So, after 7 years of economic darkness and a stalling property market, what is the force behind the recovery that is being seen in the Spanish housing sector? Being economics, there are obviously a large number of reasons, some highly technical and almost unexplainable, however in this article we will take a look at four tangible reasons as to why there are more people buying property in Spain.
Over the past two years the struggle in Europe has been focused on Greece and their economic volatility. With the European Central Bank having to step in and other European nations helping with Greece’s debts, there has been a certain amount of debt over Greece’s ability to remain in the single currency and to a much lesser extent, the future of the Euro currency itself. This has led to the Euro performing badly against Sterling and the US Dollar, with near record low exchange rates being seen. This means that foreign investors gain hugely from a good exchange rate and sees them save a considerable amount of money than one or two years ago. For aa foreign led market having a weak Euro has helped draw these investors back into Spain.
Increase in Tourism
Tourism is a huge part of the Spanish economy, representing 12% of Spain’s GDP. In 2014 there was just shy of 65 million tourists visiting Spain, according to the Ministry of Tourism, which represented an increase of over 7% from 2013. These visitor numbers equate to almost the entire population of the United Kingdom and places Spain 3rd in the most visited countries in the world, behind France and the United States of America.
With so many visitors there is a large market for property lets in the peak tourist season, allowing the foreign investors in the property market rent their houses for considerable profits. This is particularly popular in Southern Spain with places such as Marbella receiving record numbers of tourists.
Low Mortgage Rates and High Yields
For those purchasing a property in Spain, there are still good value interest rates to be found due to fierce competition between banks. You can generally find rates between 2and 3% for most types of mortgage. Combine this with the relatively high yields that are available through rental of a purchased property, it is easy to see why a property purchase makes sense. The yields you can expect from rental are generally greater than those found via bank investments, although they do not offer as much flexibility. In the medium to long term housing in Spain can offer a far greater return than any other form of standard investment.
As touched on previously, it is foreign buyers that are really driving the housing market forward. They are taking advantage of all of the above, as well as much more stable economic conditions in their own country to enable them to purchase a second home abroad. The biggest foreign purchasers of Spanish property come from the United Kingdom, as has been the case for the past ten years or so and 2014 saw the number of purchasers from the United Kingdom grow by more than 27%.
There are many reasons why the housing market is growing again in Spain and the above is merely a scratch into what is a much broader topic.
Article provided by Mike James, an independent content writer in the property and travel industries, working alongside a selection of companies including Marbella’s largest and longest-running real estate agent Panorama.es, who were consulted over the information contained in this piece.