Spanish property prices are continuing to fall and the short-term is not expected to see any market recovery. However, some experts have observed that foreign buyers are leaping on the opportunity this presents in order to snap up cheap properties.
According to the Sociedad de Tasación Quarterly Report on Spanish Real Estate Trends, the first quarter of this year saw a 6.3% average fall in Spanish homes, both new and existing, when compared with the same period last year. The drop in prices is decelerating but nonetheless values continue to fall decisively. However, the report also highlights that confidence in the sector increased for the fifth consecutive quarter.
According to the report, which surveyed the opinions of 700 professionals in the property sector, confidence in future prices stands at 3.8 out of 10. Sales of main residences reach a level of 4.5, while second references stand at 3.8. Much of the growth in confidence may be down to the activity of international buyers, who continue to take advantage of low prices in order to make affordable purchases to serve as homes or investments.
Amidst falling prices, last year saw 36,000 Spanish properties snapped up by foreign buyers, and this represents an impressive annual growth level of 36.6%. Britain was the leading source of international buyers, providing 15.1% of the total. France was second, providing 9.8%. Other major players included Russia with 8.5% and Belgium with 7.26%.
Perhaps unsurprisingly, these purchases were heavily focused around properties close to the Mediterranean close or located on offshore islands. The famous Spanish coastline is often a key attraction for expats keen to settle in the homes they buy. Proximity to the beach is also a major boon for investors, as the draw of the beach serves to push up the demand and rental returns that investment properties attract.
According to Santiago Herreros de Tejada of Grupo Sociedad de Tasación, "Foreign demand will continue because property prices are in historic minimum levels in Spain. Buyers see this as an opportunity as they can achieve interesting discounts over properties." He also points to statistics from Spanish property registry the Colegio de Registradores, which shows foreign buyers accounting for a record percentage of total Spanish property purchases. 2013 saw 11.1% of property sales made to a foreign buyer, compared to 2009 when the figure was a mere 4.24%.
The drop in property prices is expected to continue until current oversupply has been used up. It is also expected that in the near future property sales will fall and there will be an increase in the number of rental transactions – perhaps another factor attracting foreign investors. However, overall, there are few signs of a recovery in the short-term but it is expected that demand for family properties will remain weak yet stable.