Spanish property – long term investment or not, views…

[Denpots1]

Hi,

I’m looking at buying a property, primarily it’ll be for us as a family to holiday in plus a possibility to rent so hopefully running costs will be covered, no mortgage required.

I know this is very vague, but if I’m looking long term say 15-20 years would you think it’ll increase in value from today’s price and also become an investment?

Thanks.

[Mark Stücklin]

I think quality property in good locations will be a sound investment over that time frame. Shorter time frames are more challenging due to the high transaction costs in Spain, though anyone buying in places like Barcelona or Ibiza over the last five years would have done very well regardless. Spanish property is still relatively cheap after the bust, and mortgage borrowing is incredibly cheap, which should fuel demand. Stock markets are near all-time highs, bonds and saving accounts yield next to nothing, we’ve missed the Bitcoin boat, so it’s not as if there are lots of succulent alternative investment opportunities lying around. Plus you’ll get the utility value.

[macgd016]

Let me just look at my crystal ball 😀   Just kidding but there is just no way of knowing, property values are cyclical, some are short cycles and some are longer but in Spain they have tended to be boom and bust in recent history.  The last property crash in Spain was in 2007/8 and it probably didn’t start to recover until 2015, generally speaking prices have probably recovered to their pre crash value but it depends very much on the location.  There are some exceptions to this, Barcelona, Sitges and Mallorca to name three where prices were less effected by the crash and have increased ahead of the national norm.  You could reasonably take the view that the Spanish economy is on the up, interest rates are low and banks are lending again so property values should increase significantly before they crash once more.  Alternatively you could take the view that the Spanish economy is on a knife edge, there is much uncertainty in Europe, the cost of money is so low that it can only go up which will put many people in negative equity, all of which would lead you to believe there is likely to be an imminent crash so its back to your crystal ball I’m afraid!

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