Price of new housing in Spain falls

Prices for New Housing Drops for the first time in 15 years

The slowdown in the property market in Spain has led to a situation where house prices have fallen by 1.2% during the first 6 months of 2008. This is the first fall in prices in 15 years according to the Sociedad de Tasación which has been carrying out studies of the housing market in Spain for 25 years.

The report published by this organization which values properties and is used as a reference for what is happening in the housing sector shows that for the first semester of 2008 that prices have fallen in the capitals of 35 provinces. It also finds that prices have risen in just 11 provinces, although not above inflation, and that prices have stayed the same in 4 provinces.

According to this latest study the price of new housing in the capitals of provinces closed at the end of June at an average of 2,781 euros per square metre which is 1.2% less than the previous semester when prices rose by 1.1%. In the first semester of 2007 prices rose by 4%.

Most expensive real estate in Spain

The most expensive city to buy a flat in is still Barcelona, where a square metre costs 4,500 euros despite a 0.4% drop in prices there followed closely by San Sebastian where prices have dropped by 0.6% and a square metre costs 4,035 euros. Prices in the Spanish capital, Madrid, have fallen by 1.4% where a square metre costs 3,916 euros.

Cheapest place to buy a house in Spain
On the other hand the cheapest prices can be found in Pontevedra where a square metre costs 1,848 euros, Badajoz where a square metre costs 1,525 euros and
Lugo where a square metre costs 1,547 euros.

The Sociedad de Tasación concludes that these figures show a significant slowdown in the Spanish housing market above all in tourist areas and areas on the outskirts of cities where there is a large stock of unsold new housing. It also points out that according to the Spanish National Institute for Statistics the number of flats started and finished from January to March has gone down compared to the same period last year.

It also concludes that the considerable slowdown in the Spanish property market is due to the difficulties in finding credit, high prices and recent rises in the Euribor.

Property surplus in Spain

Report forecasts a surplus of over a million properties in Spain

A report compiled by the consultancy agency Forcadell together with the University of Barcelona (UB) presented last week by the expert and professor Gonzalo Bernardos, states that ‘practically nobody is selling anything’ and stresses that there is no lack of properties in Spain. In fact, according to the report by the end of this year there will be almost a million surplus properties for sale.

Forcadell believes that the steps that need to be taken are primarily to assess the real situation. It also believes that possible solutions lie in not trying to stimulate the production of more flats but to allow for a cooling off period in which a large part of the actual stock could be absorbed into the property market.

Forcadell proposes a packet of measures. Firstly, the opening of a period of ‘indefinite’ sales in the prices of properties something which would imply a substantial reduction in current prices and would be uniform for each city.

It has also suggested that the special promotions included in the campaign of sales should be financed under special conditions. According to the consultancy agency the cost of the subsidy in the interest rate, which would be guaranteed over a period of five years at 2.5% and which would also include loans of up to 100% the value of the property should be shared by property developers, banks and building societies.

In recent reports Forcadell gave clear warnings over the difficulties the property sector was facing. According to its forecasts the price of property in Spain will go down on average by 20% between 2007 – 2009, a fall caused principally by the excess number of available properties and a significant drop in demand for properties. In his opinion, speculators and investors will not get good results which will lead many of them pull out of the property market all together and invest there money elsewhere.

Official figures confirm slide in Spanish construction industry

Brussels confirms a drop of more than 10% in the building sector in Spain

Production in the construction sector of the Spanish economy registered a fall of 10.1% over the last year from March 2007 to March 2008 - the heaviest fall out of all the Eurozone states who provided figures. Most notably Ireland has not provided information on the state of its construction industry which has also been badly affected by the downturn in the property market.

In any case, the sharp drop registered in the construction industry in Spain is much worse than the average for other Eurozone states which is 1.4% for the same period. The average drop for all EU member states is even less at 0.1%.

Out of the twelve countries that provided information for this 12 month period those that experienced growth in the property market were Rumania (32.5%), Sweden (23.2%) and Slovenia (22.2%); while the largest falls in this sector were registered in Spain with a drop of 10.1% followed closely by Portugal with a drop of 6.5%. The economies of Ireland and the UK also believed to have been badly affected by the slowdown in their property markets.

In Ireland activity in the construction industry fell by 14% in the last quarter of 2007 compared to the same period in 2006. This means that Ireland could be experiencing a similar fall in production in the construction industry as Spain.
By sectors, activity in the construction of buildings has gone down by 2.1% in the Eurozone and 0.8% for the whole of the EU following rises registered in February of 3% and 5% respectively.

