Glut of investment properties for sale on the Costa del Sol

The Andalucian daily ‘Sur’ reports that locals who invested in off-plan properties in the hope of juicy profits overnight are now struggling to sell before completion. Investors who fail to sell on before completion either lose some or all of their deposits, or complete and pay high transaction costs and mortgage expenses. The number of investors rushing to dump their investments before completion has lead to a glut of properties for sale in Malaga province, home to the most popular stretch of the Costa del Sol.

The party is over

The Catalan Daily ‘El Períodico de Catalunya’ reports that Spain’s construction boom is over. “The party is over, and we are entering a new phase,” a real estate professional visiting the Barcelona Meeting Point is quoted as saying.

Foreign residents buy 11.7% of Spanish properties in 2nd quarter

Figures from the Spanish Ministry of Housing show that immigrants (foreigners now resident in Spain) bought 28,404 properties in the 2nd quarter of 2006, the equivalent of 11.7% of all Spanish properties sold in the period.

A total of 242,639 Spanish properties were sold during the period, up by 3.8% on the previous quarter, whilst sales to immigrants were up by 5.7% on the previous quarter. Sales to foreign residents are growing faster than the overall market.

By region, the Valencian Community attracted the most immigrant buyers, with 7,470, or 26.3% of the region’s total property sales in the period, followed by Catalonia (5,768), Madrid (3,834), Andalusia (3,203), Murcia (2,108), The Canaries (1,535), The Balearics (1,030), Castile La Mancha (948), Aragon (634), and Castile and Leon (585).

Construction boom creates 100,000 new firms

Figures from Spain’s department of employment reveal that there are now around 223,000 firms operating in Spain’s construction sector, up from 124,000 in 1998, when the construction boom started. There are now more firms in construction than in manufacturing, which shows how important construction has become to the Spanish economy.

Madrid now 3rd most expensive city in the world for property

A new report from Seb Asset Management – a large fund – finds that Madrid is the 3rd most expensive city in the world for property, cheaper than only London and New York. The report argues that low rental yields make property in Spain an unattractive investment compared to other places that offer better yields, for instance China, South Korea, Japan and Singapore.

Spanish investors have high expectations

A new study published in the Spanish magazine ‘Papeles de la Economía Española’, and edited by the Foundation of Savings Banks (FUNCAS), reveals that Spaniards expect their properties to appreciate in value by over 20% every year, for the next 10 years. The study also reveals a contradictory belief among Spaniards that property in Spain is overvalued.

Almost half of all Spaniards unhappy with their home

A new study from BPB Iberplaco – a construction materials company – reveals that 42% of Spaniards live in a home that they can afford, rather than a home they would like to live in, and 9% are completely dissatisfied with their home. The study also reveals that spacious kitchens and bedrooms are priority features for Spanish homebuyers, although 69% of Spaniards prefer to live in city centres, even if it means living in smaller apartments.

Spanish properties taking 3 months longer to sell than last year

Newly-built Spanish properties are taking 3 months longer to sell than last year, according to a new study by real estate consultants CB Richard Ellis (as reported in Spanish financial daily ‘Cinco Días’). Juan Antonio León – company vice-president – is quoted as saying that, “whereas new developments used to sell in 4 to 6 months, this year it is taking between 7 and 9 months, especially in suburbs, or coastal areas with holiday homes.” The profitability of residential property is falling, and developers are switching to commercial property in search of higher returns.

Spanish property market lacks transparency says Bank of Spain

José Luis Malo de Molina – direct of research at the Bank of Spain – has warned that the property, construction, and land markets in Spain lack accurate and timely information.

Euribor still rising, mortgages costs follow

Euribor - the rate used to calculate interest payments for most mortgages in Spain – rose to 3.799% in October (confirmed by the Bank of Spain), and 3.864% in November (not yet confirmed by the BoS), the highest level since June 2002. November’s rise was, however, the smallest monthly increase in Euribor this year, suggesting a slowdown in the rate at which Euribor is increasing. Even so, many analysts expect Euribor rates of 4% by the end of the year.

According to the Spanish Mortgage Association, in the short term the latest rise only affects the 3.2% of mortgage holders who have their mortgage payments revised in December. Spanish mortgage holders on variable rates (8 out of 10 Spanish mortgages) who are affected will see mortgage repayments rise by more than 1,250 Euros a year for an average mortgage (143,604 Euros at 26 years).

The European Central Bank is expected to raise base rates again in December.

80% of Spanish households skint at end of month

A new report from the Foundation of Savings Banks (FUNCAS) reveals that 80% of Spanish households end the month without any savings after paying the mortgage. Spanish household indebtedness has increased in 2006, and is now one of the highest in the Eurozone. Andalusia’s 8 provinces have the smallest savings, with only 9.26% of income saved. At the other end of the scale is La Rioja, with a savings rate of 19.14%

© Mark Stucklin of Spanish Property Insight – Everything you need to know about Spanish property