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It seems that we are in the midst of a global economic downturn and a worldwide property crash, so is it the right time to be buying Spanish property…and in particular, is it a good time to be investing in property off-plan?
A lot of agents and commentators are reporting that we are nearing the bottom of the market in some of the more popular areas of Spain, with the attraction of genuine discounts in some of Spain´s most thriving resorts proving just too tempting for a large army of bargain-hunters. So while key-ready Spanish property and resale opportunities abound, the off-plan market seems a perilous place to be in a market downturn.Let´s face facts at this stage – many thousands of people who invested off-plan during the early Spanish property boom years made a lot of money in a fast-rising market, able to take advantage of massive price rises and their pick of generous, cheap finance deals. Those people who invested during recent years and who are now approaching completion haven´t been so fortunate, and some have found themselves facing the very real prospect of negative equity and a shrinking Spanish mortgage market.
As an example, if a buyer invested off-plan 2 years ago at 200,000 euros, and the value of the property at completion is 170,000 euros, not only is there a ´loss´ of 30,000 euros to contend with, but tighter mortgage markets dictate that the likely maximum lending available would be 119,000 euros (70% of valuation), while banks 2 years ago would have been willing to lend perhaps as much as 80% of the purchase price (160,000 euros).
If you are investing off-plan in a falling market, you simply cannot be sure of the value of your property at completion and therefore you will be unsure of the level of borrowing that you will be able to attain. This ultimately means that you may have to part with more cash to cover any shortfall – cash that you perhaps don´t have.
Of course, all of this means that the spate of Spanish property construction has all but ended – it takes a brave (or foolish) developer to begin a project in this market! This will lead to a dramatic slowdown in the supply of new-build Spanish properties, and over the longer term this will ultimately benefit the entire Spanish property market when times begin to get a little better.
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A CUP OF TEA OR COFFEE IN SPAIN £3.00 IN WALES UK £1.00
A MARS BAR OR A TWIX IN SPAIN £1.00 : : : UK £0.37
80 TEA BAGS THAT SAY £0.99 ON THE BOX COST £3.50 : :UK : £0.99
FISH & CHIPS £9.00 UK: £3.50
A PINT OF LAGER £3.00 UK £1.75
EVERTHING I CAME ACROSS IN SPAIN COST 2 OR 3 TIMES MORE
SURELY YOU CANNOT BLAME THE EXCHANGE ON THIS ?
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