In the sector of public works production in the Eurozone went up by 1.3% and by 4.2% for the whole of the EU. However, if monthly figures are compared then the outlook is gloomy with a fall of 2.2% for the Eurozone and 2.5% for the whole of the EU.

According to Eurostat, which provided the statistics, out of the EU member states that supplied information the biggest monthly falls between February and March have been registered in Germany (12.3%), Slovenia (12.2%) and the UK (9.0%) compared to a drop of 1.7% in the Spanish sector for this period.

On the other hand, only Sweden and Poland increased production in the construction sector in March with rises of 5.1% and 1.4% respectively.

Property developers in Spain confirm drop in sale of homes

The president of the Association of Spanish Constructors and Promoters (APCE), Guillermo Chicote, yesterday confirmed that the sale of flats went down by up to 60% between September and April and that there is now a surplus of around 500,000 unsold properties. Gerardo Díaz Ferrán, from the CEOE also warned that if the government did not adopt ‘brave and aggressive’ measures to alleviate the economic slowdown in Spain there would be half a million more unemployed by the end of the year.
According to Chicote, the situation will get worse in 2009 and that instead of 300,000 unemployed workers in the construction sector this number would rise to 500,000.

The APCE announced that if more properties were not sold then the ‘Treasury would not have money coming in and that it would have to pay out more money in subsidies to the unemployed’. Chicote also suggested some ways of increasing the demand for housing by creating a new category that fell between subsidised state housing and private housing with a fixed price.

Promoters have also asked the government to take a number of financial steps within the space of 3 years one of which would be to update the tax rebate for buying a property set in 1998 at 9,015 euros.

With respect to prices, APCE predicts that prices will continue to increase slightly below the rate of inflation. According to the latest official figures published by the Housing Ministry the price of flats went up only by 4% in this last quarter compared to an inflation rate of 4.5%.

Spanish building industry suffers EU's highest drop

Spain’s contruction industry experiences highest drop in production in November compared to all other EU countries

According to figures published by the EU statistics office (Eurostat) production in Spain’s construction industry dropped by 3.9% in November 2007 compared to the previous month. During this period the real estate sector throughout the Euro zone suffered a fall in productivity of 0,8%, while the 27 EU member states experienced a drop of 0.2%.

In October 2007 statistics showed a rise of 0.6% in the Euro zone and a rise of 0.3%for the EU 27. The statistics compiled by Eurostat take into account seasonal variations that affect the real estate sector and include subsectors and civil construction.

Among the 10 EU member states that have provided statistics for November 2007 Spain saw the steepest drop in production followed by Portugal with a drop of 2.8%, Slovenia saw a drop of 2.6%, Germany 0.7%, France 0.4%, Slovakia and Holland both experienced a drop of 0.1%. The only 3 EU member states that saw monthly rises in productivity were Poland (2.3%), Rumania (1.8%) and Sweden (1.6%).

On the whole the construction of buildings dropped by 1.1% in the Euro zone and 0.2% among the 27 EU member states during October 2007.

Statistics for the civil construction industry also dropped by 0.5% both in the Euro zone and among the EU 27 member states in November last year. This compares unfavourably for figures for the previous month which shows a growth of 0.1% in the Euro zone and and 0.4% for the EU 27.

Statistics also show a drop in productivity in the construction industry when comparing figures for November 2007 and November 2006 with a drop of 0.8% for the Euro zone although it rose by the same amount among the EU 27.

When comparing statistics over 12 months production dropped in 4 EU member states and grew in 6 others. The highest falls were registered in Germany and Slovakia at 6.3% and Spain at 6.2% followed by Portugal at 2.8%.

The highest growth in productivity in the construction industry was in Rumania which experienced a spectacular growth of 32.6% together with Poland which saw a growth of 11.1%. Slovenia experienced a growth of 9.1%, Sweden 6.3%, Holland 4.8% and France 2.1%.

Sector by sector the construction of buildings dropped by 0.7% in the Euro zone although it rose by 12% among the EU 27 while civil construction dropped by 1.2% in the Euro zone and rose by 0.15% among the EU 27.

Spanish constructors want more land to build on

In a congress organized by APD Spain’s main construction companies have said that the price of property could rise sharply within two years if more land is not made available for new buildings.

Fernando Martín, the president of Fadesa, complained that the procedures for making land available to build on could take up to six years in Spain when in other countries such as Morocco or Mexico it had been reduced to just one and a half years.

He also claimed that the price of new flats in Spain would not go down and interest rates would not rise any further in contrast with the predictions made by many experts.

Martin pointed out that since the local elections earlier this year no land had been processed for new construction. He said that the way that the law was being applied was prejudicing the construction industry in Spain.

