Acre On the other hand this is a fantastic buyers market, so you might be best off to get the place you really want now rather than keep paying rent for a few years and end up with a really cheap place that you doesn't really suit you.
Another quote:- The decline in prices of dwellings on the Costas have seen the largest devaluations since the start of the crisis. As shown by TINSA*, between December 2007 and April 2013 housing declined in Spain by 37.2%, but by 45.1% on the Mediterranean coast.
That quote makes me glad I bought my present home in 2002. I was also fortunate that the new property, which had been contacted by another person whilst in the planning stage, came back on the market six months before completion, but I was able to buy it at the original price, reflecting a considerable discount in the region of 40% on the current market value at that time.
Assuming my home continued to rise between 2002 and 2007 along with the market in general, if I have now lost 45% on the 2007 value, I estimate that I could today sell at a ‘bargain price’ and still walk away with a reasonable profit.
I cannot imagine that anyone buying today will show a similar profit for a very long time.
If those who bought in 2007 had instead had the foresight to rent, then the 45% loss they have suffered in it's value, would by now be considerably more than they would have paid had they rented instead of buying.
(Example: My property was worth about 300,000 euros in 2007, 45% of that is 135,000. A fair rent for my property since 2007 would have been less than 1,000 per month, so one could rent for at least 11 years, before buying would have been a better bet. And that is assuming prices don’t continue to fall, as they probably will. A person renting saves on other ancillary expenses which the landlord may bear e.g. IBI, Community charges, maintenance. If the renter had bought, then they would also have either mortgage interest to pay, or if they had cash, have lost the opportunity to use that money for another purpose, or have lost at least bank investment interest during that time. Even in a bank at a 'low average' 2%, after tax, that would have been 6,000 p.a. or six month rent, which since 2007 would have amounted to 36,000 plus compound interest, or another 3 years rentals. So in total around 15 years renting, before reaching the point where buying might have been better. And of course during that time having the flexiblity to move anytime you like without having to find a buyer, incur agent and legal fees etc )
If the trend continues, then renting may still be the very best course for some time to come. Of course I don't expect anyone connected with the business of selling property to show they agree with this ! And, if I were selling now, I too would not express this view and would enthusiastically disagree with anyone who did..
* www.tinsa.es/en
Tinsa (claim to be ) a leading multinational company for real estate valuation, analysis and advice. It began operating in Spain in 1985 and since then has consolidated its leadership position every year in terms of the geographical coverage of its work, its volume, specialisation and reputation. It currently offers integral real estate services and its principal shareholder is Advent Internacional
This message was last edited by Julianx on 14/06/2013.
This message was last edited by Julianx on 15/06/2013.