Sun, fun, siestas and Sangria, what’s not to love about Spain? Sure, the economy might not be all that healthy but if you’re a foreigner looking to explore new property markets, then Spain is the place to be. Spain has long been a popular holiday destination for Brits who need to escape to sunnier climes. In fact, many Brits, and not just those who are well off, already have holiday homes in Spain. But in light of the real estate crisis, which is directly related to the continuing economic crisis, Spain is now actively encouraging all foreigners, not just Brits, to invest in its property.
The situation five months ago
In June 2012, The Guardian reported that major banks in Spain were so desperate to sell the thousands of homes that had been repossessed that they created websites devoted solely to this purpose. According to the article, the banks were knocking up to 60% off the asking prices. That’s a good bargain in anyone’s book.
At the time, some property experts believed that the market still had some collapsing to do and that smart buyers should hold out for another couple of months.
The situation now
Spain has become even more desperate and has started offering residency to foreigners who buy property to the value of €160,000 (US$205,568).
Spain is also looking beyond the UK, targeting China, Russia and Australia. To put it in perspective for Australian buyers, news.com.au says that for half the price of a house in Australia, buyers can get a lovely home in Spain and automatic citizenship.
If you’re tempted to buy, remember that the economy is pretty bad and unemployment rates are increasing. So Spain is a good idea for a second home or a holiday home, but not necessarily as a permanent destination – unless you’re retired, that is.
Keep your eyes open
Price-wise Spain may be a buyer’s paradise, but that doesn’t mean you should hop on the web, find something you like and transfer the cash. You need to be as pernickety (if not more pernickety) about buying a house overseas as you would about a local purchase. You need to find a licensed real estate agent. You need to physically visit the property. You need to have the property inspected (many foreign buyers have been caught out by houses that look good but can’t withstand a bit of rain (eyesonspain.com).
You need to research property rights and laws because things can be a little sticky – get a lawyer if you can’t make head or tail of the legalese.
If you arm yourself with as much knowledge as you can about the Spanish property market (its ins and outs, ups and downs and, very importantly, its pitfalls) then now could very well the right time to invest in a villa by the sea. Or, you could hold the view that the property market has not yet hit rock bottom and hold out a bit longer. Either way, Spain is a destination to consider.
Written by Sandy Cosser on behalf of Ooba, a financial services provider that specialises in personal home finance with services that include securing competitive mortgage interest rates and securing first and second bonds.