Furthermore, the group of Spain’s main construction companies known as the G14 said that more land needed to be made available for new buildings because they only built the flats that people wanted to buy and insisted that the demand for new flats wouldn’t drop from between 450,000 and 500,000 per year.

Martín warned that employment levels could be affected if the disincentive to build new demand for new properties continued and that according to his figures the promotion of new property could drop by up to 60% as it did over the last six months.

Real Estate slow down in Spain puts Spanish savings banks at risk

American Agency Moody’s detects 5 Spanish savings banks at risk.

Financial analysts at Moody’s believe, like the Spanish government, that property prices in Spain will continue to rise slowly. However, the agency doesn’t rule out other possibilities such as a slight drop in prices in the Spanish property market. It believes that if this situation arises then Spanish banks, above all regional building societies which have lent a lot of money to construction firms, will be hit the hardest.

The American agency thinks that banks and savings banks are more at risk from construction firms defaulting on their payments than families who can’t pay their mortgages. With regards to those who fall behind on their rent the European Association of Arbitration has pointed out that if this occurs then it is almost always during the first few months of the rental contract being signed. Although, the most pessimistic forecast of a property crash occurring in Spain has been ruled out for now, a lot depends on macroeconomics and the healthy evolution of the world economy.

While the number of individuals and families who can’t keep up their mortgage repayments is still very low in Spain, the percentage of mortgage defaulters has been rising steadily. While in March it was just 0.462% this rose to 0.506% in June. This could be a cause for concern for savings banks who have granted loans to construction companies, given that the figure was under 0.3% just two and a half years ago. Moody's has identified 5 Spanish savings banks particularly at risk, although it has declined to name them.

Related: Spanish banks # Spanish savings banks # Ranking of Spanish banks

Average time it takes to sell property in Spain

Selling a flat in Spain takes on average 4 months, one month longer than two years ago

According to information from DonPiso, a national chain of estate agents, the average time it takes to sell a flat has increased by 40% over the last two years from 86 days in 2005 to 120 days in 2007.

The report claims that the increase in the time it takes to sell a flat in the Spanish property market is a logical part in the normalization process (as opposed to crisis) currently being experienced by the real estate sector in Spain. It also points to the continuing increase in interest rates and uncertainty over future rate rises as a factor in the slight drop in demand for property. The report claims that property owners think that their properties are worth more than their real market value and tend to overprice them which also makes buyers more cautious.

Other factors which have affected demand for property is that more people are investing in the stock market rather than property. The report expects property prices to increase at a slower rate in 2007. It forecasts an increase in prices of between 5% and 7% this year both for new properties and ‘second hand’ properties.

However, despite the present slowdown in the property market in Spain demand for properties remains steady and the report predicts that Spaniards preference to buy rather than rent together with the growing number of immigrant house-buyers will help to keep the real estate market in Spain buoyant for the foreseeable future

Spanish real estate market: Expectations 2007

House prices expected to rise by 3% in 2007

According to a study by Asprima, the Association of Madrid Property Developers property prices will rise by 3% 2007 followed by stagnation in prices in 2008 and then a rise of 1% in 2009.

In a report presented on the first day of a Real Estate conference in Madrid Asprima foresees a drop in demand for properties of around 15 – 20% which will lead to a situation similar to the UK, Australia and the US where the housing market went through a boom but has recently remained stagnant partly due to the rise in the cost of borrowing.

Moreover, the report states that the Spanish housing market is a turning point and is moving towards a less favourable situation. However, it also confirmed that once prices have adjusted realistically demand will rise once again.

The president of Asprima, José Manuel Galindo, suggested that the Spanish property market is undergoing a process of normalization with prices rising less and less production. He blamed the recent rises in interest rates. Despite this he still considers that the demand for housing will remain high over the following 6 or 7 years.

Furthermore also José Manuel Galindo referred to the 4 million immigrants who have already moved to Spain which could result in a demand for more than 100,000 new properties per year.

Sharp fall in real estate share value in Spain

Following sharp rises in property prices over recent years Estate Agents suffered a sudden fall in value on the Spanish stock market yesterday.

This collapse in value brought back memories of the damage suffered by internet companies when the technology bubble finally burst. Many analysts believe that property prices have blown up far out of proportion partly due to property speculation. Yesterday the Valencian Estate Agent, Astroc, suffered a spectacular fall in value on the stock market. However, what is not yet clear is whether this precedes a crisis in the housing market or is just an isolated incident.

The evolution of the small estate agent, Inbesòs, showed how important speculation is. Following a fall of 26% at the opening of the market it then shot up by 37% giving respite to some nervous investors. Infact Inbesòs has risen by 700% in three years and it is not even one of the most profitable in the sector.

