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Spain set for a more robust property market in 2017 as prices rise

Spain Set for a Bumper Year on Property Sales

 

Demand from international buyers will remain fundamental necessity to help the Spanish property market continue its recovery and it remains to be seen if Brexit results in a fall in British interest.

Overall experts point out that 2016 was a positive year for the real estate market with prices having bottomed out the year before and modest price rises seen in some locations.

It is likely that locations with lower prices could become more in demand in 2017 as buyers still want a bargain and there is likely to be some uncertainty around the UK formally beginning the process of leaving the European Union and elections in France and Germany.

According to Lucas Fox International Properties the last 12 months were a turning point for the property market in Spain. Co-founder Alexander Vaughan said that the
recovery continued throughout 2016 and price increases moved beyond the big cities such as Barcelona and Madrid and desirable second home destinations.

‘We believe that a growing economy, low financing costs, good potential for rental returns and capital appreciation will continue to drive sales throughout 2017 and beyond,’ he said.

But his firm has found that Brexit had a noticeable effect on sales to British buyers in the second half of 2016 but he believes that this was mainly due to the depreciation of the pound rather than concerns about the country’s future in Europe.

‘Across Spain as a whole Brits still dominate foreign sales with nearly a fifth of the market share, more than double that of French buyers, he pointed out, adding that diminishing demand for high end homes in London following Brexit could also see non-EU citizens look to Madrid or Barcelona in the forthcoming months.

 

‘We also expect that demand for Spanish property from other foreign buyers, including from the United States and the Middle East, will continue its upward trend throughout 2017. We’ll see new low cost flights from British Airways and Norwegian Airlines from the US to Barcelona during 2017, a reflection of the growing attraction of cities like Barcelona for Americans, as both a tourist and second home destination,’ he concluded.

New homes are expected to be built in Valencia in 2017, signalling that developers think the demand will be there, according to Juan Luis Herrero, a partner with Lucas Fox in the region.
‘Regarding re-sale properties, we forecast a continued upward swing, especially now that the uncertain political situation which prevailed during 2016 has come to an end. The return of mortgage credit and low interest rates will continue to fuel this trend,’ he said.

Demand is also expected to rise on the Costa Brava, especially in traditionally sought after coastal villages such as Llafranc, Calella de Palafrugell and Begur. ‘These are the areas where we are likely to see the first increases when prices begin to rise,’ said Tom Maidment, a partner with Lucas Fox Costa Brava.

He also expects to see an increase in buyers from the United States but thinks second home buyers from the UK will hold off until there are firm indications of what deals will be done once the UK begins the formal process of leaving the EU which should start with the triggering of Article 50 before the end of March 2017 and the impact this might have on Sterling.

Prices could fall further in Marbella as developers reach out to foreign buyers, according to Stephen Lahiri of Lucas Fox’s office in the region. ‘The increase of new projects is leading to increased competition and developers are increasingly focusing on prices and payment terms and value for money,’ he explained.

Richard Speigal, head of research at Spanish property portal Kyero, pointed out that house sales in Spain have recorded a 15% rise on the previous year and seen 10 consecutive quarters of growth, which means that the Spanish property market crash has officially ended.

‘Spain’s market has two unusual advantages. Firstly, it had nowhere to go but up. The 2008 crisis completely shredded the housing market. Secondly, Spain has incredible international appeal and with one in five property sales going to foreigners, it can endure weak local demand,’ he said.

‘British, French, German, Dutch, Belgian, Italian and Swedish buyers are picking up the slack, which has been good news for the wider market and for those involved in selling property in Spain,’ he explained.

He believes that there is still pent up demand from potential British buyers, citing figures that show that overseas searches for Spanish property via Kyero reached all-time highs after the referendum vote in June, up over 50% on 2015. The portal’s largest agents also reported seeing record attendance at UK investor shows.

He predicts that older British home owners with no mortgages on their properties and looking for a holiday home will be tempted to buy in Spain in 2017 and beyond. ‘In short, British buyers age 50 plus who love Spain are sitting on huge equity piles and Brexit didn’t diminish their wealth and as a group, British buyers are getting richer,’ said Speigal.

But he warned that they will haggle over prices and will want to get value for their money. ‘The hunt for value will translate to a key trend in the Spanish property market in 2017 with buyers seeking good value properties that offset the drop in Sterling’s value. Evidence is already emerging of the benefits of this on lower priced destinations, which look set to boom in 2017,’ he added.

Hi top tips for 2017 include Almeria where traditional charm attracts overseas buyers. In the third quarter of 2016 sales were up year on year by 93% and with an average price of €129,000 properties are seen as good value, almost half the cost of the national average on the portal.

Prices are also lower on average in Alicante where international buyers have more property than any other province in Spain. While this could make it susceptible to shocks, Speigal says it’s strengths are hard to beat including fabulous beaches, steady sales growth and prices up to 15% below average.

