Spain: Don't Break Open The Cava Yet

Is Spain ‘back’?

The country used to be flavour of the month - every month - in many of Britain’s property supplements and websites. But since 2010 in particular the usual ‘retire to the sun’
articles have taken a back seat as the housing market suffered.

However these articles are beginning to reappear as newspapers and magazines try to coax back international advertisers (domestic estate agency advertisements and those from new-build developers in particular are almost back to pre-crash levels).

Back, too, are offers of press trips to journalists to sample the best of Spain - two of them hit my inbox only this week. But I’m not quite so sure the good times are here yet.

The ever-reliable Mark Stucklin, who has run the Spanish Property Insight website for over a decade now, suggests there are glimmers of light at the end of the housing crash tunnel, but that these are not as bright as some make out.

“The latest numbers from the General Council of Notaries say home sales surged 40 per cent in March. But the week before last the figures from the National Institute of Statistics showed that Spanish home sales plunged 24 per cent in February” he notes

In reality, he says, rather than lurching as these largely-unreliable statistics suggest, the market is “just bumbling along the bottom of the crisis.” The apparent volatility is down to a series of fiscal measures, such as mortgage interest tax relief, coming to an end.

Other indices show a mixed picture too.

For example, another report from Spanish notaries suggests the number of foreign buyers rose 9.8 per cent in 2013 but the proportion of British buyers dropped - again - to only one in seven of all overseas purchases of Spanish homes.

And while the Costas saw an overall rise in overseas buyers last year, the story was not the same throughout the country - Galicia, Castilla y Leon and Navarra saw annual falls of 20 per cent or more in the number of non-Spanish purchases.

Knight Frank’s global price index of 56 countries, issued in March and looking at data from the final quarter of 2013, lists Spain right down in 50th place.

While Kate Everett-Allen, who compiles the index at Knight Frank, says “global house prices are mirroring the upturn in the global economy...our index rose by 8.4 per cent in 2013 compared with 4.6 per cent in 2012” the story for Spain was sadly the reverse.

In the calendar year of 2013 Knight Frank reports the country’s prices fell a further 4.0 per cent - almost half of that fall was in the final quarter of the year, although the annual rate of decline appears to be slowing.

Spain of course remains extremely popular - for tourists, if not necessarily buyers - but the evidence is that in many areas property prices are still falling. One British agent informed me last week that there remains up to eight years of new-but-empty stock on the market.

This makes it a fantastic buyer’s market, but those taking the plunge should be under no illusions: so far, recovery has not come to Spain, so the best bargains may still be to come.

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