The government played down the importance of what happened in yesterday’s stock market saying that some sectors had experienced excessive growth. It considered that people should not talk of a collapse but that it was a mere correction following historic highs in recent years. It also said that the value of Estate Agents continued to be higher than 12 months ago although some companies had grown out of proportion to their value which gave rise to the idea of a crash in this sector of the stock market.

The Governor of the Bank of Spain, Miguel Ángel Fernández Ordóñez, denied that the collapse in the value of various companies in the sector could be considered as an indicator of the property bubble bursting. He said that on the stock market rises and falls were never slight.

Fernández Ordóñez repeated that there is a gradual slow down in the property market and that prices were still far from crashing. The Governor of the Bank of Spain reminded the press that property prices grew 7% last year compared to 17% the previous year.

Madrid and the Mediterranean coast most popular with builders

75% of new flats built in Madrid and parts of the Mediterranean

Over 900,000 building licences were granted last year, 11.9% more than in 2005, which resulted in the construction of 818,573 flats or houses according to the Spanish Association of Architects.

Out of this total 830,000 flats were destined for private housing (vivienda libre) which roughly translates into a 13% increase on the previous year and just 75,489 were subsidized state housing (vivenda protegida - VPO) which only signifies a 1% increase.

The majority of new flats and houses were built in Madrid or parts of the Mediterranean. In fact, three quarters of the building licenses were destined for these two areas.

VPO construction accounted for just 8.2% of the total of new construction in 2006. In Madrid just 1 in 4 new flats which is approximately 18,730 flats were destined to be VPO last year. Andalucía came next with 11,498 VPO flats and Catalunya with 7,094 VPO flats. In some autonomous communities less VPO flats were built in 2006 than the previous year. For example in Navarra there was a drop of 31.7%, in Galicia there was a drop of 28.4% and in Castilla y León there was a drop of 24.5% while the most significant advances were made in Cantabria, La Rioja and Baleares in the construction of VPO flats.

Lowest property prices in Spain

Only ten cities left in Spain where one metre squared costs less than 1000 euros
House and flat prices are nearing their peak, however this peak is very high. There are only a few cities left where you can find a house or flat for less than 1000 euros per square metre and this is only in a few neighbourhoods. According to a report by House valuers (Tecnitasa) these cities are Cuenca, Murcia, Jaén, Melilla, Alicante, Badajoz, Las Palmas, Lugo, Zamora and Jerez de la Frontera. The report covered 61 Spanish cities in total.

However, the cheapest cities influence the figures significantly. In the area called La Paz, in Murcia, prices have risen from 650 to 830 euros per square metre in one year. In the cheapest areas in Jaen, prices have risen from 670 to 850 euros per square metre. Both rises are above 25% in just one year.

On the other hand the highest prices have remained static. In the Paseo de Gràcia in Barcelona a square metre costs 11,000 euros and 10,000 euros in la calle Serrano, in Madrid.

There are 10 cities where the price per square metre has risen above 6000 euros. Apart from Madrid and Barcelona. These cities are San Sebastian, Bilbao, Zaragoza, Marbella, Santander, Oviedo, Sevilla and Gerona amongst others.

However Estate agents have confirmed that the drop in property prices is becoming more and more generalized following the boom during the last few years. In fact two reports published yesterday state that property prices dropped in the first trimester of the year. Second hand houses and flats rose less than 1% in Madrid and Barcelona and prices dropped in many areas of both cities. One report by Expocasa goes a step further and states that property prices dropped during the first trimester in 66 of the 91 cities and towns with more than 25,000 inhabitants.

The cities which have experienced significant drops in prices are Coruña (a 6.8% drop), Valladolid (4.5%) and Cáceres (3.7%), according to Expocasa, while Idealista highlighted a drop in prices in San Fernando de Henares (3.5%) and Esplugues de Llobregat (5.2%).

María Antonia Trujillo, the Minister for Housing yesterday said that the housing sector is stabilizing and going back to figures that were normal 16 years ago. Speaking at a conference organized by one of Spain’s largest unions, UGT, in Cáceres, she said that the government’s objective was for the annual rise in house and flat prices to match the rate of inflation.

Spanish housing market

Latest figures released by the Spanish Conveyence Association ST confirm the general trend of of a slower rise in the price of housing in Spain with respect to recent years when the Spanish property bubble was at its peak.

According to the figures published today, house prices rose by 9.8 percent during 2006. The growth in the second term of 2006 at 3.3 percent was markedly lower than the 6.3 percent growth in the first six months of the same year.

