According to a new Standard and Poor report Spanish house prices are set to fall for at least another 4 years, and could fall by up to 25% during this time. When you add to that the possibility that Spain could yet leave the Euro and leave owners with a home in a devalued currency, and the possibility that potential new capital controls could stop us moving money around Europe, then surely it is not a good idea to invest in Spanish property right now. That said, there are some great deals and great investment opportunities in Spain at the moment, can we afford to miss out on those over things that might never happen?
The answer to that question is really a personal one; a great deal is in the eye of the beholder, a great investment is relative to what the investor is looking to achieve and everyone has their own opinions on what will and won’t happen to Spain, the Euro and Spanish house prices – or at least listens to different people. However, as most foreigners buy in Spain for lifestyle reasons with investment being a secondary consideration, we can asses it from that angle.
Firstly, let’s look at whether these things will happen, I’ll get out my crystal ball and… Of course I don’t know and I can only predict the future with the same educated guesswork that anyone can, at the moment such predictions instil little confidence in anyone, let alone property buyers. What I will say is this: according to S&P Spanish house prices could fall up to 25% in the next 4 years, and have already fallen 22%, this is a total of 47% since the peak. Right now, bank owned properties in Spain are readily available to the public through Polaris World at discounts of 50% and above.
As for the chances of Spain leaving the Euro, the fifth biggest economy in the EU and if Spain goes it is likely that Italy will follow then we are up to the fourth biggest, at which point France is probably safe but above that the UK is still shaky. It is my belief that Spain’s departure would be the beginning of the end for the EU, so either some country (yes Germany I’m looking at you) or grouping of countries and/or bodies will find the money to completely save the EU, that is to safeguard investments in the troubled countries, or every Euro country will be in the same boat of having a new currency anyway.
So we can either not buy another car or asset for god knows how long it takes for decisiveness or we can carry on living now in the belief that the world’s largest monetary union either will out, or that new currencies will be balanced at around the same weight anyway.
As for the potential to find good investments in Spain we need look no further than Murcia. I cover Murcia in each of these articles, because at the moment few can question its investment potential. The foundation stone has just been laid for the new paramount theme park in the region, and it is also home to a new international airport. This will bring in millions more tourists to an already popular area. In most Spanish locations you have to look for areas that aren’t over developed, but in Murcia you have the knowledge that even if some areas have been over developed any oversupply will be more than absorbed by the increasing tourism.
This rental occupancy slam dunk comes at a time when Murcia is awash with bank owned properties at heavily discounted prices of 50% and above, and with finance of up to 100% readily available. The advent of such a world class brand opening a new theme park makes Murcia an easy choice for investors, occupancy is already strong in Murcia resorts and the new theme park is really a certainty to bring in millions more renters, not to mention massively boosting property values in the area. It takes a lot of the risk out of buying property in Murcia leaving only the many benefits. Right now there are dozens of bank owned properties in Murcia including CAM bank repossessions in Spain to choose from.