Got your attention? Well I just made it up, like many of the newspaper editors hawking their doom and gloom propaganda.
Headlines get readers and sell newspapers. If you don’t believe me consider if you’d have read this article if my headline had been “nothing to worry about for sensible people”.
The headline isn’t always the full story.
All you read in the press at the moment is that housing prices are falling, mortgage rates are going up, developers are going out of business, houses are being demolished, the doom has no end.
Should you wait to buy in Spain? Well it really depends upon why you’re buying in the first place.
Take my mother-in-law (please!) she thinks she wants to live in Murcia and she wants to do it this year. She won’t be waiting for the house prices to “bottom out” or the market to slump. She’ll find what she likes, at a budget she can afford and live where she wants to live. She’s not looking for an investment for her money, she’s looking for an investment for her life.
Debbie’s 5 Tips for Spanish Property Buyers
1. Do Your Homework
Ignore the sensational headlines and TV scare stories designed to boost ratings. Most of these only show half of the picture anyway. Take responsibility for finding out the facts first-hand and you’ll be surprised to see plenty of good investments and solid long term buys at good prices. The best thing you can do is arrange your own viewing trip. But first be sure to consult balanced guidebooks, fact-based reports and websites to hone in on your desired area.
2. Take Your Time
There is a lot of property out there at the moment and in the short term growth isn’t going to be as rapid as we’ve seen over the last decade. That means you can afford to take your time and brush off any pressure agents or vendors may try to put you under.
3. Always Offer Less
Some of the larger resorts and urbanisations have a serious oversupply of property in relation to the number of buyers right now. This means you are in a strong buying position and you should expect them to lower their prices. That said it’s probably safer to avoid some new-build projects altogether – which takes me back to tip 1 – do your homework!
4. Buy Where Property Will Remain Scarce
Traditional townhouses in historic old towns and fincas near pretty villages will always be in limited supply. So seriously consider these as viable, more affordable and unique investments to the traditional identikit villa on a golf course with a pool.
5. Decide Why You’re Buying
If you want fast capital gains as have been seen in the recent past then Spain isn’t really the best bet right now as there are better deals to be had in less mature emerging markets such as Poland, Romania and Bulgaria. However, if you want to buy to live or as a long term/retirement investment then buying in a stable, mature country with predictable long term growth, lovely people and a solid infrastructure is a good idea.
The difference between lifestyle buyers and property investors may be huge. Remember this when you next see the headlines, are they talking to you or the guy who was driving a Hummer last year and this year he’s downgraded to just a Land Rover?
The market might be getting tougher for the property investor, but it could also be getting sweeter for sensible people like me and you!
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
-
As a person who has vacationed in Spain for many years and love the country and culture. I feel the price of property is the least significant negative development of the last 18 months. The economy of Spain is compromised the property boom of the last 15 years have channeled huge amounts of money into the Spanish economy. That revenue is drying up. The high euro makes the location un attractive for UK residents.
Pretty much as is the advise for buyers in the UK market the sensible approach to the Spanish market at the moment has got to be rent.
Short term or medium terms rentals in the current climate offer a good bargaining oppotunity to your Mum.
If she sells in the UK she will avoid any further property losses and with the interest from this money in the bank a nice location could be rented. This allows a very strong position to explore a optimum purchase strategy at a later stage. Spain is a very attractive place to live due to climate lifestyle but in financial terms the head must rule the heart. Rent now purchase (or not) later. JJ ( Manchester) -
Hi JJ
great advice, and this is exactly what my father is doing at the moment in the village here in Spain – he’s been renting for a year and isn’t ready yet to buy. He doesn’t feel in any hurry to buy and he’s waiting to see what happens next.
Debs -
These are just the opinions of a relative newbie at property (I’ve got 3 places in the UK and one – where I live – in Spain) but I disagree with JJ that renting is the sensible approach in ALL cases at the moment.
First, this has been the “good advice” in the UK since “experts” were predicting a property crash in 2004, yet during the 4 years since it became “sensible to rent” house prices continued to soar. The result was that people’s savings (that were meant to be used as a deposit) became massively inadequate in many cases and would certainly get them less than they could have got with the same money if they’d bought instead.
Of course these people (including a fair few journalists who seem intent on making it happen if you ask me) are now all hoping and praying that UK prices will go back to their 2004 maximums so that their deposit might get them something. Even if prices do go down that far (which I’m not convinced they will) these people who rented will find that banks will be far harder to please and will give them a nasty rate to boot.Second, paying out money to someone else who owns a house never makes good sense if you could have used the same money to own that, or a similar, asset yourself. You’ll be poorer in the medium/long term whichever way you look at it. Also by assets I mean things, like houses, that histroically have always gone up in value – so cars, for the purpose of my definition here anyway, are NOT assets.
Third, selling a house in order to fund renting a house is, in my opinion, financial suicide. You’ve gone from owning an asset (which historically will – and always has – go up in value despite crashes, corrections etc.) to owning some money, having to spend that money to rent, and trying to find an investment vehicle where it will go up in value above rising inflation.
Fourth, in the current market (in the UK) where it’s hard for people to get finance to buy houses, rents have begun to increase and they will continue to due to more demand for rented accomodation. Rents may not go up in Spain as they are in the UK because it’s a very different market but selling a house in the UK in the current climate – if you don’t have to – seems like a bad move to me.
Now, here’s where I agree with JJ. If you don’t have a clue where you want to live or don’t have the deposit/resources available to buy then renting is a great stop-gap and allows you to be flexible. If you also care more about the lifestlye and location, like Debbie’s mother-in-law, than making money from an investment and renting enables you to get something that would be otherwise beyond your means then renting could be good there too.
An alternative plan – which is detailed in Debbie’s book – is to rent out your UK house and use that money to rent a house of your own in Spain until you’re ready to make a move. Why? Well, you’ll typically be able to rent your UK home out for far more than you’d pay in rent in Spain – which equals extra cash (which could be saved for a deposit) in your pocket. But, you still own an asset in the UK, which will eventually (unquestionably if recorded history is anything to go by) begin to rise no matter how bad things look now providing you with a further source of cash in the future.
Just my opinions – I’m happy to be disagreed with and corrected if you think my logic is off! ;o)
Thanks
Joe -
May I suggest reference to my email of this day directed to authors in Native Spain .com regarding the strange spanish aproach to property sales/purchase.
Thanks
Paul
4 comments
Comments feed for this article
Trackback link: http://spanishpropertyexpert.com/buying-property-during-the-crash/spanish-property-prices-plummeting-the-property-dream-is-over/trackback/