Is it a good time to buy?

I was hoping to hear the collective wisdom on this forum on the foolishness or otherwise of buying a property now.

I have never actually owned a property in Spain myself but close family members have and still do and so I've seen some of the trial and tribulations at first hand.

I'm not ready to move to Spain just yet but my plan is as follows: Buy an appartment in a good location, ideally very close to the beach. It wouldn't necessarily be an appartment that I personally like but I would select it according to the best chance of renting it out to holidaymakers as much as possible. I'd get an agency like Interhome or similar to handle the rentals process and I'd price it somehat below market price to assure high occupancy during the summer. I myself always go on holidays outside the peak season so I would spend two to three weeks per year there off season and so save on my own holiday costs (I normally rent) without this implying lost rental income. I'd then use the rental income to pay as much of the mortgage as possible, but I'd be sure that in case I failed to find any tenants that I'd still be able to cover costs out of pocket, even if it involved some hardships. My idea is that over the next 15 or 20 years or so my mortgage would gradually repay itself. Then when the time was ripe to move to Spain, I'd sell that appartment and buy the place I want. If he market goes up, then I have a toe on the property ladder and I can use the money I'd made on this appartment towards my dream villa. If the market will have stayed where it is, then I won't have made much on the appartment but my dream villa won't be that expensive either. So it seems like I can't really lose.

Does anybody have any opinion on this. Is there anything I haven't considered? has anybody done something similar and have experiences to share?

Hi,

In response to your question - the first point I woud like to make is you are thinking about buying an apartment even though you may not like the area - and down the line you may sell this and buy a villa or something similar.  My advice is try and get it right first time and save yourself the 10% costs which are added on to the purchase price - otherwise you will end up paying this twice.  At the moment I feel there is very good value to be had.  I purchased 5 years ago on costa blanca at approximately 25% higher than I could purchase today in the same urbanisation and location.  The urbanisation location is ideal and is very popular with holiday makers both in summer and winter.  We just started to rent this June gone by and wasn't expecting much for the first year but have bookins over winter and some for next summer already.  But like you suggested I price it competitvely and ensure that it is maintained properly which means going out twice per year to ensure that everthing is kept topped up.  The prices out there to buy are certainly very good at the moment it is getting the finance is the problem.  Good luck in your venture.

Angela59 

Hi I have been watching the market closely for sometime.

I don't think it's the best time to buy YET. Unless you can pick up a property that is significantly undervalued.

Prices are still going down. Property prices are currently declining at a year on year rate of approximately 5% (TINSA index)

Say you purchase a property for 100,000 euros

Property prices are declining at a rate of 5% (Which according to the TINSA index they are)

You will have approximately 10% purchase costs, including transfer taxes, legal fees, notary fees etc...)

So the property will cost you 110,000 Euros

To get an idea of the potential rental market for the property you are hoping to purchase, find a similar property on holidaylettings .co .uk and look at price and availability.

If you can get 300 euros per week for 20 weeks your gross income will be 6000 euros,

This income is taxed at a rate of 25% leaving you with 4500

Then you have cleaning, advertising, your time and agency fees.

So perhaps you end up with 3000 in your pocket.

Meanwhile your property has decreased in value by 5000 euros.

Until you can make more money than what the property will depreciate by its a definite no no.

Hi - it is very difficult to talk about percentage drops in the Spanish market as there are many different Spanish markets.  We have properties for sale at less than 50% of their original price of 4-5 years ago, but you never see that in any statistics.  I know of identical properties, next door to each other, which were priced at 115,000€ and 195,000€ this summer so which one would the statistics be based on? (Guess which one sold???)

Prices here in southern Costa Blanca are what people are willing to pay and what owners are willing to reduce to - nothing scientific about it, I'm afraid.

I would counsel against buying something that you don't like - if you don't like it then will your prospective tenants?  You would really need to visit the area and rent there yourself, then check with all the rental agencies what is in demand and what is not.  You will obviously find the best prices are not in the best rental areas, but you may get a decent compromise.  You also need to check thoroughly which rental agency you use, as there are lots of horror stories about owners not being paid the rentals they are due - personal recommendation is the best way to find a good agent.

