2013 in Spanish Property was an article originally featured in the Spanish Property Magazine for iPad, get your copy at the link. I thought it was relevant for here though. Here is what you should be looking out for, what you need to be aware of and how you should be thinking if you are thinking of moving to Spain in 2013. There are opportunities everywhere but there are also traps the unwary can fall into.
Spanish Property In 2013.
If you have been keeping up with the news from Spain in the media over the last few weeks and months then you will know that 2012 was a disaster in terms of Spanish Property sales. Prices dropped on average by 15% and there is no sign of the price drops ending… for some.
Guess what, I am going to tell you that this affirmation is a crock of something that you may step on in the street to tell the truth.
The problem is the definition of the term average. The average was brought down, and crashing down in some cases by the rubbish, mediocre and frankly downright unsellable at any price. And again as usual I am going to tell you that prices didn’t fall by anything near that percentage for the usual suspects, location times three and quality.
Funnily enough the last four sales we have done have been made at asking price for the property. Yes you heard that right, no discount and no negotiation. The buyers saw that the property was priced so well that it would actually be a bit of an insult to offer less than what was being asked and that they would lose the property if they didn’t pay the full amount because there were other interested parties, investors mostly, buzzing about the property.
Now I am not saying that suddenly it is a sellers’ market, that prices are going to rise substantially or that the whole of the Spanish Property Market is suddenly going to rise like a Phoenix from the flames of the absurd overvaluations and rampant speculation that marked the whole decade of the noughties, that would be just stupid. However I am going to suggest that it is now the time to buy if you are careful about what you are purchasing.
Want some examples?
Attic flat in Valencia sold at 190,000 Euros asking price. I could have sold this to at least four different clients. One offered a lower price but it was rejected out of hand and sold at full price four days later.
Luxury property in Alfinach near Puzol. A gated estate bought for the ridiculously good price of 580,000 euros is now back on the market after a facelift at a smidgeon under 1 million Euros and has already had two offers which have been rejected at well above the purchase price allowing a good capital gain.
Valencia investment flat at 63000 euros bought for cost price and rented out at 450 euros pcm. 8% return which is a darn site more than the bank were giving on the money.
So what is rubbish, mediocre or frankly unsellable at any price? The following will fall into those categories and you should expect further price falls in the coming year or years on these properties until the excess is absorbed which will take a long time because frankly there is a lot of it.
* Most second hand bank repossession properties. Most of them are in the wrong place and in terrible condition therefore forget them.
* Most new bank repossession properties. Properties repossessed from developers have one major problem, the bank lent too much to begin with and are desperately trying to get rid of them without a major loss. Therefore the prices are usually too high but you are tempted into buying by “generous” mortgages on them over 40 years and at low initial interest rates. Don’t be fooled, you are buying negative equity.
* Most golf developments. The vast majority are a sprawling mess of overdevelopment and ridiculously badly built rubbish with a nice view of the odd (And sometimes very odd) golfer every now and again. You will have few neighbours and when you do have neighbours at peak times they will be noisy as they will be on holiday for a week and spend most of the day getting drunk when they find that not hiring a car was not a great idea as the developments are in the middle of nowhere. You may get five hours peace when they go out to play golf on the mostly deserted courses.
* Beach properties requiring a long hike to get to the beach. Beachside is good. Beachside but two or three kilometers walk to the beach isn’t. In fact it isn’t even beachside really is it?
* Rehab projects in the middle of nowhere. However beautiful your rehab work is remember one thing, if the location is the “Quinto pino” (Middle of nowhere in Spanish) then after a beautiful rehab it is still in the “Quinto pino”.
* North facing properties on the wrong side of the mountain. What’s that you say? You weren’t told about the lack of any sun for six months of the year!
Also when you are buying this year there are some issues you need to know.
– Capital gains tax on property has been raised.
– VAT on new property has been raised from the reduced rate of 4% up to a new rate of 10% (at a stroke killing off the market for new homes unless the developer or builder absorbs the costs by effectively reducing prices by 6%)
– The tax on Spanish assets for non residents is now being actively pursued by the tax authorities. Therefore if you have property here and are not a resident you should expect a tax bill this year.
– The tax on purchase of a second hand property, ITP, has been raised to at 8% from 7% previously at least in Valencia. This tax is raised at a regional level so it varies by region between 6-8%.
So, all in all I would say that it is a very good time to buy in Spain but with caution. Use a good buyers’ agent or do an extreme amount of homework. Don’t fall for the ridiculous adverts still running about buying your own piece of paradise and think about what it is you want from your property in Spain. Is it for investment and rental income? Is it for you and your family to enjoy, chill out and relax and if so is it an apartment or house you want as obviously a house has greater running costs? Is it somewhere to pass onto your kids in thirty years time? If so think about the build quality even more than the price.
Whatever it is for get in touch this year for the best advice possible. We save thousands on Spanish Property Purchase for clients each year. And make sure to keep in touch by subscribing to our blog and if you have an iPad subscribing to the SPM every month. The best deals and the best properties from the best agents in Spain.