Doom and gloom have been the key-words for describing the state of the housing market in Spain as of late. Various factors have caused the market to crash completely, both for foreign investors and Spaniards alike. The adage states, however, that once you hit rock bottom, you have nowhere to go but up.
The weak pound continues to make purchasing difficult for British investors, it’s true. Real Estate brokers are saying that, on the Costa Blanca at least, sales have been slow and the few contracts that had been signed were being retracted because of the value difference between the pound and the euro. It’s not just holiday home investors that are struggling under the weak pound, either. Retirees are seeing their life savings amount to less and less and can’t afford to purchase their own villa in the sun to enjoy their golden years. That’s tough to swallow. HiFX, a group of experts in the field of foreign exchange, the difference in pounds for an average priced home has risen £28,000 over the last year or so. Even if buyers estimate that they can still manage payments on the villa of their dreams, the next obstacle to overcome is the difficulty in obtaining a Spanish mortgage, and at that deposit rates have risen from a ridiculous 30% to an unbelievable 40%.
Still, all is not lost. In fact, it’s a great time to buy. Representative Jaqui Daly, who works for Savills Property Consultants, a UK firm, says that those of her countrymen who purchase homes in Spain typically belong in one of two groups. Investors looking for immediate returns and who don’t plan to enjoy their property for their own use are probably on the downside of things under current conditions. Lifestyle buyers, however, are more interested in using the property for their own vacations and enjoyment. This last type is finding this a great time to buy. These lifestyle buyers can take advantage of low prices without the stress or pressure of making money anytime soon. This style of ownership is often preferred by retirees. As a side note, Spain seems to be a fantastic choice for purchase because of its traditionally lower prices (compared to areas like the UK) and because its citizens, like other Europeans, are more frugal even during times of financial abundance, thus making the properties a more stable long term investment.
Another encouraging factor is the interest rate in the UK which has been slashed a full two percent in as many months. Prime Minister Gordon Brown has indicated that he believes this measure would be beneficial to other nations, as well. Banks have been somewhat less giving than the prime minister, however, and have stated that the lower interest rate will not be passed along to customers. The government force banks to pass along the rate cuts, but they can and will exert considerable influence.
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