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.
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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The sale of Costa del Sol properties saw an increase of 7.8% in May compared to the same month last year according to Spain’s Institute of National Statistics (INE), with monthly sales standing at 1,931 sales (including VPOs).
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.
By the end of 2010, there were 687,523 new properties looking for buyers on the market, only a slight decrease on a year earlier. Based on current trends, fewer new properties coming on the property market combined with healthier sales last year, it is estimated that it could take between 3 and 5 years to absorb this accumulated stock.
By the end of 2010 the stock of new housing stood at 687,523 properties, a drop of only 0.08% compared to the surplus of 2009, according to the according the the Spanish government . This is the first drop in the level of new build on the market since 2005.
ACCUMULATION OF UNSOLD NEW PROPERTIES
To the rest of the world it became known as the subprime mortgage, but in Spain it is remembered as the “welcome mortgage.” It was specially designed for immigrants in 2005, at the height of the property boom, by Spanish mortgage brokers such as CreditServices. With nothing more than a three-month work record in Spain, these companies offered new arrivals to Spain mortgage loans that covered 120 percent of the value of a property. All the costs, fees and commissions would be covered by the loan, and the buyer would become a Spanish homeowner without having put down so much as a cent. The loans were organized through US companies, none of which had any physical presence in Spain, preferring to use fronts such as CreditServices instead.
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The situation is so severe that the government recently appointed a special overseas property advisor to help deal with it and to better understand the problems of those involved.
As a result, contentious issues such as illegal properties which do not have correct permits, cases where off-plan developments have not been built as specified and the length of time and cost involved in resolving property disputes were recently raised by the British ambassador to Spain with the Andalucian regional government and the Minister for Public Works and Housing.
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I have just been reading a positive article in the telegraph.co.uk that claims that the amount of enquiries for Spain are up quite drastically from last year. A good sign! I should just point out though that ‘interest’ does not equate to sales and has the figures are given in percentages, they do not give a clear indication of how many individuals are actually looking at buying in Spain. From my point of view the demand for Costa del Sol property from the British market has picked up slightly, but remains weak due to exchange rates and other financial considerations.
Just found an article by Mark Stucklin reporting that it appears that the Spanish property market might have bottomed out. Although Andalucia still is down, as I reported recently, it is good to see that there has been a pick up in resale properties and the drop in due to lowering new build sales. Anyway, please find the article below.
A surge of foreign lifestyle buyers and investors has split the Spanish property market.
Sales are up 200% in some regions compared with 2009 – despite the Bank of Spain claiming that last year was the worst in a decade for foreign property investment in Spain.
“Parts of Spain are doing really well at the moment but there are two completely different markets,” said James Dearsley, European sales manager at agent Atlas International. The company has reported a significant increase in sales since November 2009.
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Earlier today I posted an article by the Times Online, which although positive, does consist of a bunch of press releases from a variety of sources. This is not to disparage the sources, but just that they need to understood in the right context.
They became a symbol of the global housing market crash, unsold, half-built, lining the Mediterranean like skeletal relics of a bygone, more prosperous age.
But villas and apartments on the Spanish Costas are suddenly hot property again as Britain’s second-home buyers rediscover the attractions of life in southern Spain.
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After finding the article the Spanish property bust, I thought it would be of interest to look at how the province of Malaga has done by comparison. Although there are no specific figures for the Costa del Sol, we can work on the assumption that has most of the population and infrastructure are along the Malaga coast, Malaga province equates with Costa del Sol in reference to property transactions.
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