Is it time to buy coastal resort properties in Spain?

[nmb]

Amidst the confusion and volatility across Europe at the moment, is this now an opportune time to buy resort properties in Spain? What is the general opinion of property markets such as the Costa Del Sol, etc where the expat community is still well represented.

 

[lookinginvest]

Again, all of the confusion about Brexit and problems with the EU economy might be playing into the hands of long term investors. Do you really think British holiday makers are going to stop going to Spain even if the UK does eventually leave the EU?

 

[nmb]

There have been rumours for some time that the Spanish banks are looking to jettison their unwanted property which they obtained when customers defaulted in light of the 2007/8 financial crisis. Surely this must be a buy signal in the medium to long term?

 

[PostBrexitInvestor]

There have been suggestions that UK expats living in Spain and other European countries could be impacted by the Brexit vote. However, countries such as Spain depend heavily on expats in certain areas especially coastal towns where expat investment in property has been constantly high for many years. Whether now is the right time to buy Spanish coastal properties is debatable with concerns about the underlying European economy.

 

[Gary Kay]

I think now is the perfect time for UK buyers to turn their attention to Spain regardless of the Brexit or current Pound to Euro rate.

If you are an investor you want to invest and maximise yield from your money - current UK bank interest sits at 0.25% meaning they want to get the money out of the bank and into a high yield project.

Spain is perfect for this in my opinion at this minute in time - long and short term demand is at an extremely high rate in coastal areas as well as the Brexit causing confusion with UK vendors who own property in Spain, we have found clients selling a lot cheaper due to them going back to the UK and winning on exchange rates going back therefore delivering a bargain to the buyer and a multi-positive investment of 1. Immediate Equity, 2. Rental yields of 5-7% (based upon recent investments) and 3. Picking up property at a BMV price.

 

[lookinginvest]

People will always holiday, expats will always consider Spain and, as you rightly suggest, the Spanish property market looks good value in the longer term. Don't forget, it is nigh on impossible to buy at the bottom of the market and sell at the top. If you buy nearer the bottom than the top and you sell nearer the top than the bottom then you won't go far wrong in the longer term.

 

[PostBrexitInvestor]

This is probably the perfect subject to discuss with regards to long-term investment over short-term concerns. If you can see beyond the short to medium term, which will be difficult for the European economy, perhaps there is good value?

 

[PropEx]

The main thing that puts me off buying in Spain is the 14% transactions cost when buying a property.

 

[lookinginvest]

That cost seems awfully high, surely the authorities should consider reducing transaction costs where possible to encourage investment?

 

[PropEx]

Another thing the Spanish banks do is when they repossess your home you have to pay the difference between what the bank get for your home and the rest of your mortgage. This is being challenged in the European courts though

 

[nmb]

As the banks are no doubt in a hurry to jettison these unwanted properties they are probably sold well below market value?

 

[PropEx]

As the banks are no doubt in a hurry to jettison these unwanted properties they are probably sold well below market value?

Not as much below as say American homes are sold by the banks for but yeah certainly below market value. I just find it incredible that you lose your home but still have to make mortgage payments. No wonder it is being challenged in the courts!

 

[Veronica]

If a house is repossessed by the banks in the UK for non payment of mortgage they will sell for whatever they can get and the mortgagee has to pay any difference. So why should it be any different in Spain?

 

[Longterminvestor]

At the end of the day property buyers took on their mortgage liabilities, nobody forced their hand? Why should the banks be left to cover outstanding liabilities in the event of a fire sale?

 

[PropEx]

If a house is repossessed by the banks in the UK for non payment of mortgage they will sell for whatever they can get and the mortgagee has to pay any difference. So why should it be any different in Spain?

I wouldn't know, I've never had a mortgage.

 

[nmb]

Until the last of this unwanted stock has been mopped up by investors it is difficult to see a major resurgence in the value of Spanish coastal property.

 

[Veronica]

If I was looking to buy in Spain I would definitely start looking now while the banks have repossessions on their books. I would go direct to the banks initially rather than going to an agent.
Here in Cyprus we have a similar scenario although not as many repossessions as Spain. We are currently working on behalf of an investor who is looking to buy a repossessed hotel from the bank.

 

[nmb]

Is it perhaps a case of buying before the market bottoms out because when it does bottom out there could be a significant rebound?