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Hi there,
So I am seriously thinking about buying in Barcelona. I have been looking for about a year and have found a property which needs completely renovating but judging by current market standards will be worth it in the long run. I have done my homework around costs involved etc. But I just wondered if anyone had thoughts about whether this is the right decision to pour all my hard earned cash into euros and Spain as I will have to sell my house in the UK to fund it – I live here in Barcelona and I’m marrying a Spaniard so certainly here for the next 5 years. Any thoughts, advice or insights/watchouts would be appreciated.
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bradyeme I think most realistic advice would suggest retaining the UK property as UK property is likely to rise strongly pre general election since the coalition will exert pressure on the BOE to keep interest rates low until then at least. Also, if you return after 5 years you’d still have your asset worth a lot more probably in the country where demand exceeds supply.
My advice would be to rent out the property in the UK to fund the purchase in Spain if it’s possible, then you keep your options open 😉
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Both of the above. I think it is a pretty good time to buy in Barcelona (might even get better though) but it is not a good idea to sell your UK property either. I was in a similar situation 10 years ago in Madrid. I kept the UK property and don’t regret it at all. If you can, it might be best to take out as big a mortgage as possible on the UK property, and use the equity to fund your purchase in Barcelona. Then rent out the UK property – the mortgage repayments should keep your tax bill down.
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From what I can tell, Barcelona house price have hit bottom, and may even have turned the corner, at least asking prices have.
It also looks to me like foreign demand for property in Barcelona is going to rise, perhaps substantially. Prices in London are now so crazy foreign investors are starting to look further afield for value. It’s all part of the globalisation of the property business story.
On balance I expect property prices in central Barcelona to start rising, driven by foreign demand, but I don’t expect locals to get any richer anytime soon. Eventually locals might even be priced out of central Barcelona, as they have been in London.
So I think Barcelona is now a good buy at these prices (around 3,000 €/m2), though the transaction costs are insane at more than 10pc (daylight robbery). If I can swallow that bitter pill I might try and buy somewhere myself. Mind you, I’m here for good, so I don’t have to worry about being stuck in Pesetas.
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Thanks for the insight guys , its reassuring to hear another opinion. I am choking on the bitter pill of 10% (actually all done it is probably closer to 12%) but given the property and potential (we managed to get 175m2 in eixample at 2000 e/m2) I think it will be worth it. Especially given your point Mark on foreign investment I have two colleagues from Russia and China looking here right now. Although from my experience the asking prices are wholly over inflated and open to negotiation…. 🙂
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Two recent headlines say that ‘Spanish buyers are behind London’s property boom’ as it’s seen as a safe haven from Eurozone concerns, and ‘Spanish workers flock to the UK in record numbers, up 36% in one year’ so it’s a two way exchange.
Foreign investors are still snapping up London property in the run up to the next General Election, buying and selling costs in Spain kill much of any upside, just to break even you need prices to rise 17-20%, what would a reasonable profit thereafter equate to, maybe 10% so your property may need to rise about a third in price?
Most big cities worldwide are likely to be good long term bets provided transaction costs are within reason. 🙄
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@bradyeme wrote:
we managed to get 175m2 in eixample at 2000 e/m2)
That’s an amazing price. Good find, assuming all the other features are ok and it’s not beside a crack den 😉
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Hi bradyeme, as yourself, I’m a resident here in Barcelona and would support and add to the views of Mark but also agree with Angie, regarding the UK property.
With regards to the UK, it depends on the location. If it’s London, then obviously I would advise against selling. One advantage UK property has over Barcelona property is the liquidity of the asset. UK property is relatively fluid, in terms of selling quickly. A Barcelona apartment purchased in 2014 may only realise it’s initial outlay, a number of years after the purchase. As you pay such a high purchase tax (10%). It also takes longer to sell Bcn property because of the depressed market. As it sounds like you are settling down here and looking to the long term, you’ve obviously taken this into account.
One other factor if you are viewing this property as an investment, you need to consider the CGT on any future sale. If you buy at one price but then spend a lot of money on renovating, the property may be worth 1000 or 1500pm2 euro more, however the taxable sale figure will still be the original purchase price. And you will pay CGT on any profit or difference from that original price. You may also want to consider a way to get the IVA back on the renovations. (10% IVA on your primary residence and 21% on investment properties).
