I remember the slump of the early 90s. Unemployment was just as high, tourism was heading down – at the time I heard many Brits claiming Spanish tourism was toast, they’d priced themselves out of the market etc etc. Yet things turned around in the second half of the decade..
Spain still holds a great appeal to tourists and people wanting a home under the sun and near the Med sea – you can see from the press article I linked to on the Press Articles thread that now Russians are coming in greater numbers.
Will people learn from the past property slump? Sadly I think people will make the same mistakes. Unless credit is more tightly controlled there will be another bubble in the future. Don’t get me wrong we have some time to go before the current situation is resolved. But even now I see people on different forums deciding to move to or retire to Spain. The appeal seems to be ever-lasting. Unless something drastic like a European war breaks out, there will always be people wanting to “live the dream” and move to Spain, even if the reality is different to their dream.
Unlike in the early 1990’s there is nowadays alot of places that people can buy holiday homes in apart from just Spain like Turkey and even Bulgaria and Romania and so Spain is facing alot of competition. However, the current crisis or recession or depression, whatever you want to call it, is many many times worse that the modest recession that occurred back in the early 1990’s. This time Spain has entered a full blown depression and given that the recent housing boom was so large then a massive recession can be the only outcome which will mean that Spain is facing a lost decade in which property prices will be continually falling over the next ten years or so. Don’t expect another boom in property prices to occur for at least twenty years.
The real difference is that tourism has held up (it really slumped in the mid 90s) and Spain is now building up tourist numbers from places like Russia. Plus, it seems from other talkboards there is still a pent-up desire from many Brits to move to Spain (perhaps to retire). In a sense this is not good news as it distorts the economy, but I don’t see it changing. Plus, living costs in Spain are still way cheaper than the UK. For instance it costs 10k a year to rent a one bedroom flat in south east England – you can now buy 2 bedroom flats in Valencia for 25k.