The average price of new housing in Spain now stands at 2,763 euros per square metre according to the ST.

House prices rose last year in all Spanish cities, but in some much more than in others. The regions in which consumers experienced the highest rise in house prices were Aragón (16.9 percent), Castilla La Mancha, Valencia and Catalonia. House prices rose the least in Asturias (3.9 percent), the Basque Country (5.8 percent) and, perhaps surpisingly, Madrid, where they rose by just 6.6 percent with respect to the previous year.

Related:
House prices in Spain
Protests over the price of housing in Spain

Most popular areas in Spain

Property buyers in Spain prefer the Regions of Murcia and Valencia

According to figures released this week by the Spanish Housing Ministery, Murcia and Valencia have overtaken the Costa del Sol to become the most popular areas among non-Spanish property buyers.

In the second quarter of 2006, 11.7 percent of all property purchases corresponded to foreign residents in Spain, and 2 percent to non-residents. However the regional breakdown calculated by the Housing Ministry reflects the popularity of the Murcian and Valencian regions where almost 20 percent of all property purchases were carried out by non-Spanish residents (19.5 in Murcia and 19.2 in Valencia including the provinces of Alicante and Castellón). Alicante, where 25 percent property sales went to foreign residents, was the most popular province.

Ranking of the most popular areas in Spain

According to the figures published by the Housing Ministery, the ranking of the most popular regions among foreign property buyers in Spain is as follows:

Murcia (19,5%)
Region of Valencia (12,2%)
Balearic Islands (15,9%)
Madrid (14,4%)
Canary Islands (13,7%)
Catalonia (13,4%)
La Rioja (11,3%)

The overall classification of property purchases per region, including Spanish property buyers is the following:

Valencia: 7.470
Catalonia: 5.768
Madrid 3.834
Murcia 2.108
Canary Islands: 1.535
Balearic Islands: 1.030

Related links:
Spanish property market
Guide to the province of Alicante
Guide to Murcia
Guide to Valencia

Average mortgage rates in Spain

The length, size and number of mortgage loans in Spain continue to rise.

According to figures released by the Spanish Property Registrars Association yesterday, and inspite of the recent rise in interest rates, property-buyers in Spain are opting for longer loans and the average length of a mortgage in Spain has risen to 26 years and 3 months, that is six months longer then the average stood at the end of 2005.

The average monthly mortgage payment has also risen to 789 euros, 40 euros more than during the last three months of 2005.

And more and more people are taking out morgage loans according to the figures released by the Spanish Mortgage Association yesterday which indicate that during the first term of 2006 business in the loans and mortgage sector rose by 26 percent compared to the same period in 2005.

Average price of property in Spain.

Meanwhile house prices continue to rise, although as predicted the rate has not increased with respect to the previous year. According to the Registrars' report released yesterday, house prices in Spain have risen by 15 percent over the past 12 months which is exactly the same as the previous 12 months. The cost of new housing in Spain rose by 11 percent, considerably less than resales where prices rose by over 19 percent.

The average price of property during the first term of this year was 1,916 euros per sq metre.

Related:
Mortgages in Spain
Spanish bank mortgages for non-residents
Spanish banks

Private buying and selling of property in Spain

Euroresidentes has participated in the design and launch of a new site designed to encourage direct sales of property in Spain. The site is called Tu Tipi and contains adverts and photos of property for sale in Spain.

The technology behing Tu Tipi is based on the simple formula of Craiglist which has been so successful in linking sellers and buyers in the USA. But while Craiglist provides the basis for practically any kind of supply-demand transaction between two people (for example the site played a major part in finding emergency accommodation for victims of the Katrina hurricane last year), Tu tipi is limited to connecting people wanting to sell or rent property in Spain with people looking for houses for sale in Spain or for rented accommodation.

Anyone can publish an property advert in Tu tipi after completing the simple register form and verifying registration by clicking on the verification link sent to their email address. Use of this new site is completely free, and will remain so in the future. Property sellers or owners wanting to rent out their property in Spain can publish adverts in English or Spanish and can upload a maximum of 4 photos per advert.

Even at this preliminary stage some people have published adverts on Tu tipi, which we think indicates the extent of the need for a simple, bilingual, no-cost site with property for sale in Spain. Hopefully Tu tipi will fill this need in the coming months and become a useful resource for people looking for their dream house in Spain.

Further information: info@tutipi.com

Slowest rise in housing prices for past 4 years.

This weekend Spain's Director General of Arquitecture and Housing Policy announced that in 2005 prices of property in Spain rose by just 12.8 percent, the slowest rise for the past four years.

