land price trends

[Anonymous]

I’m thinking about buying a plot of land (perhaps with a finca or ruin) in a rural area to build on at a later date. I was wondering if land price trends in Spain are linked to property price trends. For example, if you have 17 % growth in property prices in a particular area over a year, would you expect equivalent growth in land prices? And if property prices in Spain level off or go down over the next few years, is it likely that land prices would also level off, making it a better bet to delay purchasing land till this happens. Or is land something that will always increase in price since there is a limited amount of it available?

And is there such a thing as statistics on average price per square metre for land and price trends over time (like there is for property)for specific areas? If so, where would you access this information, and does it exist for small villages?

Any advice very welcome
brenda

[Anonymous]

Hi Brenda,

Good question!

Land price trends are not only linked to property price trends they are the driving force behind property price increases. It’s a complicated equation but basically the land price component of property has been rising much faster than labour and building materials. This is reflected in the fact that resale property price are increasing faster than new build prices.

I have not seen an index for land prices – the government and appraisal companies only publish an index for built properties. Such an index may exist but if it does I haven’t seen and even if it did I can be sure that I wouldn’t tell you much about price developments in specific areas. However it follows from what I say above that land prices should be rising faster than property prices.

Nobody has the proverbial crystal ball so we don’t know what is going to happen to land prices in future. There is talk of the government reforming the land classification rules. If so this might release more land for building which in theory would drive down prices by increasing supply. For now it is just talk.

If something happens to demand for properties and prices fall then this will have an impact on land prices. However there is no sign of this happening for the time being. If you buy land in a good location I don’t think the risks are excessive, though be sure of course to triple-check building regulations with a good lawyer before putting down any money. After all land is the one resource that really is finite.

Have a look at http://www.miparcela.com. I know it is all in Spanish but you might find it useful for comparing land prices.

I hope that helps

Mark

[Author]

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