As a previous poster said, the last problem will be finance.  Most lenders are only offering 60% to non-residents so you will need to find a good sized deposit.

My personal opinion is that here prices are unlikely to fall much further.  You can buy 2 bed city centre apartments in Torrevieja from about 60,000€ and I don't think these will go down much more.  There is however still a lot of overpriced property out there, so take your time and, as I said before, come and visit the areas you are interested in before you make your mind up.

Good luck with your venture!

I came across this article and thought you might be interested to read it. It should answer some of your questions.

expatsinspain.org/news-in-spain/209-mixed-signals-from-the-spanish-property-market

Thanks for all your advice.

I was thinking of buying something in El Campello (Alicante) or that sort of area as it is an area I know well have been vacationing there for many years. There are plenty of very nice seafront appartments in large buildings on the market right  now and the prices vary enormously and don't necessarily reflect the actualy quality of the appartment as far as I can see so it might take some hunting to track down something that is good value for money. There are also some areas with nice terraced houses, some in semi-gated communities, not directly on the sea front but still quite attractive. All of these options are good for rental in my opinion (although I will do some more research) and also good for my own purposes so I wouldn't say its not an area I dont like.

However, my ultimate goal is to have a house with a sizeable garden as gardening is my passion and Id be prepared to live without a sea view in oder to get something I can afford and am even considering some old farm house in the campo. The rental value of such a place is probably quite poor though in comparison, hence my plan to not buy it straight away but rather go for a place where I can make the rental income contribute meaningfully towards my mortgage costs etc.

Andy

Those that think that prices won't fall much further and/or that property is cheap now should have a look at the latest blog post by the Spanish Brick.

I don't think there's any hurry to buy.  It's best to wait because let's face it, there's not going to be any recovery any time soon and prices are likely to drift further lower.  Wait until the banks start flooding the market with their repos!!  It's just been a trickle so far...

 Yes, is the answer to that question.

Most of the agents i know are selling more properties per week now than they were selling per month this time last year.

If you can get what you want at a price you are happy with then it's always the right time.

I would say prices are back to 2003 levels.

Apartments for 40-50k

Townhouses 65-75k

villas 100,000k+.

Historically there will always people who buy at the right time and there will always be people who wish they had.......and talk about how they should have over and over again.

 The problem with buying a property is you will never know when the bottom of the market is until it has started to rise.  If we did know when the bottom was they we could all make a fortune by buying and selling at the exact right time   So the basic answer is I dont think anyone knows if the market will continue to go down or not.

At the moment there are properties for sale at prices which will not sale for years - other properties almost identical can be 20 % lower because the person is desperate to sell - these are the sort of properties which will sale and if you buy one of these then I don't think the prices will go much lower.

The other thing which must be considered is the exchange rate - the euro to sterling rate has fallen by about 7% in the last couple of months - if this was to reverse then properties would become cheaper to the British - if it continues to drop then then they become more expensive.  

In the end you must back your own belief and buy when you believe the price and exchange rate is right for you - go with your gut feeling.

Personally I think the prices of properties where people are desperate to sale will not signifcantly reduce but I think the exchange rate will improve and the rate will go up to about 1.25 within the next 12 months.

You also need to consider the downfall of the exchange rate...it's not very healthy at the moment...my UK state pension is down 60€ on the August figure...

fb

http://hubpages.com/hub/2011-property-boom  worth a read

Now is definately not a good time to buy. All statistics point to a further fall in prices and the gut instinct of anyone in the traditional buying spots for Brits will know that a further and sustained Hard rain's gonna fall. Oversupply, shoddy builders, greedy developers, unscrupulous agents, dodgy banks, corrupt local politicians are all a heady mix which was an accident waiting to happen. Then along comes the credit crunch and the goose stopped laying the golden egg for anyone involved in Spanish property. I've been watching the situation for 10 years and from about 2006 and before we'd even hears of the concept of a credit crunch it was clear that thing were going seriously wrong in Spain  but everyone denied it/covered it up and hoped for the best. It will be along time before there's a recovery. No-one is buying, those that are selling are trying to get out and the market that sustained the boom in the popular costas and dreary Murcia and Almeria has gone. Brits can't take money out of the piggy bank (Equity rich UK home) and buy into the dream with ease.

