If you work in Spain, to buy a property it would take on average 8 years annual salary. At least according to a study published by the Foundation of Savings Banks (FUNCA) in the latest publications.

It appears that the article has taken into account the official drop in sales price (widely seen has not reflecting the true drops in price) and TINSA (valuation company) property valuations. So what does this mean, in 2005 you needed to dedicate 10.1 annual salaries to a property purchase and now in 2001 that figure stands at 7.86 annual salaries. Considering that property prices did not peek until 2007, I see this a quite a positive and seems to contradict the official price drop of under 20%.

Unfortunately no specific figures are given for the province of Malaga, but Andalusian Autonomous Community at 6.98 annual salaries. Considering the size of Andalucía and what a small percentage Malaga makes up of the total, plus the demand for properties by a range of buyer (yes even in this climate!) I would assume that Malaga properties would be above the national average.

Ever way I would take this information with a pinch of salt.

Regards
Andrew Bellés

The debt restructuring would include options like making interest only payments for up to four years, extending the orginal terms of the loan to 40 years (age allowing) and rearranging payments for one year at an interest rate of 0.25% above the Euribor rate.

If , in the worst case, despite this restructuring, property owners are still unable to meet the debt payments, the bank must offer a rebate of part of the mortgage.

Although this option would have to be studied on a casa by case scenario, I would hope that the banks would sensibly take in account current prices and adjust the loan to reflect current market prices and values.

Lieu of payment

Even with these benefits I would expect that the unemployed property owners would still have difficulties. If after having you debt restructured you are still unable to meet payments, you will be able to hand over your property and clear the debt in full. Previously that bank only took a property at 60 percent of its value and pursued the ex owner for the remaining debt, so a definte improvement there.
On handing over the property, the former property owner has the option of remaining in the property and paying a month rent that equted to 3 percent of the outstanding debt. Thus not depriving them of a roof over their heards.

Now which struggling property owners qualify? If you are facing foreclosure and all those that live in the property are unemployed and mortgage payments exceed 60% of any income. Second the value of the home must be below a certain amount. Under 200.000€ if in a city of over 1 million inhabitants, 180.000€ in cities with population over 500.000, 150.000€ in cities with populations between 100,000 and 500,000 inhabitants and 120.000€ in towns with a population under 100.000€.
Regards
Andrew Bellés

In Andalucia, home to the Costa del Sol, house prices fell a more modest 8.4 percent in 2011 with new builds dropping 5.3 percent and resale’s 11.8 percent. If the province of Malaga (where nearly a third of all sales are done) were removed from Andalusian figures, the figures would have been dire. But once again, the attraction of Malaga as a destination has helped minimize the damage.

At peak (2007)-to-present, Spanish property prices are (according INE) officially down 20.6 percent (new builds 11.9 percent and resale’s 27.7 percent). On the other hand Andalucian property has decreased by 11.9 percent from peak, with new builds suffering a 2.5 percent drop and resale’s a 20.6 percent drop.

Although hard to judge how much the market has decreased since 2007, the figure for Andalucian resale properties is broadly accurate. Before anyone decides to write an angry email decrying me as a ‘liar’ please remember that the INE figures are based on actual transactions completed and not on advertised asking prices, which in the past tended to be more ‘ambitious’.

I would also agree with the annual change of 11.9 percent. Although prime properties are holding their prices quite well, this only applies to properties that appeal to certain cliente. As always prices are reflected by supply and demand.

Regards
Andrew Bellés

The two main Spanish property taxes that have seen increases are, transfer tax (ITP) which is applicable on the purchase of existing homes and stamp duty (IAJD). Both these increases have been in force as of the beginning of 2012. Although these increases do not seem to have been reported widely in the press.

Supposedly these increases have been implemented to ‘help stimulate employment and growth’ and to ‘increase government revenue through a more progressive tax system’.

TRANSFER TAX
Prior to 2012 if you were purchasing an existing home (resale property) you had to pay a 7% tax on the sales price up to 400.000€. And 8% on any amount above the 400.000€.
As of the 1st of January 2012, the tax on the sale of properties up to 400.000€ has risen to 8%, on the amount above 400.000€ you have to now pay 9%. And if you are buying for over 700.000€ then the tax on that amount rises to 10%.

