high quality 2 bedroom apartment in Oasis de Mijas for around 220,000 and a super brand new 3 bedroom apartment at starting prices of 339,000 through to 600,000. Three beds in Oasis de Mijas sold for between 275,000 and 300,000 but as you can see there is still a price differential. And the location is vastly superior for Oasis de Mijas.

In Marbella and Puerto Banus this situation is only going to be more exaggerated as lots of different investors look for land or projects to finish that just don’t exist on the open market and it’s only a matter of time that banks begin to realize the true value of the assets they are holding.

So what will happen when we have a three tier market? If we take a look at Costa Blanca where new build is 10-15% more expensive then it’s clear that Russians and Scandinavians will pay the difference but UK citizens tend not to. However there is a cash difference in Costa Blanca of say 90,000€ compared to 80,000€ i.e. only 10,000€ but that’s likely to be at least 50,000 in cash terms in Costa del Sol.

There will be buyers for all three price points the real question is how many at each price point and how it will affect the market as a whole. Our view is it will just make a distinct choice for would be property buyers and focus the distinct choices between Costa del Sol and Costa Blanca.

8 Important Factors that Force Spanish Property Prices Down

luxury Villa in Marbella

Marbella Luxury Villas

With the Spanish property crisis continuing I thought it would be a good idea to take a look at the why property prices are so low and also see why these reasons don’t apply to luxury property sales in Marbella and Mallorca

1) Employment and expectations of finding a job: due to the unemployment rate in Spain (25%), most people are reluctant to commit themselves to buying a home. Obviously most people buying luxury villas in Mallorca or Marbella this is not a factor.

2) Financing: financing is non-existent in the real estate sector, and the granting of mortgage loans is unlikely to return to normal over the coming months due to uncertainty regarding the macroeconomic situation. In the current climate banks want to avoid any type of risk. Again the majority of buyers of luxury homes in Spain are cash buyers.

3) Interest rates: the euribor is at a record low level of 0.5%, which means that now would be a good time to take out a mortgage. However, the banks are applying ever higher differentials, a sign that they do not want to increase their property exposure any further. Again not a factor for cash buyers

4) Taxes and deductions: two factors which will push house prices down are the rise in VAT from 4% to 10% for new-build purchases and the end of home purchase tax deductions, which come into effect this year. However, falling house prices will offset the tax benefits which were available up until the end of 2012. So again not really an issue for would be high end buyers.

5) SOCIMIs and renting: the reform of Act 11/2009, which regulates SOCIMIs (listed real estate companies), has been approved with a view to incentivizing the house rental market. Furthermore, the government is currently pushing through a reform of the Lease Act, which shows that it is focusing on strengthening the rental market. According to Nick Stuart, the more rental housing available, the better for everyone and house prices will fall even further. Again this will have an effect but will be felt much more on the market below 600.000€

6) The stock of available housing: the more homes there are on the market, the lower house prices will fall. However, as Nick Stuart managing director of Spanish Hot Properties points out, the real estate market in Spain differs widely across local housing markets, and in some areas there is no stock of available housing, which means that this variable will be neutral with respect to house prices.

7) The creation of Sareb: the creation of Spain´s bad bank will not slow the downward trend in house prices, although it will not push them down either, in the opinion of the chief executive of a property valuation agency. In his view, the objective of Sareb will be the management and divestment of property assets, within a time frame of no more than 15 years. He added that Sareb will manage housing developments and land but will not sell homes to individuals. Instead, it will focus on institutional investors.  Again the reality is that very few desirable homes are repossessed in relation to the rest of the market.
8) Finally and most importantly it’s one word CONFIDENCE or currently the lack of it when that’s low coupled with bad international press for Spain then it’s always likely to dent house prices. However in relation to the luxury property market most people buying are very savvy and can see though these mirages or reasons not to buy.
So in conclusion property prices are likely to stay low for the a little while yet but we are already at the bottom for the luxury property market in Mallorca and Marbella

ARTICLE RESOURCES
Spanish Hot Properties
Marbella property

A Seed Change in Spain or Just a Sign of the Times?