Tenerife is also on the spotlight as far as overseas buyers are concerned with Italian buyers overtaking British buyers for the first time as the main group of international buyers. Prices are already increasing, up 5% to an average of €249,000 in 2016 and low cost flights from around Europe make it popular with those looking for a holiday home that they can also let out.

Courtesy of propertywire.com

What Brexit means for British buyers

What Brexit means for British buyers

The UK’s decision to leave the European Union raises some important questions. Here’s how itwill affect British buyers in Spain.


Can I still buy a property in Spain?

Yes. Britain is still a member of the EU and British citizens enjoy the same rights today that they did last week.

It is likely to take at least two years to leave the EU, and many more years to settle the resulting changes in trade agreements. British buyers are unlikely to feel the impact for some years.

What does a fall in Sterling mean?

A weakened Pound is the most immediate effect of Britain’s referendum. In effect, Spanish property has just become more expensive for UK buyers.

The exchange rate is expected to be volatile over the coming months, but buyers can take steps to insulate themselves from currency risk. It is also worth setting this in a wider context: While Spanish house prices have been steadily recovering over the past 2 years, they remain 32% cheaper than their peak in 2007.

Spanish property remains excellent value.

What will happen to my property when the UK leaves?

Spain has a long history of welcoming buyers from overseas, who now account for 1 in 5 house sales. Non-EU buyers are extremely active in the market and enjoy very similar rights to EU nationals.

Leaving the EU/EEA is highly unlikely to impact the rights of British citizens to buy property in Spain. Overseas investment is too important to the economy.

Will I still get a mortgage?

Yes. Spanish banks typically ask foreign buyers for a deposit of up to 40%. While there is scope for this to rise, it is already at a level that provides banks considerable protection and is unlikely to see much adjustment.

Meanwhile, the economic climate in Europe is wedded to low interest rates. Borrowing costs remain good value.

Will the Spanish property market crash?

British buyers are important to the Spanish market and they are the largest single nationality among overseas investors. However to put this in context, Brits form 4% of the market.

There are two reasons Brexit is highly unlikely to trigger a crash. Firstly, foreign buyers are a diverse group: German, French, Belgian, Italian and Swedish (among many others) are all an extremely active, growing part of the market.

There may be some localised pain, but even a complete collapse in UK demand (again, totally unlikely) would only put a small dent in the market.

Secondly, the market has nowhere to go. Spanish property has been recovering steadily since 2014, but remains a very long way off its peak. The worst we expect from Brexit is restrained growth.

Is my EHIC card still valid?

Yes. The European Health Insurance Card provides reciprocal health cover for travellers in the EEA. It will remain in place for at least two years while Brexit negotiations are in motion.

European countries are keen to ensure that their citizens enjoy healthcare while travelling, so it’s entirely possible an EHIC agreement (or something similar) will remain in place even after Brexit.

Will I get full healthcare if I move to Spain?

For now, yes. As long as Britain remains in the European Union, reciprocal healthcare arrangements continue as before. Expats who live in Spain and contribute to the social security system already receive full healthcare, and will continue to do so regardless of Brexit.

The situation for British pensioners is less clear. The current cost of their healthcare is met by a per capita payment from the UK to Spain for every pensioner who has completed the S1 form and is in receipt of a UK pension.

Nobody knows if this arrangement will continue, though many commentators predict British pensioners will require some form of health insurance post-Brexit.

What about my pension?

Under single market rules, UK citizens living in Spain (and indeed the whole EEA) have their pensions and social security payments automatically uprated each year in line with local inflation.This system is a mutual EU arrangement and is likely to become a negotiating point in Brexit talks.

In the worst case, British pensioners in Spain could get similar treatment to those in Canada and lose their automatic right to pension increases.

How will inheritance work?

British citizens (and indeed all EEA residents) currently get very good tax treatment in Spain, paying the same inheritance tax as locals.

Crucially, the double-taxation treaties that enable theseare NOT made in the EU. Therefore Brexit has no effect on the existing tax agreements between the UK and Spain.

What happens next?

In short, nothing for quite some time.

Exchange rate fluctuations will be the only visible effect of Brexitin the short term.

The two year process of leaving the EU will not begin until Article 50 is triggered and this is currently scheduled to happen inOctober 2016. (Despite protestations, Europe cannot force a faster pace until Britain formally takes this step.)

It is also important to note that this referendum is non-binding, and British politicians willnow enter a protracted period of horse trading over what to do next – or even who’s in charge.

With Brexit leaders already dialling back their rhetoric and promises, it is not a foregone conclusion that Britain will completely leave.Huge debating points now remain over whether Brexitmeans a totalwithdrawal from the single market (EEA).

Time will tell, and it all serves to slow the process.

The net effect is Britons will continue to enjoy the benefits of European citizenship for some years, and can expect a broadly similar deal once Brexit is complete.


The British love affair with Spain continues.

