With the ongoing financial crisis still affecting the Spanish economy, several autonomous communities are trying to combat the lack of funds by raising several taxes. It appears that Andalusian community has raised several taxes including those on property purchases.
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Developers in Malaga province (home to the Costa del Sol) sold 10,000 new homes in the course of 2011, almost half the stock of 25,000 new homes on the market at the start of the year, according to the Association of Builders and Developers of Malaga (ACP). More..
It appears that foreign investment in Spanish property is once again on the rise. This new wave of investment in probably due to the recent reductions that have been seen in the property market since the end of 2010. Investment in property in Spain surged by 32.8% in the first half of 2011 over the same period in 2010, to 2,445 million euros, according to the Bank of Spain.
In a recent article in thisismoney.co.uk it has been reported that British lenders are allowing property owners to re-mortgage their UK properties to fund property purchases abroad. To date this has been common amongst Scandinavia clients, but it is a positive sign to see British lenders doing the same. But the article is also a bit of a PR piece, I have tried to only include the salient points below. For the full article you can find a link at the bottom.
Tourists who visit Malaga province mainly to play golf spend €103 per day on average, a Junta de Andalucia study shows.
Since 2005, the golfing sector has seen visitor numbers increasing by more than three per cent each year, and in 2010 alone, 427,000 golfers spend €687m in Andalucia.
In what we are seeing as quite a positive move, the Spanish government has recently passed a law to help stimulate the property rental market by making the eviction process much easier and simpler for landlords. Until now, the rental market for Spanish property has always been quite anaemic due to the lack of protection afforded to landlords, with one of the main issues being the length and difficulty of removing non-paying tenants. But it appears this is to change.
Last Friday the Spanish government announced a temporary reductions in the value added tax (IVA), lowering it from eight percent to four percent for any purchase of a new property. The government’s aim is to rekindle Spanish property sales and help reduce Spain’s stock of unsold new homes, which amount to approximately 687.000 properties in Spain, and just over 20.000 in the province of Malaga.
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Tempted by the offer of a salary for life and an inheritance tax reduction for his two daughters, Euan Armstrong, 73, signed up to an equity release plan in 2004 with Denmark’s biggest bank using his €2 million home in Spain as collateral.
Six years on, Mr Armstrong is forced to live with one of his daughters as he prepares to take on the bank that promised so much yet threatens to leave him penniless.
After the recent article on the decrease of new properties on the market in 2010, I thought it would be worthwhile to review the statistics for the province of Malaga and the Costa del Sol.
The average price of new housing (non-subsidized) fell 4.7% in the first half of 2011 year on year and 2.3% since December 2010, according to a report by “Sociedad de Tasación”. On average, the price of new properties in the provincial capitals of Spain stand at 2419 euros per square meter in June, with the average 90m2 house valuing at 217,710 euros.
Investment in Spanish property by foreign buyers has risen in the first trimestre of 2011 to 1.13 billion euros, which represents a surge of 28.7% year on year. This marks a return to foreign investment in the real estate sector, which has not been seen since 2008.
The Aifos owner, Jesús Ruiz Casado could face a prison sentence of four years for failing to return funds paid by buyers for properties on a development in Casares that was never built. Approximately 20 buyers, many of them foreign couples, were never refunded the sums of between 50,000 and 70,000 euros they paid towards properties on the Hacienda Casares development. Aifos is expected to have received more than 1.1 million euros in total. Construction was supposed to start in November 2004 but the development never materialised.
HOW bad Europe’s debt crisis gets depends largely on Spain, which would be much harder to rescue than smaller economies like Greece. How bad things get in Spain depends largely on the banks, which are already trying to find an additional €15 billion ($21.1 billion) to meet new capital requirements imposed by the government. And how bad things get for Spanish banks depends largely on the country’s unfolding property bust. Nestling at the heart of these worries is land.
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