Spain

Property in Spain

A recent survey carried out by ING International on the home-buying habits of countries reveals that Spaniards are no longer obsessed with buying their own home. According to the survey only 60% now believe that buying is better than renting, from a financial point of view, a figure which puts it behind many other countries such as Italy, the United Kingdom, France or even Germany, a country which has traditionally favored renting.  This obviously begs the question is this just due to the recession or will this be longer lasting?

The survey also showed that even though 71% of Europeans think that house prices are high, many of them still think that prices will continue to rise next year. Spaniards and Dutch are the only Europeans who do not follow this trend, as they believe that house prices will continue to fall in their countries in 2013. Only 10% of those interviewed in Spain think prices will go up next year, while over 50% firmly believe they will go down. That would obviously make the local Spanish people extremely perceptive as it’s pretty clear that bar prime location areas such as Mallorca and Marbella prices are unlikely to rise in 2013 but if they will fall further that is very much more of a debate and you will see a huge variances in the different regions of Spain

In line with this, 80% of Spaniards think that house prices in Spain are high, a figure which is only surpassed by Luxemburg, Italy and Austria. Again one would have to agree with them but Spain has particularly unique problems where the incomes of the local residents do not match the property values and local housing needs to fall further for these families and first time buyer to enter the market.

So as for it being a seed change or just a short term feeling until the Spanish property recessions is over, only time will tell

Why not contact visit http://www.spanishhotproperties.co.uk/ to find out more

ARTICLE RESOURSES

Spanish property recessions

TINSA

 

 

IBI Spanish Property Tax Rise, How will it Effect You?

 

Mallorca Luxury Villas

Villas in Spain

IBI the property tax in Spanish is an annual tax on property that the owners of any type of property, whether it be residential properties, garages, business premises etc, are obliged to pay, and constitutes one of the main sources of revenue for town councils. For this reason many town councils have already announced that that they are going to increase property tax in order to increase revenues. However, since many taxpayers still find it difficult to understand how the tax is calculated so we will try and answer the major issues concerning the tax. this is just one of the very few examples why the Spanish property market is so complex

At this time of the year the dreaded property tax notice is being sent to millions of property owners. This is a tax that is almost universally disliked by taxpayers, and a tax that virtually no-one understands.

Who has to pay property tax?

Almost all property owners are obliged to pay this tax, although there are some exceptions as, by law, some types of real estate are exempt. One of the best-known exemptions is property that belongs to the Catholic Church, a topic that has been the subject of hot debate in the media recently. However, church property is not the only kind of property that is exempt, as there are other property owners who do not have to pay this tax. These include:

– Property owned by the state, the regions, or local entities which is directly related to public safety or educational services (police stations, prisons, and schools).
– State-owned property dedicated to national defence.
– Property owned by the Red Cross.
– The diplomatic offices of other countries.
– Registered heritage buildings of historical importance.
– Old buildings in big cities or buildings owned by legally recognised non-catholic religious associations.

How is the property tax calculated?

The town council of each municipality establishes, within certain limits, how much tax has to be paid for all the properties in the municipality. In the case of urban properties, this is done by taking the assed value – a value which reflects the value of the land and also the building on it -and applying a coefficient that ranges from between 0.4% to 1.3% to it. For example, the tax due on a residential property in the capital city of Madrid (where the tax rate is 0.581% for 2012) with an assessed (not real) value of 79.215 euros is 460 euros.
You can find out what the assessed value of a home is by asking at the Cadastre. It also appears in the property tax notice sent to all property owners each year.

The property tax can differ widely across municipalities, depending on whether a property is located in the capital of a province, used for the provision of public services by the council etc.

How the assessed value of a residential property is determined

The assessed value, to which the town council applies the percentage established, is calculated by the Cadastre in accordance with a set of criteria. The most important of these include:

– the location of a property
– the market value of each property
– the cost of the labour and material used to build a property
– the taxes that the building is liable to, and the quality
– the age of the building, among others

The resulting value is significantly lower than the property’s market price, usually about half the market price. Every 10 years town councils have to review the assessed values of all the properties in their municipality. The values are usually revised upwards, which means that the amount of tax to be paid increases.

Are there any discounts applied to the payment of this tax?

There are several general discounts which can be applied to the property tax, such as a discount for state-subsidised housing (VPO) – which has a 50% reduction for the first three years – or for the agricultural assets of agricultural cooperatives – which are entitled to a 95% discount.