The regions to experience the highest rises in (15.1 percent) and Castilla la Mancha (14.6 percent), whereas Cantabria, Castilla y Leon and Catalonia registered the lowest growth in the housing market, with rises and just 6.6, 7.5 and 8.8 percent respectively.

Experts expect prices to continue to rise during 2006, but at a gradually slower rate than in the housing boom of the past few years, as national demand slows down, investors turn away from the property market and look towards other forms of investment. And whereas prices are certainly not expected to freeze or fall in the short term, they are expected to rise least in areas with massive supply of new housing development.

Foreign markets will become more and more important to building developers and promoters from now on, especially since building has not slowed down yet, even though prices seem to be doing so.

So while it is a good moment for foreign buyers to find a possible bargain purchase in Spain, as always they are advised to go carefully, not to jump headfirst into a property purchase and to seek legal advice. If you are considering buying a property in a certain area of Spain and want our opinion on the price you are being offered, let us know.

Dangers of the Spanish property market

The Guardian printed a full-page article yesterday about the Spanish property market with some startling figures that underline what we always advise to the thousands of users who write to us with questions about buying a house in Spain.

Anyone intending to purchase a property in this country is advised to first visit the site or house, then pay for the services of one of the many reputable lawyers in Spain (see lawyers fees in Spain) to check out all the legalities PRIOR TO SIGNING ANY DOCUMENTS REGARDING THE SALE and also, of course, before handing over any money.

According to the Spanish Agency for Holiday Homes quoted by the Guardian, Britons currently buy 50.000 houses in Spain each year and a group of Spanish companies specialising in homes for the elderly estimate that 226,000 British, 135,000 German and 35,000 Scandinavians are living here.

However, more and more stories of people buying properties in Spain do not have a happy ending. The Valencian LRAU law has made many properties vulnerable to possible seizure, as has the illegal construction of thousands of houses up and down the Spanish costas. According to the Guardian, a councillor of Alhama (a Murcian village with just 17,000 inhabitants where property developers plan to build 55,000 new homes and no less than 8 golf courses), has suggested that the area's biggest developer, Polaris World, has a London sales office where it is already selling unbuilt houses belonging to developments which have still not received full planning permission (although, in this case, they are expected to receive permission). And, the paper quotes the case of one British couple who have spent all their savings on a new home in Elche, but now risk having it demolished because the town hall says it was put up illegally by the builder they bought it from.

There are many reasons for living in Spain, but buying a house here is not as straightforward as it may seem and it is essential for buyers to get professional advice to prevent their dream home from going horribly wrong.

British property buyers prefer Spain

According to a study just published by Barclays Bank, the number of UK residents buying property abroad is set to double, and a third of potential property buyers named Spain as their preferred overseas destination.

According to the results of Barclay's study, five percent of UK residents (2.2 million people) already own a property overseas, and another 2 million definitely intend to buy one. And a very high 37 percent of those surveyed for the study said they are considering the possibility of buying a property abroad at some time in the future.

Spain remains the firm favourite among British overseas property buyers, with the US coming second and France third.

Not surprisingly, the main things putting UK citizens off the idea of buying property abroad are legal and tax complications, the possibility of being misled or deceived by local property sellers, and the difficulty of adapting to a new language and culture.

Related:
Reasons for living in Spain
Property taxes in Spain
Spanish lawyers
Advice on buying a house in Spain

Lowest rise in house prices in Spain since 2002

According to the General Director of Arquitecture and Housing Policy, Rafael Pacheco, the rise in the cost property has risen just 13.4 percent in the last 12 months. This represents the lowest rise for 3 years and, according to Pacheco, is the first clear result of the Spanish government's housing policies.

The General Director also indicated the regions in which house prices have risen most. These are Castilla La Mancha (19.8 percent), Aragon (16.4 percent) and the Valencian Region (16.3 percent). In Andalucía, traditionally one of the most popular destination for non-resident house buyers, the rise in house prices at 13.7 percent is only just above the national average.

The most expensive region as far as the cost of housing is concerned is Madrid (2,719 euros per sq. metre), followed by the Basque Country (2,537 euros), Catalonia (2,037 euros) and the Balearic Islands (2,003 euros). The cheapest regions are Extremadura (864.2 euros per sq. metre), Castilla La Mancha (1,255 euros) and Leon (1,297 euros).

Related
Revaluation of property in Spain per region
Investing in property in Spain
Houses for sale in Spain

Spanish-English real estate dictionary

Because of the amount of enquiries we receive from non-Spanish speaking property buyers in Spain about Spanish real estate terms and how the system here works, we are compiling an extensive Spanish-English glossary of real estate terms.