To go back to the original question, don't bother sinking dosh into something you don't like and which will only go down in value as thing stand for forseeable future. Take advantage of the ludicrously cheap rents and live the high life renting all over this amazing country. Invest in yourself, not Spanish brieze blocks.

by the sound of your post  davieboy  we are all doomed , like to know what buisness your in as we are definately seeing a bit of movement . but maybe people are just realising that its probably pretty much hit the bottom .also people should also realize that its not that much different in the uk .but it is easier to recieve a handout i admit that.

given the choice of general life quality you wont find much better than here.

Davieboy,please could you clarify your comment,dreary Murcia,Ihave lived in the region for 5 years and I am a lost to understand what you mean.

Sorry Moggy but I just can't take to Murcia - have been loads of times for work and just can't see its appeal. None of the fiery passion (and decent dance & music) of Andalucia, not blessed with anything like the rugged beauty of the Costa Brava or the wild Spain of the Costa de la Luz. It's not as boring and conservative as the Costa Blanca (North) I'll admit, but apart from the weather (and great tennis at La Manga, Steve) nothing would draw me back there.  As for the city, apart from the odd wedding cake of a cathedral it just doesnt compare remotely with the classics like Seville, Cordoba, Barcelona,  etc. People have been talking it up for years but I think like Almeria, sunny scrubland was very tempting to build on in boomtime and now chickens are coming home to roost in unfinished urbanisations. And has anyone spotted any signs of a second airport. When I first visited it was going to open in 2005. Hmmm.

Having said that, my nephew and his family absolutely love Murcia and return to Alcazares year after year. Thank the Lord we all like different things...and congratulations of five years in Spain.

Davieboy.you need to get past La manga,have you never walked in the sierra espuna and seen the mufflon roaming wild,or sat in a spanish restaurant hight in the mountains and watched the wild boar come down to be feed.We have a walking group of 40 plus who manage to find walks in the stunning country side around Totana,Mazarron and Alhama every  week.

The moors and christians festival in Cartagena has to be seen to be believed,also the semana santa in Lorca,We sit on a packed beach with the spanish in November to celebrate the sardine festival with music and entertainment and barbequed sardines in Mazarron.The list is endless of thinks to see and do,yes it is not commercialised like Torrevieja or Benidorm but if you want typical spain with local towns and coutryside you carnt beat it.

Murcia is a region not just a town,when you visited La Manga did you go up to the Bateria de Cenizas(portman guns)or walk in the Callablanque national park.And one of the true homes of the flamenco dance must also be La Union which holds a whole month of celebrations in August with dancers travelling from all over Spain to take part,this now as a new mining park for visitors which shows you a fascinating insight  in to the mining history of the area. like all areas Murcia has it all you just need to get out there and find it so dreary is not a word  I would use to describe it,again it all comes down to what people want from life and where they choose to live it

Forgot to mention Daviboy the airport is due to open at Corrvera in 2011 Thinks move very slowly in Spain we were told 2005 when we bought here.And  there is also talk of paramount being involved in the region with a theme park very similar to Disney world,and yes I know you will either love it or hate it bit it does show  big buisnesses are prepared to put money in to the area.

Take advantage of the ludicrously cheap rents and live the high life renting all over this amazing country. Invest in yourself, not Spanish brieze blocks.

davieboy,

I agree.  It's a renter's paradise in Spain at the moment.  Rents have been dropping like a stone the last few years and we have been taking full advantage

Buy inland Murcia at the moment. ready to live in properties,  2 and 3 bedroom from around 25000euros,

You own nothing if you rent.

You own nothing if you rent.

But you get to live like a king in Spain if you rent.  I know a lot of people renting villas/townhouses in the Sotogrande/Manilva area for absolute peanuts.  And rents are still plummetting....