Last Chance Saloon For The Spanish Golden Visa

It has been an interesting week here in Valencia. We have never before had so many initial client meetings both in person and via Skype, Zoom and Whatsapp video calls. Monday was mad with just too many coffees in the five client meetings that we had for onboarding people into our service. We also finished the week with four sales agreed (from other clients onboarded some time ago) and a couple of signings completed in notary.

Now on these pages before many years ago we called last chance saloon for pensioners before Brexit and got a flood of clients. I wonder if calling the last chance saloon for Golden Visa applications might lead to the same response from people planning to take advantage of the Spanish Golden Visa. And why do we say this? Well, simply put, that's the way things are heading and the general direction of travel in Europe now.

The Current Situation

These are many countries in Europe that offer a Golden Visa for investment in property. Before reading on just in case you don't know here is what the Golden Visa is.

The Golden Visa is given to those who invest over 500,000 Euros in property to be able to stay, live and work in Spain 365 days of the year without having the obligation to be in Spain for over half a year (A condition of maintaining a normal visa) It is given to those people who are from outside the EU27 (It's so sad not to say the EU28 any longer) and invest in the country in property. Investors looking to get the Spanish Golden Visa can also invest 1 million Euros in stocks and shares or deposit 1 million Euros in a Spanish bank to get the visa. The investment has to be maintained in order to keep the visa, ie you cannot buy property and then sell or mortgage it to reduce the 500k initial amount.

Golden Visas can be got in many countries in Europe. The cheapest, which is known as the Maltese Permanent Residency programme, can be had for just 100k but with the huge disadvantage of having to live in Malta. The Greek Golden Visa can be got for 250k, half of the price of Spain's but a World away in location and the added difficulty of not being able to understand anything written down (Thanks to Liz Rowlinson for the update, Greece's Golden Visa is due to rise to 500k very soon).

However, two countries have closed down their Golden Visa routes this week and there is pressure from the EU to significantly reduce the ease with which people can get citizenship by investment, the next step from the Golden Visa.

Ireland and more importantly Portugal have closed down their Golden Visa programmes this week. The Portuguese example is more important for us as it was the main competitor for Spain for Golden Visa applicants.

The Portuguese Government had previously significantly reduced the usefulness of the Golden Visa by limiting property purchases to outside Lisbon, Oporto and the Silver and Algarve Coasts. Now they have abandoned the Golden Visa programme completely. The reason is apparently that it has served its purpose of soaking up the excesses from the early 2000s building boom and that it is a contributory factor to the rise in prices of both purchasing property and more importantly for rentals. Rentals in Lisbon rose by 25% last year and obviously this is not sustainable in a low wage economy with limited numbers of properties for rent due to the impact of Airbnb and holiday rentals in general. The suggestion is that people were buying up all of the properties in order to get a Golden Visa and then renting them out for short term holiday rentals which were giving a good return on investment but pricing locals and other residents out of the market.

What's Happening in Spain?

Currently the Spanish government has not made any noises about restricting the Golden Visa but politically it's a hot potato as the small Mas País party has asked for it to be scrapped as it is "distorting the market and stopping people from getting a property". This comes on the back of discussions on the Spanish archipelagos about restricting the right to buy for foreign buyers, something that they most probably won't be able to do at least for European buyers as it goes against the Four Freedoms of the EU.

We don't want to alarm those of you planning on coming next year or further down the line but it might be worth bearing in mind that this might well be gaining prominence in politicians' minds as it's an easy populist win to blame foreigners for issues in any country despite it being totally lacking in any empirical evidence and there are elections coming up. A move towards getting the Golden Visa might be worth making or even redirecting your efforts towards the new Digital Nomad or Remote Worker visa (Of which you can read more in our blog of course. Just click the link.)

Whatever the direction of travel, things don't happen quickly in Spain. Even if the idea is to eventually stop the Golden Visa it will take time. Therefore, if you are thinking of coming to Spain with the Golden Visa it might be a good idea to accelerate the process to get in before the door shuts for non EU citizens. It has mostly been stopped for Russian buyers and to a certain extent Chinese buyers due to restrictions within the banking system. Currently if you are a UK, American or Canadian citizen (Or most other places) you can still get the Golden Visa.

What's Happening In The Market As We Reach Spring 2023?

At the end of 2022 there were lots of predictions that the property market was due a reset as interest rates rose and prices became higher. The strange thing is that in Spain at least prices are comparatively affordable compared with the situation at the top of the market just before the financial crisis in 2008. In most areas of Valencia prices have still not reached 2008 levels and if we consider the cumulative inflation of almost 30% in that time then there is a suggestion that property remains affordable. This is born out by the fact that there were a record number of property transactions in Spain last year with 650,000 sales made in the year and an increase of 44% in sales made to foreign buyers to number almost 150,000 in the year (Final quarter figures still to be confirmed as I write). December did see a slight drop compared with the previous December but there were special considerations on the tax front in 2021. A report produced by Idealista this week pointed out some very interesting findings.

In 2007 the average mortgage in Spain that was given out to buy property was 258,000 Euros whereas last year it was 179,000 Euros at lower interest rates. If we take into account the previously mentioned accumulated 29.75% inflation rate between 2007 and last year then the average mortgage is 54% below what it was just before the financial crisis. When we consider that interest rates on those mortgages are also generally lower and mostly have been taken at lower fixed rates it seems that we are far away from the levels of indebtedness found in 2007.

Equally, in 2007 there were many more buyers getting 100% mortgages whereas now just 50% of purchasers are buying without a mortgage 25.8% or under 50%, 22.5%. If we then take into account purchasers looking for 50-80% mortgages, 32.2%, over 80% of purchasers are buying with "affordable" mortgages (and equally mortgages where they are paying less than they would renting).

