Spanish property market: Too much of a boom to go bust?
Article Date : Tuesday, July 05, 2005
Throughout the course of last year Spain saw more houses built than Germany, France and Italy combined, continuing a remarkable trend that has resulted in over 20 per cent of all Spanish properties being built over the past decade, according to research. It goes without saying: that Spain is undergoing a serious property boom, outstripping a number of other European countries with similarly strong property markets.
Naturally, when a property market demonstrates this much growth this soon, fears of a market crash become increasingly acute. To a large extent this is alleviated in Spain by the rapid construction of new builds, meeting demand from domestic as well as foreign buyers, and it is this market in particular that could see even further Spanish property growth and fuel an ongoing boom.
There are a handful of important reasons as to why the Spanish property market is so strong and showing continued signs of growth. Low interest rates are helping keep prices down in tandem with a relatively strong economy and declining unemployment rates. Foreign demand remains high for newer properties as well as slightly more expensive older homes, and a number of hotspots such as Marbella, Barcelona and the Costa del Sol continue to have strong appeal. Large cities in particular are attracting buyers in their droves, with somewhere in the region of two million people in total having moved into urban areas since 1998.
Many of these buyers are investing in second homes. Figures from the Royal Institution of Chartered Surveyors (RICS) reveal that 14 per cent of all Spanish properties were second homes in 1999 and the Office of National Statistics states that over 2003/04 nearly 70,000 Brits owned a holiday home in Spain. This is all helped along by the boom in low cost air travel, which has made it dramatically easier for buyers to travel between their homes simultaneously boosting appeal for buy to let investment.
Last year saw somewhere in the region of 54,000 people move to Spain, some 15 per cent of the total number of people (360,000) who moved abroad last year. This figure itself is strong evidence of the appeal of Spain for British housebuyers, and of all these, a sizable percentage are in the older, retirement age bracket.
According to reports almost 30 per cent of all Brits who moved to Spain last year were over 60. Only five per cent were under 40 suggesting that, overall, younger buyers are substantially less likely to move to popular holiday destinations on a permanent basis.
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