Buying a house in Spain?
October 11, 2012
Guest Post by Grace Beckett.
Spain is considered to be one of the most beautiful and scenic countries in Europe. Its rich heritage in almost every aspect of life make it a must see destination for many. Some even go one step further by buying land or property or even a house for when they visit. If you are one of the few who would want a nice little cottage somewhere around the Pyrenees or the Sierra Nevada mountain ranges or maybe a villa overlooking the Mediterranean Sea, this article is for you.
Here, we look at some of the most important things and issues to look out for before buying real estate in the land of bullfighting, football and sangria.
Spain’s history shows a high inclination towards a very artistic culture. Right from Diego Velazquez in the 17th century to Francisco Goya in the 18th and 19th and more notably Pablo Picasso in the 20th century, Spain has been overflowing with it. The Flamenco music and dance has been highly regarded all around the world as well, so it’s not much of a surprise to see some of the most beautifully constructed houses and villas here.
Spain has seen big changes in architectural style through the years. With a walk around Madrid, the capital, one can see renaissance architecture dating back to the 1500s. The country moved towards modernism in the 20th century and today, you notice an inclination towards contemporary architecture. Most of the villas around the sea-line are from the 1960s to the 80s and expanded later.
The famous property bubble
1985 saw a rapid increase in property value in Spain all the way up to 2008. Between 1985 and 1991, house values nearly tripled as there was a super-high demand all through the country. From 1992 to 1996, the prices had somewhat stabilized but then onwards, they started to skyrocket again.
It is the same theory used for a regular bubble – sooner or later, it has to pop. When the Global Financial Crisis (2007-2012) caught up with the Spanish, they were already in too deep. With the house ownership in Spain more than 80%, the country was one of the worst-affected in the world. Between July 2007 and June 2008, sales dropped an astonishing 25.3%. Banks had started offering 40 to 50-year mortgages to the owners in an attempt to slow down the crash landing they were headed for, which worked. Due to the high rates however, many sold their land and houses but are now stuck with huge debts for property they no longer own.
As of August 2008, new constructions are at an all-time low, but the value of land has not had much of a change, still standing at a whopping 2095 euros/m2.
Buying property in Spain today
Regardless of the incredible downfall, Spain has managed to get back up and has improved significantly. Although there are almost no new constructions going on, you have a good chance of getting your hands on a second-hand cottage or villa/bungalow for a reasonable price (considering the boom) almost anywhere in the country. The styles vary from place to place and according to the value and they are in pristine condition.
Properties on the Balearic and Canary islands also provide some amazing scenery as well as tranquility away from the fast-paced capital.
Summing it up
Spain has seen its share of ups and downs in the property business. Buyers have gone from enthusiastic to greedy to downright delusional but right now, everything seems to have settled down. Although experts say that there still is a chance for another sharp decline in the land value, it is safe to say that the worst has now passed and investing in real estate here is pretty logical now.
Grace is an blog writer with Godot Media. Her interests lie in writing about finance and real estate. She specially likes writing about foreign markets and investments abroad. Grace is also a skilled cv writer and financial advisor.