The property transfer tax was originally raised from 7% to 8% for purchases over 400.000 when the Spanish government raised VAT (IVA) on new properties to 8%. At the time the Andalusian government used the rationale of not discriminating against any particular group. However when the tax burden on new purchases was reduced by the central government to 4% for a short period to stimulate (or at least bring forward) the sales of new homes, this ‘discount’ was not seen on the sales of existing homes. Now with the new government in power in Madrid, this tax reduction is set to continue for 2012. Yet taxes on resales have not decreased, but have in fact increased. For a local government that claims it does not want to discriminate against any particular group, the Socialist lead Autonomous Community of Andalucía new rules seem to benefit those buying from developers and penalising those buying from individuals.

Andalucía is still trying to promote younger people to get onto the property ladder by allowing them to purchase properties up to 130.000€ and pay only 3.5% transfer tax as long as it will be their primary residence.

STAMP DUTY
Prior to 2012, if you were buying a new property you would pay additional to the VAT 1% stamp duty. In the case of a resale property, you had to pay it in the case that you were taking a mortgage. Again as of 2012 this tax has increased by 20%. So it now stands at 1.2%. Although it will not affect all those buying resales properties, it will affect the many looking at financing. Unless of course you are under 35 and buying the property for less than 130.000€ and intend to use it as you main residence. Then it stands at 0.3%.

Regards
Andrew Belles

Lower house prices have helped boost sales, and a huge drop in housing starts over the last 3 years, most acute in popular tourist resorts like Marbella, means that the housing glut is shrinking fast.

Given the long lead times in the building industry, there could be an acute shortage of new housing a couple of years from now.

Shortages will be made worse if demand recovers to its normal level of around 22,000 new homes a year, based on the size of the population. Unemployment or fear of unemployment is keeping many potential buyers out of the market.

45pc of Malaga’s 200,000 unemployed are young adults who be first time buyers looking to start a family if they could afford to.

Much of the blame for this sorry state of affairs lies with politicians says José Prado, President of the ACP. “In recent years they’ve done nothing but earn a fortune from construction and made no effort to attract investors.”

Source: Article by Mark Stucklin

According to the decree, in 2012 and 2013 properties will be subject to an increase in the IBI (impuesto de Bienes Inmuebles) that needs to be paid to the local town hall. Around 273.000 property owners, in the municipalities of Velez-Malaga, Benalmadena, Estepona and Archidona, will be escaping these increases as the values were previously revised between 2005 and 2007.

Property owners in Torremolinos, Rincon de la Victoria, Alhaurin el Grande, Ronda, Cartama, Coin, Torrox and Antequera will see the greatest increases as they have not been revised since 2002. Although it is already underway in Antequera. These municipalities should seen increases of of about 10% in the amount to be paid.

Municipalities where the values were revised between 2002 and 2004, which include Fuengirola, Mijas and Nerja, should see increases of 6%.

Finally in the municipalities that saw revisions between 2008 and 2011, which includes Malaga, Marbella, Manilva and Alhaurin de la Torre, will see increases of 4%.

The decree does however establish an exception for municipalities where the new values were approved in or later than 2002. The increase will only be applied to properties whose cadastral value increased in the revision, approximately 50 percent of the total number of residential properties. Both Malaga and Marbella find themselves in the situation. Following the increase in values both town halls introduced measures to reduced the affect of the increase, delaying the application of the new values or offering subsidies.

No matter which party wins the general election on Sunday, the new Government is going to have to deal with a number of matters in the province of Malaga which have been pending for many years, even though this time of economic crisis may not be the ideal moment. The conversion of the Benítez military camp into a park, the remodelling of the Baños del Carmen, the northern access to the airport, the coastal railway, the Antequera rail test ‘ring’ and the construction of sewage plants are some of the main projects which are still outstanding.

The Baños del Carmen are a good example of an ‘eternally pending’ project in Malaga. It has already been delayed by more than a decade and it was only last year that the Ministry of the Environment finally approved the plans to recuperate this lovely spot on the coast of the provincial capital. The total cost will be 13 million euros and 400,000 euros have been included in this year’s budget so that the project can be put to tender.

Outside Malaga city, essential projects include the construction of the pioneer rail test ring which is planned for the Vega de Antequera. This will be 57.9 kilometres in length, will cost over 400 million euros and trains will be able to reach up to 450 kilometres per hour. The new Government, together with other public administrations, will also have to set to work on the creation of a coastal railway line between Malaga and Estepona. The Ministry of Public Works and the Junta de Andalucía signed the protocol this week but its high cost – five billion euros – will make it very difficult to put into effect at the moment.