Regarding Barcelona, one factor the crisis won’t change is it’s geographical location. It will always be a cultural, vibrant, Mediterranean city, which to my understanding seems to have weathered the worst of the storm. With prices now bottoming out and even rising slightly in some areas, I think it’s a good time to buy.
What you’ll achieve is a perfectly renovated home for market value, which may or may not rise substantially, however you will have had years of enjoyment living in a fantastic city. I think people in general sometimes make the mistake of viewing their home like a profit making business without thinking about the years of happiness and stability it has provided.
(I’ve written a few blogs on my experiences of purchasing property here in Barcelona, if you’d like the links send me a DM). Hope that helps!
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This is such an interesting discussion and one I have had many times with different folks. I am lucky to have two properties in the UK so can make choices about selling or renting – but both are outside London and I believe the prices may rise by just 5-8% over the next 5 years plus I will have CTG issues with one in 12 months – hence the reason for wanting to sell.
MikeD I think it is such a valid point about this is a great city, We will have a top floor apartment in a desirable location that if carefully renovated should sell for double the price (this apartment is a rare find – no crack den in sight!) Having lived in London and Sydney before Barcelona I think it’s hard to compare housing demand, stock and prices to Barcelona but all things considered if work doesn’t move me again I’m here for the foreseeable future so why not enjoy it! -
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@Melosine wrote:
Most certainly now that it has been announced Ferrari are to build a theme park there . And even better news is it will be open in 2016 !!!!!!!
Is that a positive reason to buying a house? Won’t it be a little noisy? 😉
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Yes, one swallow doesn’t make a summer.
However, it’s the same story at all the portals; idealista, pisos, habitaclia. They all suggest that asking prices in prime areas of Barcelona have stopped falling or started rising. It is my belief that foreign buyers are driving this.
I’m hearing the same story from all my contacts in the business. Demand is strong, there is no over-supply of property in the centre of Barcelona, prices are responding. Local demand is still weak though, but there is a lot of pent up demand on that front.
I know of two small developers banking big gains on refurbished flats in Prime areas.
Even within Barcelona there are two markets: prime areas where foreigners buyer going up, other areas where locals buy still going down, though less than before.
At least this is the picture I’m getting.
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Can you explain how prices can go up when property sales fell in February for the TENTH consecutive month. That economics course I did must have been rubbish
http://www.thelocal.es/20140409/spains-property-sales-plummet-in-february
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@katy wrote:
Can you explain how prices can go up when property sales fell in February for the TENTH consecutive month. That economics course I did must have been rubbish
http://www.thelocal.es/20140409/spains-property-sales-plummet-in-february
Yes, I can. The article in your post is discussing all of Spain.
What Mark wrote above was concerning ‘prime areas’ in Barcelona. There are often pocket anomalies regarding prices and demand in most real estate markets. There are areas of Barcelona that seem to be doing well. Others not so. And as I learned from my own purchase, aticos with private terraces are in high demand and seem to be less affected by ‘the market.’
I can’t speak to your economics course.
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Where are the stats? Or have you been talking to a “developer” too. How can you possibly know if there are no stats and you are not in the business. As you know asking prices are not a guide.
I am well aware it is the stats were the whole is Spain…and the official figures showed a fall in sales everywhere except the Canaries.
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Have just read the article which says only the Canaries’ property prices didn’t register a fall in February, so there is a disparity of views there 😮
We’ve known for years that Government stats in Spain are cooked to increase demand, in this case by the INE. Interestingly, a similar but UK Government body the ONS is now under fire for distorting figures on various issues, it’s what Governments do, Spain’s Gov’t in particular IMO 😯
The only point I would agree with re Barcelona is that being a City I would think that property would be a safer bet only in prime areas, than coastal or country generally where in Spain there are far too many unsold properties. Cities worldwide appear more resilient due to being centres of commerce, look at London prices partly helped by Spanish and other Eurozone buyers looking for safe havens 🙄
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