Investing in Spanish real estate
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Finding Spain
Spain is one of the countries in Europe that attracts a lot of attention from people. Spain is officially called the Kingdom of Spain and lies in the Western region of Europe. It consists of peninsular Spain, located between the Mediterranean Sea and the Indian Ocean, two archipelagos in each sea, and two autonomous cities in North Africa. It shares its borders with Portugal, France, Andorra, the British colony of Gibraltar, and Morocco. Spain is a constitutional monarchy organized as a parliamentary democracy, and has been a member of the European Union since 1986. It is a developed country with the 9th largest economy in the world.
Real Property
Spain is a picturesque country with high plateaus and mountain ranges, great rivers, and thousands of beautiful islands. It has three distinct climates including moderate Continental climate in the inland areas near Madrid, Mediterranean region climate in the eastern and western coasts and an Oceanic climate in Galicia. Due to its weather, history and cultural diversity, buying real estate is a thriving activity in Spain.
Buying real estate in Spain has been going on for a long time. Earlier people would invade Spain and fight wars for territory. Now they tend to pay money and make real estate purchases of parcels of land. Continuing in a serious tone- Spain due to its geographical location, climate and natural beauty attracts buyers from all over the world especially Europe and the USA.
Currently the real estate market in Spain is witnessing a boom with real estate prices rising 170% from 1995 to 2005. This is an example of what many economics consider a study in bubble economics.
In Spain, about 80% of homes are owner occupied. The ownership feeling was encouraged by the Spanish government in the 60s and the 70s as a way to follow the ideal of an ‘honest’ familial tradition.
Buying real estate was a way to ensure a settled and productive family life along. The people of this country have grown to believe family values are intwined with actual home and property ownership. A thought those governing this population of people have deeply embedded in the mind of the average Spanish citizen.
Some experts feel that real estate prices are going up too fast in Spain and a crash is inevitable. They feel that it will not be a soft landing for investors. And, fear the crash survivors will have a tough time getting back on their feet again.
Experts and economists, however, feel that with foreign investors always hovering around ready to pay a higher price the house prices will never go down.
Prices going skywards
There has been a building boom from 1996 to 2004 in Spain. According to the ‘La Caixa Bank’s Informe Mensual 2004, the increasing prices of houses in the last five years have had a ‘wealth effect’, which led to an increase in confidence and consumer spending. Thus, wealth effect combined with factors like demographics, low interest rates, socio-economic factors and revised tax incentives for home ownership programs have had a major impact on the demand for new housing. Local and international property speculation is also having a big impact on the increased demand for housing. Experts say that real estate prices will continue to go up in the future with more international investors joining the party.