In addition, each town council can establish additional discounts in its municipal regulations, as Madrid Town Hall has done for large families.

Some town councils also offer a discount to taxpayers who pay the property tax by direct debit through their bank. An example of this is Madrid Town Hall, which offers taxpayers who pay by direct debit a 5% discount on the amount to be paid. In the case of Barcelona, taxpayers who pay in this way will save 2%.

Property tax increases: Why?

Every 10 years town councils have to review the assessed value of the properties in their municipality. It is estimated that a total of 4.2 million properties will be subject to an assessed value review in 2012, and that as a result millions of property owners will have to pay a higher property tax.

In order to soften the effects of this increase, after the assessed values have been reviewed some town councils, such as Madrid, apply a reduction coefficient to the new assessed values. This reduction coefficient is reduced each year, and as a result the amount of tax to be paid increases every year. Thanks to this system, the “impact” of the tax is not so punitive. Instead the amount to be paid steadily increases over the ten years following the review.

What is more, it is also necessary to take into account a change in the law which will result in many property owners having to pay more tax. At the end of last year the government of Mariano Rajoy announced that, as a temporary measure, the tax rate for property tax would be raised during 2012 and 2013 in order to help town councils collect more revenue , around 918 million additional euros. This change allows municipalities that have not carried out a review of assessed values since 2006 to increase the tax due for properties with a higher value by up to 10%, depending on the year in which the council last reviewed assessed values.

It must be remembered that many town councils have not reviewed the assessed values of the properties in their municipality in over a decade, despite the fact that ten years is the recommended assessment period. In fact, of the 7,591 municipalities that exist in Spain, almost half have not updated land values in 18 years, which means that they can now charge 10% more, thanks to this new government measure. This increase will be followed by another, much more dramatic, tax hike which will take place when town councils finally review the values of the properties in their municipality. By that time the assessed values will have risen so much since the last review that the amount of tax to be paid by residents will increase significantly.

When a property is sold does the buyer or purchaser pay the property tax?

The property tax for each year should be paid by the person who is the owner of the property on 1 January. If, during the year, a property is sold, the tax due should be paid by the person who owned the property on the first day of the year.

If the property is rented, should the tenant or the landlord pay the tax?

The town council will send the notice of payment to the homeowner, but they can get the tenant to pay the tax if this has been established in the terms of the rental agreement.

So if your looking to buy a villa for sale in Spain we hope this information will be useful to  you.

ARTCLE RESOURCES

Spanish property market

villa for sale in Spain

UK Spanish property Buyers Still the Biggest in Spain But for How Long?

Mallorca Luxury Villas

Villas in Spain

Well I suppose it will come as no surprise to you that UK Spanish property buyers still make up the largest percentage of an increasing international property buyers’ market in Spain. However on closer inspection the trend is considerably downwards with UK citizens currently missing out on huge opportunities.
Official figures published recently for 2011 show the British bought more property in Spain than any other foreign buyers. However those looking to buy Spanish property now cover a much more wide ranging area.
Of the 22,260 overseas purchases in 2011, only 18% were British. The number of foreign buyers was up from 4.45% of all property sales in 2010 to 6% in 2011.
Below is a selection by number of Spanish properties purchased in 2011 by nationality of the buyer
British          4007
France        1972
Germany     1702
Russia        1645
Italy              1187
Sweden       1176
Norway        1049
Belgium       1031
A close inspection of these figures makes very interesting reading. In 2008 the amount of UK buyers made up 60% of the international market with obviously the number of properties sold being much higher. Whichever way you cut it a drop from 60% to 18% is huge and a good indication why you shouldn’t rely on one particular country or sector for your business.
The issues that have affected the UK market especially is the exchange rate that from a high of 1.60€ in 2002 to a low of 1.07€ in 2008/2009 are now less of a problem with the current exchange rate as of 25 July 2012 being 127.67€ and property prices in some areas now below 2000 levels. However there is still a lack of confidence from UK buyers with the reality that other nationalities picking up the best property deals.
If one starts to look at the figures of other nationalities one can see some really interesting movements. If you add Norway, Sweden and Denmark together as one block they are the second largest block with over 12% of the overall market. Interestingly unlike the UK these buyers are increasing year on year. The same goes for the Benelux countries i.e. Holland, Belgium and Luxemburg making up some 9% of the market. Add Scandinavia and Benelux together and they are the biggest group of Spanish property buyers in 2011.
Another interesting stat is the Russian figures because in 2011 Russians became the largest single buyers in the Alicante Province. Costa Blanca having used to be the second resort for UK buyers. The other factor is these figures are by properties sold rather than the amount they were sold for so Russian buyers would figure as a higher percentage if it was based on the value of the property sales.
What this tells us and what we are very aware of at Spanish Hot properties is that the market has completely changed and an international real estate company can no longer survive on just English speaking clients alone and why we speak all the major European languages as well as Russian and most importantly have natives from those countries working within our group.
The other major fact that comes from these figures is that there was only 22260 property sales i.e. only 1855 sales per month for the whole of Spain. When you think how many international real estate companies are based in Costa del Sol, Canary Islands, Balearic Islands and Costa Blanca it’s pretty clear there isn’t a sustainable living market place for them all and at least half will have fall by the wayside or continue to struggle for a living.
If you are looking to buy Spanish property in the near future and want some advice about the market place why not visit http://www.spanishhotproperties.co.uk/  for the most up to date information or alternatively contact me directly.