 

source: Kyero.com

Home Sales Increased by 24.2% in August

 

The sale of homes in Spain increased by 24.2% in August, compared to the same month of 2014, reaching a total of 29,369 transactions, according to provisional data published by the National Statistics Institute yesterday, which corresponds to sales recorded in the Property Registers of transactions carried out in months prior to the reference period. The year-on-year increase in August is 10.3% higher than the figure recorded in July, when the number of home sales grew by 13.9%.

With the August upturn, home sales accumulated 12 consecutive months of year-on-year increases, thanks exclusively to the 50.5% increase in transactions for second hand housing, which reached a total of 23,428 transactions, since the sales of new homes dropped by 26.5% in August, compared with the same month in 2014, to 5,941 transactions.

In the first eight months of this year, home sales accumulated an increase of 12%, with transactions on new housing registering a decline of 35.7% and those on second hand housing increasing by 43.9%.

Month-on-month (August over July), home sales fell by 10.2%, compared with the 17.7% decline registered in August 2014.

El Mundo reported that most of the home sales in August (90.5%) related to free housing, which registered a year-on-year increase of 24.5%, to 26,570 transactions, while there were 2,799 transactions on protected housing (9.5%), representing an increase of 21.2% over August 2014.

In August, the largest number of home sales per 100,000 inhabitants were recorded in Valencia (110). In absolute terms, Andalucía remained in the lead for home sales in August, with 5,984 transactions, followed by Valencia (4,335), Catalonia (4,286) and Madrid (4,242), while in relative terms, the regions where home sales increased most year-on-year were Murcia (49.9%) and Aragón (39.5%). In contrast, Castilla y León (-0.5%), Extremadura (5.1%), and Galicia (6.2%) registered the most negative year-on-year rates.

 

 

 

 

source  kyero.com

Spanish House Prices Register Second Greatest Decline Globally Since 2012

  


Spain is the second country amongst the major world economies to record the greatest declines in their house prices since 2012, behind only Greece, according to a recent study published by ‘The Economist’ magazine.

Specifically, since the first quarter of 2012, Spain has accumulated a reduction in the price of housing of 14.3%, a figure exceeded only by Greece, which accumulated a decline of 25.6%.

In the list of 26 leading world economies, only four other countries have registered declines in their housing prices in the past four years: Italy (-13.6%); the Netherlands (-6.8%); France (-6%) and Singapore (-2%).

In contrast, the countries which recorded the greatest increases in their housing prices were Hong Kong and Turkey, with increases of 61.4% and 56%, respectively, followed by Brazil (+35%), the United States (+30%), South Africa (+29.1%) and the United Kingdom (+24.9%).

Over the last year however, El Mundo reported that Spain registered growth of 1.6% in its housing prices, above Belgium (+0.7%), France (-2.3%), China (-2.4%), Italy (-3.3%), Singapore (-3.7%) and Greece (-5.9%).

Hong Kong and Turkey were also the countries to register the largest growth year-on-year (of 20.8% and 18.8%, respectively), followed by Ireland (+13.4%), Sweden (+10.3%), Australia (+7.5%) and South Africa (+7.3%).
 
 
 
 

 
source kyero.com

House Prices Rose 5.1% in Q2

 

The price of housing in Spain increased by 5.1% year-on-year in the second quarter of the year, according to the latest statistics from the Association of Property Registrars. This increase is almost double the increase recorded in the first quarter of the year (2.65%), which the Registrars point out "consolidates and intensifies the change in trend which began in 2014”.

 

Quarter-on-quarter, the increase in housing prices amounted to 2.8% in the second quarter over the first. Thus the pace of growth of the past few quarters has softened the decline since the peak levels reached in 2007, to 29.2%.

 

A total of 87,187 home sales transactions were registered in the second quarter of the year, which is 11.1% more than in the same period of 2014, and the second highest number of transactions recorded in the last nine quarters, although the figure is 3.7% less than that recorded in the first three months of the year.

 

In the last twelve months a total of 335,163 home sales transactions have been registered, which is 2.7% more than the accumulated figure up until the first quarter of the year.

 

Once again, a great difference was noted between the number of new and second hand home sales in the second quarter. While a total of 18,482 transactions were recorded on new homes, representing a decline of 18.5% over the previous quarter, some 68,705 transactions were carried out on second hand homes, representing an increase of 1.2%.

 

The region which registered the greatest number of homes sales transactions in the quarter was Andalucía, with 17,751 transactions, followed by Catalonia (13,228), Valencia (12,760) and Madrid (12,514).

 

According to El Economista, foreign demand for Spanish homes remains strong and accounted for 12.8% of the total home purchases in the second quarter, rising from the 12.2% recorded in the first quarter, which shows a certain level of stabilisation in the percentage of purchases by foreigners, at around 13%.

 

The foreign nationalities leading the ranking for home purchases in Spain are the British (19.8%), French (8.1%), Germans (7.6%), Belgians (6.5%), Swedish (5.6%) and Italians (5.3%). The Russians rank in seventh position, with 3.9%, confirming the downward tendency of recent quarters.

Source Kyero.com September 2015