Access to Arroyo
The Government will also have to consider a number of measures which would greatly improve the daily life of people in Malaga province. One of the most important is the modification of the Arroyo de la Miel exit from the A-7, which is notorious for traffic congestion, along with the construction of the northern access to the airport from the new second ring road, the plans for which were also drawn up about four years ago, and an extension to the suburban railway to reach the Andalucía Technology Park. This would also mean that the local railway would be extended to Campanillas, which is where major residential expansion will take place in forthcoming years.

The Government will also have to take action on sewage plants if it is to comply with the EU demand for a ‘zero waste’ limit to be attained by 2015; this would also improve the quality of the beaches and help tourism. Nerja still does not have a sewage plant and is the only large municipality on the Malaga coast to lack such a facility, and Estepona’s sewage plant needs to be enlarged. With regard to water supply, the project to build a 61.7 million desalination plant at Mijas is waiting to go ahead when the local council hands over the land.

Marbella
In Marbella, numerous projects are pending including the coastal railway which will be a great advantage to this, the only town in Spain with a population of over 100,000 which has no railway station. In the shorter term, the main concern is the road tunnel at San Pedro. This project is very advanced and is expected to be ready for the Ministry of Public Works to carry out the safety checks and arrange its inauguration by the end of this year. The Government will also have to decide whether or not to reactivate the project to eliminate the direct accesses onto the A-7, something which Marbella council has been demanding for years. The 54 million euro was among those dropped last year to save money.

On economic matters, the new Government will also be faced with a request from Marbella council to help with the 300 million euro debt with Social Security and the tax authority, which arose from non-payment during the GIL era. The local authority is having to pay one million euros a month, just in interest, and this is severely affecting the municipal coffers.

Finally, Marbella’s list includes two environmental projects. One is to stabilise the beaches: the survey to determine what measures should be adopted to stop the loss of sand is being carried out in Marbella but has been suspended for technical reasons in San Pedro. These reports are expected to cost 400,000 euros. The other major project is the recuperation of the sand dunes at Artola, Bahía de Marbella and Real Zaragoza.

New police stations and seafront promenades
As well as major infrastructure works, the central government will also have to deal with matters which may be smaller and less important but are still necessary, including the construction of new Guardia Civil and National Police stations.

In Mijas, a plot of land has been set aside for a Guardia Civil barracks but definitive plans have never been provided by the Government. In Alhaurín de la Torre, a 5,000 square metre piece of land was reserved for the same reason five years ago. In Antequera, construction of the new Guardia Civil barracks began three years ago but has been suspended due to lack of funds. Benalmádena and Vélez-Málaga are also still waiting for their new police stations, having provided suitable sites nearly four years ago.

Beaches
Many local councils also hope that the Government will take action to improve seafront promenades and beaches.

Fuengirola, for example, has been waiting since 2004 for the final stretch of the promenade at Carvajal to be finished and has even taken legal action to try to resolve the matter. Rincón de la Victoria has never received the plans for improvements to the promenade at Torre de Benagalbón and in Vélez the promenade at Chilches and the recovery of the beaches at Mezquitilla and Lagos are still pending, as is the regeneration of the Ferrara beach in Torrox which was badly damaged by the storms.

Inland, the high speed AVE railway line which will connect Antequera with Algeciras is something which has been discussed for many years but this too is still pending.

Source: Sur in English

These latest reports show that the average house price has fallen by 22% since the peak, but that doesn’t tell the whole story. This price index provides a national average, giving a reflection on the market at a macro level – what it doesn’t represent is data on individual properties, or areas within a town on a micro level.

There are plenty of reports of properties that have more than halved in price since the peak of 2008. As a known example, a property was purchased by a colleague for 180,000 euros 10 years ago, they subsequently sold it for 695,000 at the peak of the property boom and it was resold earlier this year for 320,000 – quite a dramatic rise and fall.

While this may not be “average”, it demonstrates that while the national price drop of property in Spain may be 22%, there are some properties where vastly larger savings can be achieved. By definition, a national average takes into account all areas of Spain, including highly populated cities, where there has been no overbuilding and demand has remained consistent.

Around coastal areas, such as the Costa del Sol and Costa Blanca, as well as in resorts on the popular Balearic and Canary Islands, some towns have seen prices fall by between 28 and 49 percent. These numbers still reflect an average but give greater insight into local trends than any national statistic.

Some of the price differences can be attributed to speculative developers whose overbuilding has left them desperately seeking buyers and offering heavy discounts. There will also be properties that have been repossessed or required a quick sale from their cash strapped owners.