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http://www.spanishhotproperties.co.uk/

Germany Saves the Euro and the Spanish Property Market

Marbella

Marbella

So finally after lurching from one crisis to another Europe which in all reality is Germany has finally agreed to the measures that are required to bring an end to all the uncertainty of the Euro and especially Spain’s participation in it.
In reality we all know Spain was never going to leave the Euro but it was up to Germany to agree to the changes that would see individual countries being able to go to the markets and buy bonds at a similar rate to that of Germany and with the new changes this will now happen.
Even before this happens bond rates for Spain and Italy have already dropped and in Spain well below the 7% rate that commentators deemed unsustainable.
So why has Germany saved the Spanish property market? In simple terms especially for UK investors it takes away the uncertainty and the concerns that Spain would leave the Euro thus devaluing and returning to the Peseta. The reality is there has never been a better time to buy Spanish property especially UK buyers with the lowest prices since last century as well as the best exchange rate for several years. All the factors point out this is the time to buy. However you wouldn’t want to buy and suddenly see a 20% devaluation in your asset. Now that is not the case people can invest in Spanish property knowing that they will be getting the best value possible.
One word of caution for all you UK citizens is to ask yourself what the long term future is for the Euro Sterling exchange rate as right now the current rate is a big positive for those who are buying.
So hats off to Germany for finally doing what they had to do and Europe and especially Spain can now go from strength to strength

Spanish property market

Spanish Bank repossessions

 

Spanish Property Liquidation for Banco Santander has Huge Ramifications for Spain

Costa CalidaFollowing on from my Blog about Ireland and Spain and how differently they have approached there property disasters it looks like Banco Santander are about to get real and set the benchmark for dealing with their toxic real estate.
Santander would have received two offers from venture capital firms for buying its real estate assets. It would involve a mixed bag of properties and land whose internal appraisal would be valued at approximately 3 billion euros. The offers received and that are being negotiated would represent a discount off that appraisal in excess of 50%. There are fears in the market regarding the impact that could be caused to property prices by such a large-scale operation.

Bad years ahead, José Barta, a professor of strategies for markets, says in Diario Financiero that “Santander has chosen to put itself in a position of liquidity even though that may generate short-term losses. And that can only be because its estimates for 2012 and 2013 predict anni horribili”.

The fact is that the placement on the market of so many real estate assets by the leading bank in Spain means subjecting the market and other entities to strong pressure in terms of the prices they set for their own real estate assets. In fact, the Expansion newspaper indicates that the Bank of Spain could express its own displeasure regarding the operation due to the strong discounts it would force on the market. Which tells you everything you need to know about the mentality of the Spanish banking system. Surely the best thing now is for Spain to take its Pain and look to start to boom again in 2013 that what its citizens deserve not the banks destroying them.

I for one hope this particular deal goes ahead and in reality there is no way the Bank of Spain can block it. They could buy the real estate and put it in a toxic fund but that’s about it.

Really very interesting times ahead for Spanish Real Estate
property for sale in Torrevieja
Property for sale in Villamartin