Arthur takes a brief look at Spain’s recovering property market…
Spain has always been a popular destination with Brits looking to buy property abroad. Since the late 1960s and early 1970s when the country was opened up to tourists, property has been key on the Spanish agenda.
However, the property boom really began when the country adopted the Euro in 1999 and began to borrow extensively at reduced rates. According to a recent Financial Times article, in 2007 “Spain accounted for more housing starts than Germany, France, Britain and Italy combined” and “13 percent of the national workforce” had jobs in the construction sector at the time, which accounted for a staggering 10pc of the country’s GDP. It is not wonder, therefore, that when Spain’s property bubble burst in 2007/8, coinciding with the financial crisis, the repercussions were hard felt.
Since 2016, however, Spain’s property market has been characterised by sustained economic growth. Figures from the end of 2016 showed the highest levels of house price growth since the collapse, which have continued to rise over the past three years. A new lease of life in Spain’s construction sector spurred on by growing demand, increased lending, and property price growth, is once again making Spain more and more attractive to international investors.
Rightmove claims that Spain is the most popular destination for Brits looking to buy property abroad (whether that’s to relocate permanently, or buy a second home). Alicante, Mallorca and Malaga are the most sought-after areas according the theolivepress.es .
Nevertheless, based on research by the property portal, Idealista.com, rental prices are soaring in many major cities. Barcelona rental rates are 20pc higher than they were during the boom peaks. Whilst this might be good news for foreign investors, 14 pc rental price increases in Palma de Mallorca are pricing many Spanish families out of the area.
Even though recovery is evident and looks set to continue throughout 2017, we must also consider the fact that some regions have only experienced very modest price rises, and that other are yet to see prices rise. If you’re considering investing in property in Spain, it would be wise to keep track of property price increases across a variety of regions in order to understand the bigger picture of the Spanish property market.