But the take away for both buyers and sellers is that prices are very much dependent on location – anyone seeking to sell their property should be realistic when setting their sales price and headline average price cuts should not be used as a guide. While, for buyers seeking a bargain, these coastal areas are clearly the place to head for sun, sand, sea and cut price properties.

- The map below shows price decreases in larger popular coastal and island towns (all with a population of at least 25,000) -

Source article: Kyero.com

The European Commission today approved the holding of five Spanish train corridors included in the design of the trans-European network should be operational by 2030. The Mediterranean Corridor, which originally included the province of Malaga, now appears to go from Almeria and Sevilla across the north of Andalucia to Antequera / Bobadilla.

The Mediterranean corridor, with an investment of 19,424 million euros, and is constituted as a multi-use corridor, both road and rail, which connect the French border to the main transport nodes in four regions of Spain along the Mediterranean Coast.

This set of infrastructure projects will connect the French border with Algeciras, via Barcelona, Valencia, Cartagena and Almeria, and will have a transverse axis between Granada and Antequera, where it forks to finish in Seville. All major ports along the mediterrean will connect to the new network (Barcelona, Tarragona, Castellón, Sagunto, Valencia, Alicante, Cartagena, Almeria, Malaga and Algeciras, etc.) and will feature the development of the Guadalquivir river corridor to the port of Sevilla

Along the Mediterranean Corridor, the European Commission has also approved the Central Corridor, the Atlantic Cantabrian-Mediterranean Corridor and the Atlantic Mediterranean Corridor. With these investments, Spain will get to perform the necessary infrastructure works to achieve a comprehensive network for both passenger and freight transport.

In all, Spain will invest 49,800 million euros between 2014-2020, in carrying out the works.

Development sources have indicated that this investment will take place under the state budget will mean an average cost of 7,000 million euros annually, which must be added between 10 and 20% of 31,700 million euros that contribute to a Europe-wide European Funds.

Spanish Article: Diario Sur

Our property in Fuengirola site will only advertise properties that we feel offer value for money and are what many buyers are currently looking for.

Alternatively our Costa del Sol real estate site offers a large selection of properties throughout the Costa del Sol

Regards
Andrew Bellés

Moreover, these investments exceeded 1000 million between April and June for the second consecutive quarter. Something not seen since 2008, before the final collapse of these purchases. In the second quarter, an increase over the first purchases was 16.1%.

Foreign investment in Spanish property had been falling steadily since 2003, when it reached 7.072 million euros, 2004 saw this decrease to 6650 million, 5.495 million in 2005 and, finally, 4.716 million in 2006.

However, this trend was reversed in 2007, when 5.341 million euros was invested, a 13.3% more than 2006.

2008 saw a similar figure of 5.331 million invested in Spain.

Then in 2009, the economic crisis saw investment decrease to 3,651 million euros.

If the trend for this continues, we will see foreign investment in Spanish property rise to the 2008 figure. A good portent for owners of properties, whether residential or commercial in the more popular locations.

Regards
Andrew Bellés

Europe is facing economic meltdown but the crisis hasn’t deterred British buyers from snapping up properties in Spain.

Italy, Greece and Bulgaria are also attracting British buyers seeking a bargain. But wherever you are buying, the advice is the same – do your homework to avoid pitfalls.

Mortgage funding
One of the effects of the global banking crisis has been that mortgages are more difficult to secure and borrowers must put down a bigger deposit to get a loan from banks overseas.

The growing debt crisis in recent months, particularly in Greece and Italy, has exacerbated the problem. A number of Greek banks have stopped lending for the time being.

Spanish and French banks will lend to those with only a 15 or 20 per cent deposit, but this could be tightened if the financial crisis takes a further turn for the worse in Europe.

Conn says: ‘Historically, European banks have been more conservative than their British counterparts. Britons applying for overseas funds will need a chunky deposit and must provide all relevant paperwork to show income and liabilities.’

Some British lenders allow homeowners to remortgage to fund a holiday home purchase abroad, but it will depend on individual criteria and borrowers will usually still have to have significant equity in their British home, even after they have released the funds, to qualify. For many, an overseas mortgage will be the only option, but rates in Europe and the US are competitive.

Frank Kyle, 32, an engineer in the oil industry, got a bargain when he bought his new holiday home in Murcia, south-eastern Spain, but he had to put down a bigger deposit than he had planned. Frank, from Glasgow, paid 112,000 euros (£97,500) for the two-bedroom property on a popular golf resort and he is confident he bagged a bargain. His neighbour in Murcia paid 170,000 euros for a similar apartment five years ago.

