We recently published an article about how to handle mortgage arrears in Spain and what to do if you were struggling to afford your Spanish property…well, on the back of what many thought was a presumptuous article, written too soon about a problem that may well not present itself, we’re here to tell you that the Spanish property sale is now on. Developers and private vendors are trying whatever tricks and offers they can to offload their real estate stock.
An article in the Sunday Telegraph really highlights the extent of the situation – villas slashed in price from well over a million pounds to just nine hundred thousand, beautiful rural fincas down by 30%. And to say that this time is a real opportunity for bargain property hunters is a typical British understatement!
If you own a home in Spain and can continue to afford it – good for you. And don’t panic either…the Spanish market began its downward spiral in 2005 and the market is beginning to readjust itself and correct itself. If you’re in a position to hold your stock for the long term, just enjoy it for now and know that you do still have an asset on your hands. If you’re in the position that an increasing number of people are in where your Spanish property – priced in euros, mortgaged in euros and yet funded by the weaker pound – is beginning to really hit your wallet, you have to think about your options sooner rather than later.
There was a trend in Spain for buyers to purchase two units, use one to finance the other through rental income and enjoy the second property as a holiday home. For people in this position it can make sense to try and off-load one of the properties and consolidate concentration and financial efforts on retaining the one property. Those in this position may well be able to offer the excess property for sale at a discounted price and be more likely to sell. Whilst this action has a short-term impact on the pocket and a longer-term impact on investment returns, it can save the situation from becoming a disaster. Where others are in a stress position with their properties in Spain that could result in catastrophe – sell sooner rather than later – cut your losses and save yourself!
For those who are looking for a property bargain – Spain is the right place to be right now. The pickings are rich, and if you’re a cash buyer you can call the shots. If you want new-build or off plan you need to be looking for developments where the developers are established, have a long-term reputation to save and are less likely to go out of business taking your money with them. You need to see bank guarantees, building licenses and structural guarantees before you buy. If you’re buying from a private vendor know that you may well be able to drive quite a hard bargain, (sorry vendors, but it is true). Get a good lawyer on your side to make sure that all with the property sale is legitimate and you’re not likely to inherit debts. Finally, go for the best that your budget can buy – you want prime location and prime quality so that you can be sure you’re buying a long-term asset rather than a long-term weight on your shoulders!
Spain is a great market offering real opportunities right now – but still even with Spanish property sale on, you need to tread carefully and think about the reasons why this situation in the market has presented itself. Too much poor quality stock flooded the market devaluing it…so as stated, think about location and quality when buying, and if in doubt of any aspect of the sale, walk away.