Having completed the glossary, we are now working on full definitions of each term, so that our users can get an idea of how the Spanish property market differs from the property market in the UK. In this sense we want to go beyond a simple bilingual list of property terms.

Send us any words not included. We hope to finish all the definitions in the next few days. Click on each term to get the full definition.

Real estate market in Spain, latest statistics

According to a study carried out by the Pompeu Fabre University (Barcelona) and Tecnocasa, the housing market in Spain has started slowing down and a halt in the massive price increase experienced over the past fews could be near.

The authors have based their opinions and conclusions on the analysis of the sale of over 12,000 second-hand houses and flats and details of mortgages granted to buyers from the first semester of 2004 up to June this year. According to the report, lived-in property (as opposed to brand new) now takes an average of 83 days to sell, which is 15 days longer than a year ago.

Another finding of the report is that property sellers this year are more likely to be prepared to negotiate the price than they were last year, and that on average buyers are able to secure a 5 percent reduction in the original asking price. During the presentation of the report yesterday, executives of Tecnocasa said that this should not be interpreted as an indication that the price of housing in Spain was at last starting to come down, since the reduction was usually agreed on property that was overhoused in the first place. However, in their opinion, the findings of the report do suggest that the conditions necessary for an eventual slowing down in the Spanish real estate market at some time in the near future are starting to appear.

Other findings of the report:

• 30 percent of house-buyers in Spain are foreign.
• 72 percent of all house-buyers come from Spain or another EU country. The rest are non-European, mostly people from South America, Eastern European countries and North Africa who have settled in Spain
• Over 49 percent of second-hand house buyers are between 25 and 35 years old, and 61 percent buy the property together with another person
• The average mortgage in Spain in June was 154.890 euros, a rise of 18.80 percent with respect to the same month last year
• In over 60 percent of all cases, the mortgate loan covers between 75 and 100 percent the total value of the property
• Small flats are proportionally more expensive than larger flats and houses
• The average price of lived in property in Spain per sq. metre is 3,000 euros in the most expensive areas of Spain (Madrid, Barcelona and Vizcaya). dropping to just 1,500 euros per sq. metre in the provinces of Alicante, Cadiz, Seville and Valencia
• The most expensive cities in Spain in terms of housing prices are (in order) Barcelona, Madrid, Bilbao and L'Hospitalet de Llobregat (3.070 euros).

Related links:
Mortages in Spain
Mortgages for non-residents in Spain
The price of housing in Spain
Investing in property in Spain

High-quality Spanish houses to be marketed in the UK

Undaunted by recent data published by the Bank of Spain showing that the number of non-resident house-buyers in Spain fell by 17 percent in the first semester of this year, the international real estate services provider Richard Ellis has just announced the signing of an agreement with Hamptons International. The agreement will enable Richard Ellis to offer Spanish mansions and villas directly to the UK market through Hamptons International.

According to Richard Ellis, the new alliance between these two major real estate companies represents an important added value for Spanish building promotors who work with Richard Ellis, because almost half of all foreign investment in the Spanish housing market comes from British buyers.

The emphasis of the agreement lies with the middle to upper end of the Spanish housing market, such as newly constructed villas or recently-reformed mansions and fincas with special charm.

Major Spanish promoters will now be able to offer their projects to the Spanish and British markets at the same time.

This is the press release as it appears on the website of Hamptons:

Hamptons International and CB Richard Ellis have formed an alliance to market Spanish residential developments. This will combine Hamptons’ experience in marketing overseas property to UK buyers and CB Richard Ellis’ established presence in the country through their offices in Madrid, Barcelona, Valencia, Malaga, Marbella and Palma de Mallorca. The Spanish agreement is a result of the proven success of Hamptons’ joint venture with CB Richard Ellis in the UK.

The Hamptons International and CB Richard Ellis relationship in Spain is part of a new focus for Hamptons’ overseas operations. This will concentrate primarily on new and refurbished residential developments worldwide, as opposed to resales. The company has an experienced team specialising in residential development and investment in the UK whose resources will be used in international markets.

Hamptons and CB Richard Ellis will work together to choose developments which fall within the middle to upper price range and which offer the buyer a second home with a difference whether this be in design, location or the lifestyle it offers.

Jonathan Seal, CEO Hamptons Residential Development and Investment said: “Spain is a natural progression from our residential development activities in the UK as it continues to be the most popular destination for the British buying second homes abroad whether for holiday homes, retirement or investment. We shall continue to look in other countries for similar strategic alliances where we can work with property professionals that are embedded in the national marketplace and which can offer more diverse and interesting development opportunities to our British target market.”

