November 7, 2015

Foreign Buying forces Spanish Property prices up by 5%

The economy in Spain took a real hit in 2008 when the property market bottomed out, but money invested by foreign buyers is helping the property market to recover.

During June 2015, property prices rose by 5.12% which was driven by foreign nationals making purchases in prime property markets.

The number of transactions has also increased with 188,432 purchases being made during the first half of this year which is the equivalent to an increase of 7.9%. The main reasons for the increase is that there is easier access to credit as well as low interest rates but also the fact that employment has improved along with confidence in consumers.

There has also been an increase in construction activity from levels that were extremely low but it is likely to contribute to the continuation of the recovery within the sector.

Of all the housing transactions carried out in the first half of the year, 17% of them were made by foreign buyers which shows that many of the economies that help to create demand for properties in Spain such as Germany and the UK as well as the depreciation of the Euro are all playing a vital part.
During the first quarter of 2015, 12.2% of residential properties were purchased by foreign nationals which has risen from 9% in 2006. The luxury market in Spain has seen the largest impact from foreign investment. Between 2007 and 2013, the price of homes in Spain fell by more than 35% which gave foreign investors a number of opportunities when it came to growth.

There are several areas such as Pedralbes and Salamanca that are popular with foreign investors and these areas have already clawed back 20% of the value that was lost during the property market crash. This has resulted in house prices increasing at the quickest rate seen since the market crashed.
This recent increase in growth means that the price of property is now down 29% nationally since the market peaked but there are differences throughout many regions.

The recovery is experienced mainly in popular areas such as Madrid, the Canaries and the Balearics. Spanish property registrars have shown that following the first half of the year, the real estate sector closed with a balance that was positive and this indicates that this is likely to continue through the second half of the year.
The demographic of foreign buyers has changed over the last two years and now foreign buyers are coming from the Middle East, Asia and America rather than Europe. The weaker Euro has lured in those investors from outside the European Union. However, the weak Rouble and stronger rules on the transfer of currency has deterred Russians and other investors.

The strength of the dollar has seen American investors show an interest whilst French buyers have been looking for property in Spain due to taxation policies in France.

As a result of the recovery of the Spanish economy, there has been a 2.7% growth in GDP over the last 12 months and banks have become more confident when it comes to lending. During the first three months of 2015, the banks agreed to a third more mortgages for 27% more capital when compared to the same period in 2014 which shows that domestic buyers are returning which help to aid national growth for the future.

Author Bio
Hopwood House are experts in property investment and have a wide range or properties for sale in Spain, including Malaga, Almeria and Murcia.