He had hoped to secure the apartment with just a five per cent deposit, but he paid closer to 40 per cent, securing a mortgage from a Spanish bank. Frank’s 4.5 per cent variable loan rate makes his monthly repayments about 378 euros (£326). Almost all banks now require borrowers to take capital repayment rather than interest-only mortgages.

Frank Kyle, 32, an engineer in the oil industry, got a bargain when he bought his new holiday home in Murcia, south-eastern Spain, but he had to put down a bigger deposit than he had planned. Frank, from Glasgow, paid 112,000 euros (£97,500) for the two-bedroom property on a popular golf resort and he is confident he bagged a bargain. His neighbour in Murcia paid 170,000 euros for a similar apartment five years ago.

He had hoped to secure the apartment with just a five per cent deposit, but he paid closer to 40 per cent, securing a mortgage from a Spanish bank. Frank’s 4.5 per cent variable loan rate makes his monthly repayments about 378 euros (£326). Almost all banks now require borrowers to take capital repayment rather than interest-only mortgages.

‘I am often away on oil rigs and ships, so I have never bought property in Britain,’ he says. ‘I’m hoping to get out to Murcia at least four times a year. Hopefully, I’ll get my golf handicap down to single figures.

‘My plan is to hold on to the apartment long term so I’m not worried about short-term dips in prices or the volatile euro. I may be working for a French company soon too and it will pay me in euros, which removes the currency risk on repayments.’

Watch out for the currency risks
For many British buyers a euro loan will present currency risk if they are paid income in sterling. This is something buyers must bear in mind, particularly in the current uncertain economic climate.

Most overseas mortgages, like Frank’s, are also on a variable rate and not fixed, so buyers must be aware that monthly repayments could rise.

Typical mortgage rates in Spain and France are between three and four per cent variable. But the rate offered will always finandepend on a borrower’s circumstances.

Exchange rate changes are a cause for concern, especially for those about to make a large transaction. But buyers can lock into a rate ahead of a property purchase.

Full article

The decree on the illegal properties was meant to have been ready within six months of its announcement back in March but is still not ready and the provincial delegate for Public Works and Housing has stated that will not be ready until November, more than likely December.

So there are still around 50,000 home owners of illegal properties in Andalucía that will have to wait several more months before the new regulations come into force. Once they are it is hoped they will be able to start the process of legalising their properties.

According to the Junta de Andalusia’s legal department, they have only started to study the recommendations recently as the information was presented to them in July. It is expected to take several more months as the relevant legal experts have to make sure that the new decree will not contravene any existing documentation. Once they have confirmed this, it will then more onto the Junta’s Government Committee to approve it.

In the meantime, while the affected property owners wait, they are still in the situation where they do not even know is the new decree will even benefit them. Although a minority, there are property owners who cannot show any documents showing they bought in good faith. If these properties comply with the safety and habitation conditions and were built long enough ago that the period of legal action has expired, then those properties will be moved into a special property classification.

Unfortunately, although I hope I am wrong, I do not think this will end well for all 50,000 property owners.

Regards
Andrew Bellés

For appraisal figures of other parts of Spain please visit: elmundo

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.

Malaga province has 50 golf courses, more than 55 per cent of the total in Andalucia and almost 30 per cent of the total number in Spain.

The first study carried out in Andalucia since 2005 by the Junta de Andalucia Tourism Council reveals that the Costa del Sol has become the main point of reference for golfers in the region, thanks to the wide variety and quality of golf courses, improved connections via train and plane, and the number of hotels, golf properties  and other services available.

The Costa del Sol is also seen as a pioneering area for the golf sector, and has internationally recognized courses such as Valderrama and Sotogrande.

Tourists who visit Andalucia mainly for golfing account for two per cent of the total number of visitors, and 4.5 per cent of the total tourism income. A high percentage of golfers who visit Malaga province are British and Germans, who stand out as those with the highest purchasing power.

Amongst British golfers, the average profile is that of a group of friends over 35 years old, with a wide social status, all belonging to the same club who want quality golf courses as well as varied leisure and cultural alternatives.

Most prefer destinations with direct flights from their home locations and short transfers to the golf course.

The average golfer in Malaga stays 15.8 days, visiting the golf course 4.6 days, while in Cadiz, visiting golfers only stay for 6.9 days and visit the golf course 3.5 days on average.

Due to upcoming competition in Portugal, Turkey and Morocco, the Junta de Andalucia study advises golf clubs, courses and hotels to offer better value for money in order to keep clients happy.

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