The British appetite for purchasing second homes abroad has expanded in the last five years, from buying in the traditional markets such as the Mediterranean to venturing out into new areas like Eastern Europe and the Middle East.The result of this is that Spain’s property market has remained very buoyant over the years, and there seems to be very little sign of this situation changing in the foreseeable future.

Spain remains the number one destination for Britons – over 69,000 people relocated there in the last year, making it the most popular country for second homes.When it comes to buying a holiday or investment home, Spain offers a wide range of properties in a market that’s both sustainable and growing. Another major factor in this phenomenon has been the increase in the number of low-cost flights and shorter flying times, which have aided purchasers in making that final decision about buying property overseas.

Performance to date

Spain’s property market has experienced a massive rise in house prices over the last 20 years, and these prices look set to continue rising for the foreseeable future, especially in the popular coastal areas. Experts now say that prices on the Costas will continue to rise, although at a less dramatic pace.

The Costa del Sol and Costa Blanca are two of the most popular tourist spots and consequently are prime investment areas. Property prices are relatively high in both areas but because there’s such a huge demand for housing on both Costas, you can be fairly sure that if you invest there, you’ll be sitting on a gold mine in the long term.

The Costa Blanca is one of Spain’s principal tourist spots, and millions flock here every year for the radiant sunshine, white sand and exciting entertainment. However, there’s much more to the Costa Blanca than its tourist hotspots, with small, sandy coves, rugged hillsides and the delightful, rural landscape, dotted with orange groves and sleepy Moorish villages. To the south, visitors can see the citrus and palm-filled parks of Elche, with its date plantations.The town of Torrevieja in the region is often voted one of Spain’s ten cleanest towns, for which it is awarded an Escoba de Plata (silver broom) in Madrid.
Denia, the capital of the Marina Alta, is a modern, cosmopolitan city that offers visitors and residents a range of services. It owes its current importance to its historical status, and it was known in medieval times as the Marquesado de Dénia.

If you intend to buy property in Spain mainly for investment purposes, you may be deterred by the constant gloomy predictions about an imminent price crash that will leave the country’s housing industry in a state of crisis. These bleak forecasts have been around for some time but fortunately for Spanish property owners, the bubble hasn’t burst yet. Experts now believe prices are likely to stabilise rather than plummet.

The dream of buying a property in Spain has been realised by many thousands of foreigners, its popularity due to factors like the wonderful weather and the abundance of superb facilities. Spain has over 200 golf courses, numerous beaches and an attractive culture, plus a delightful, relaxed way of living. Owning a Spanish property is becoming more popular as it provides both an excellent investment and a holiday home.

Buying as an investment

There’s a huge rental market in Spain, where investors can purchase properties and let them out throughout the year. Unlike that of other European destinations, Spain’s climate is mostly sunny and warm during the year, even in the winter months. This year-round rental opportunity provides attractive returns on investment properties. Spain remains a top choice for holidaymakers, providing a variety of self-catering accommodation, apartments and private villas at affordable prices.

The Spanish property market is still experiencing a boom in foreign investment.With property prices in some areas increasing at approximately 25.5 per cent each year, the market is experiencing a rush of foreign investors, primarily from the UK and Ireland. More and more people are buying a second home or investment property in the country.

There are bargains to be found in the coastal regions, with an estimated 180,000 homes being built this year, and a booming buy-to-let market makes coastal properties in Spain a very attractive investment. With prices rising and an abundance of people looking to rent property for family vacations, golfing holidays and job placements, it appears that Spain is a safe and wise investment.

The property market today

The Spanish property market is currently buoyant, particularly along the Costa Blanca, and it closely mirrors market developments and price hikes in the UK. This buoyancy is expected to continue as the budget airlines expand their destinations, because this makes Spanish property even more accessible to a greater number of people.

In the past 18 to 24 months, there has been an appreciation in property prices of 25 to 30 per cent in certain resorts, but in some areas this could be up to 40 per cent. While we’re being told that this is set to slow down, there will remain a healthy profit on property for the investor. British interest in Spain hasn’t waned, despite recent reports to the contrary, and around 25 per cent of the properties purchased by overseas buyers are bought by Britons.

In 2003, it was predicted that Spanish property prices would increase by 13 per cent during 2004. In reality, prices increased by 15 to 20 per cent, and the average property price per square metre in Spain sits at €1,591.85. Despite this slight price hike compared to what was predicted, the reality is that Spanish property remains affordable for the majority of potential British investors.

Looking to the future

The Spanish property market is expected to see price increases of up to 10 per cent this year. By 2008, the number of foreign buyers in Spain is expected to exceed Spanish owners in popular tourist and coastal areas around the country. Over the next four years, 150,000 properties will be built purely for foreign investors and second-home buyers.
All in all, it’s safe to say that if you’re looking to invest in a home abroad, Spain still represents an attractive and ultimately affordable option. The Spanish property market is as buoyant as ever, with an extremely high level of supply and demand.

 
REGIONAL PRICE INCREASES IN 2005

Region - Percentage increase throughout 2005

Murcia - 17%
Valencia - 18.3%
Madrid - 17%
Castilla–La Mancha - 23.5%
Andalucía - 17.9%
Cantabria - 11%
Canaries - 11%
Aragon - 22%
Asturias - 11%
Balearic Islands - 13%
 

FACTS

• Madrid continues to be Spain’s most expensive region, with property costing €2,617 per square metre.
• Approximately 160,000 UK nationals live in Spain.
• Spain remains the most popular area with foreigners (mainly British), outnumbering the Spanish in 9 out of the 15 coastal regions.
• 600,000 UK residents own homes in Spain and this figure is set to double over the next five years.
• 40 per cent of homes built on Spain’s Mediterranean coast last year were built for British investors.
• Property price inflation was 15.7% for the first quarter of 2005, with Spanish price inflation the third highest in the world after Hong Kong and South Africa.