Then we have to take into consideration supply and demand. Compared with a year ago the supply of properties for sale has reduced by 7% in the Spanish market as a whole. However, in Valencia that reduction is a whopping 27%, the highest in Spain. In Alicante it is 25% the second highest reduction. Remember when we talked about scarcity?

Also there is a lack of New Build property coming into the market and that increases this demand. This is because of the cost of land to build, the increased interest rates demanded by the banks to supply money to builders, currently around 5.5%, and the increased costs of materials for the building, around a 20% rise since 2020, which would obviously mean that the price of the new build properties would be higher than already existing units. This has led to greater demand for current stock in good condition and also people looking for properties to modernise rather than buying a new build project which might not be finished for some time.

Here's the kicker though. Due to the drop in prices after the financial crisis in late 2008 onwards, prices in Valencia are still below 2008 prices, just. Meanwhile prices in places where our clients are coming from have shot up.

London has gone up from an average of 258k in November 2008 to 543k now, a rise of over 100%. Prices in the rest of the UK have risen by an averge of 80% in that time. In the USA, New York prices have risen by just 50% in that time whereas the USA as a whole reports over 100% price rises in real terms since 2008. California is 100% plus, Seattle 120% and Austin Texas by a quite scary 200%. In Canada, Vancouver prices have risen by 120% despite a 10% drop last year, Toronto is similar but prices only fell 5% last year. In Australia Sydney prices are obscene with a 180% rise since 2008, Melbourne "only" has a rise of 140%. Even in the Netherlands the rise has been just over 50% but hotspots like Amsterdam are also up by around 100%. These are many of the hotspots that our clients come from.

It's no surprise therefore that Valencia prices look "cheap" to those looking to buy from other countries as prices are the same or just below 2008 levels. Many of our clients sell their home in these places and then invest in a much better/bigger place here for a lower price or buy for a much lower price and keep a nest egg to live off.

*All price references above were taken as November 2008 until the last date available online sometime in 2022 or at the end of the year.

What Does It Mean For You?

In simple terms the potential threat to the Golden Visa and the reduction in choice, which looks like it is going to continue as the stock of properties on the market keeps reducing, means you should be looking to accelerate your purchase. For Golden Visa clients get here as soon as possible and get that Golden Visa in your pocket. Remember that it doesn't mean you have to become a resident, although why you wouldn't want to come to live in Valencia, you can still have the property and use it for less than half the year with the Golden Visa and then come over to live in your property on your original timeline when it suits you in the future.

For buyers not in the Golden Visa bracket then again you might want to think about getting here as soon as possible as prices continue to rise and supply continues to drop. You might also want to start thinking about looking for properties outside the city as featured last week on the blog.

Properties of the Week

Something for the weekend in the Cabanyal. It's unusual to find anything ready to go in the Cabanyal these days for under 200k. Here we have something though.

"TGIF, we are busy busy and week on week we are receiving more and more emails, enquiries, having meetings, organising orientation days, and then there's the people already here on the ground, ready, willing and able to look, find and swiftly secure something suitable, amazing or downright perfect.

So here goes a quick listing on a Friday because you’ll probably be spending some of your cold February Valentine's weekend snuggling up with a loved one, browsing the portals and seriously considering booking the next flight to Valencia.

In the absolute epicentre of Cabanyal a very decent lock up and leave corner apartment with bags of light, an excellent distribution that maximises every last centimetre and sold as seen in the photos, thankfully minus the toys, off the top of my head I can think of about 5 clients who will bust a nut to see this, but I promise I won’t mind if you come first.

Bring Your Toothbrush Penthouse

Valencia Property presents a fantastic penthouse apartment in Valencia, just off Avenida del Cid with a large south facing terrace. This top floor property with a lift comes fully furnished. Essentially if you can see it in the photos then it's staying apart from the chess set and a few personal items.

The current owners are off travelling so "arrivederci" as they are leaving their life and work here in Valencia.

Why their work? Because they modernised this property completely just a few years ago leaving a large open living space with kitchen and dining area leading out through huge patio doors onto the rather excellent terrace of some 20m2 plus.

You also get a large storeroom (or even office) outside on that terrace and to the rear of the property the main bathroom, a single bedroom and a large double bedroom with incorporated bathtub (take a look at the photos)

Well appointed as they did this modernisation for themselves, the furniture and fittings are all high quality and when lockdown came along they even ordered a pool table which will also be left (It's under the tablecloth by the sofa).

Turn up with your toothbrush and take on this rather fantastic penthouse apartment in Valencia.

*There's just one caveat. The owners are leaving at the end of June so you can reserve this now and move in at the end of June or you can pay an extra 5k for them to be able to find a rental place for a few months while they finish off their work here before leaving on a jet plane to explore different areas of our lovely planet.

** See, I got to the end of this description without mentioning that this is reference number 1999, without bringing Prince into it, without mentioning partying like it's 1999, without any reference to the apartment formally known as another name before the modernisation. We are mostly stuck in a 1980's-90's timewarp in descriptions but not always (And apart from that there was nothing, Purple, Paisley or Raspberry to hang the description on)

If You Liked This...

Then maybe learn a bit more about Golden Visas and other things in our previous posts below. Just click on the images to be taken to the posts which will open in new windows.

Why Valencia Is Great For People Looking For The Spanish Golden Visa
Why Valencia Is Great For People Looking For The Spanish Golden Visa

See Our Latest Properties at the link.

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