Buying rural property in Spain

Last week we received the following enquiry from someone buying property in Spain:

Question: We have paid a deposit on an ‘old’ property in Almeria. We later found out that the property has no Escritura and our estate agent and Spanish solicitor have both said this is not a problem – that the Escritura can be applied for and will be issued in our names and a Spanish mortgage granted. English banks will not provide a mortgage based on a newly issued Escritura as they say their policy is to wait two years to guarantee ownership and to ensure the property is not claimed back i.e. by a family member or a neighbour. My concern is not necessarily raising the money or getting a mortgage but the possibility of the property being taken away from us after we’ve paid for it, therefore loosing our money and the property.

Answer: Buying a rural house in Spain is a complicated process which can be full of problems if you do not look into all of them. The title deed (escritura) should be signed at the same time as when all the money is paid. The alternative is to pay first a reservation deposit and sign a private purchase/sale contract with the vendors or with the legal representatives (always get your lawyer to check the documentation presented by them to make sure they have legal rights to represent the real owners of the land and property).

Another very important piece of advice. The present owners of the plot of land where the house is must notify the owners of the land adjacent to the boundaries of your plot before selling to you because they actually have preference of purchase over you. By law the vendors should send formal letters to all of them offering them first refusal of the land and property you are going to buy. If within the legal period established, no (affirmative) reply is received, you are free to buy the land without any risk.

If you don't make sure the above is properly carried out, you could become another innocent victim of what can go terribly wrong when buying rural properties in Spain. Furthermore, if, as is often the case in Spain, you have agreed at the vendor's request to pay some of the purchase price in cash (so that the declared price in the deeds differs from the real rice you have paid), and if the owners of the adjacent land have not been notified and given the time established by Spanish law to answer, then they could take advantage of the lower "declared" price as stated on the title deeds, deposit the same amount with the Spanish courts and take over ownership of your property. You will be paid the money deposited with the courts, but you will have lost the cash payment as well as your new property.

Rights of tenants to buy rented property in Spain

We received this email from a Euro-resident in Spain last week:

"We have been living in rented accommodation ever since we moved to Madrid 8 years ago, simply because prices here meant we couldn't possibly afford to buy a flat. We found a lovely top-floor flat, within walking distance of our work, shops, parks, cinemas, belonging to a women who earns a living from renting out several flats she owns in Madrid. She lives in the same building, and we have always had a good relationship with her and, during the past 8 years, we have made the attic into our home, changed the floor, put heating in, decorated, changed the bathroom..... All at our own initiative because we understood that this was going to be our home for a long time. Our 2 girls were both born here. Four years ago we purchased a small house near Cadiz which we use for holidays and rent out to family and friends. We decided to do this rather than buy somewhere in Madrid because we love our flat so much. Last week to our horror, the flat owner told us she had put our atico up for sale and we had 3 months to find somewhere else to live. The original contract we signed states that either party has to give notice of 3 months, but we assumed this was just a formality and she has always said that we could live in the flat for as long as we wanted. Is there anything we can do to stop her from selling the flat, or have we acquired any rights during the 8 years we have lived here?"

The answer to the first question is no, you cannot stop her from selling her property, unless a clause in the contract you signed 8 years ago specifically gives you the right to do so (this is very improbable). If however, as seems likely, the contract makes no reference to any possible ownership rights of the tenants, and simply mentions a 3-month eviction notice, then the owner has complied with her side of the deal.

The answer to the second question is yes, you have acquired a very important right as tenants: the right to buy your home in the event of the owner putting it up for sale.

In Spanish this right is called "el derecho de tanteo y retracto". The first part "tanteo" refers to the fact that a tenant has the right to buy the property he/she is renting and should be given preference over any other potential buyers. The second "retracto" refers to the right of a tenant who discovers that his or her rented home has been sold to a third party, to re-purchase the property from the third party at the same price.

According to Spanish law, all property owners must give their long-term tenants 30 days notice if they decide to put their rented property on the market. In theory this gives tenants time to either find a new home or negotiate a purchase price with the owner and buy the property themselves. If the property owner fails to give the 30-days notice, then tenants can resort to their second right and purchase the property from the new owners (which is one reason why it is very important, if you are a buyer, to find out the exact conditions of any property you decide to purchase in Spain).

In your circumstances we suggest you try to negotiate a deal with the owner of your property based on your right, as long-term tenants, to have preference over other potential buyers. The fact that you have a good relationship with her should work in your favour. And you will have to decide whether you love your home enough to sell the house you have bought in Cadiz and use the money you make on it as a down payment.

Good luck!