Mortgage repayments

Been reading through the local papers today and came upon an interesting article. It appears that the average salary in Malaga is 871 Euros, whereas the average mortgage is 1.100 Euros a month. In other words, a typical 3 bedroom property on the Costa del Sol costs a full salary plus 229 euros. Why is it so much? Well the Euribor is currently at a historic high, at around 5.5%.

This is a shame as it means that either though many prices have dropped, first time buyers are still finding it difficult to get onto the property ladder. Although with the drop in the ECB rate by 0.5%, we should see the euribor rate drop in the next few months.

The main problem has been Malaga’s reliance on the construction and tourism industry to create employment. These are not sectors that are renowned for high salaries.

According to the latest Objovi report (a watchdog monitoring young people and housing) access to property is still unattainable for today’s younger generations. Despite the enormous stock of unsold properties, the access to credit for young buyers has not improved. The report stresses that the slowing of house prices from 20% just over 2 years ago to 2/3% now.

So we’ve covered the Euribor and the worker. What else is there? Blame can also be placed on the banks. Fearful of the global crisis affecting the markets, banks are studying mortgage applications more carefully than ever before. And let’s be honest, young workers on salaries that don’t even reach 900 euros a month and temporary contracts, hardly fill lenders with confidence.

But it’s not all doom and gloom. Young professionals can still expect to earn a higher salary. They are also more likely to be on fixed contracts. This will make them more appealing to the banks.

And although property prices have increased on average 18/20% a year for the last ten years, certain areas were even more dramatic. These are the areas that are now seeing the sharpest decrease and bargain are possible.

Andrew Bellés

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