Prices in key tourist hotspots such as the Costa del Sol have dropped by as much as 40% since the peak in 2006/7, after which the market plummeted to 1998/99 prices. The oversupply of properties in these areas, particularly one and two-bed apartments and cloned, small townhouses, contributed to the sharp downturn in values. It is currently possible to buy a three-bedroom villa with a pool in a tourist hotspot such as the Costas for around Euros 400,000 compared to Euros 650,000 at the peak.
Stuart Law, Chief Executive of Assetz, said:
"Many Brits will always want to own holiday homes in Spain, due to its close proximity to the UK, sunny climate and abundance of sandy beaches. With prices having come down so far, second home buyers with limited budgets are now on the hunt for bargains which they can use for family holidays and perhaps rent out a little for part of the year. They are not primarily buying for investment purposes, so are less concerned about the short term performance of the market and potential capital growth. Instead their primary focus is on buying a high quality holiday home property in a superb location that they could not have dreamt of owning a few years ago.
"Professional investors seeking solid returns, on the other hand, are concerned that the market could still have further to fall, and we certainly believe that holiday letting rental income could be severely held back for years to come by oversupply in the tourist hotspots.. Better value can be found from an investor’s perspective in carefully selected city locations where there is much stronger rental demand from local population and in selected locations there has not been the same degree of oversupply as on the coast."
Many of those looking to retire abroad are unconvinced about emerging markets which may not have the same quality of healthcare, security, accessibility or the familiar culture Spain can offer.
The weakened pound against the Euro has certainly reduced the attraction of Spanish property bargains, but Assetz believes the extent of property price falls along the coast still presents the best opportunity in ten years for British investors looking for a holiday home. Relatively high loan to value mortgages are still available and so the amount of cash transferred from the UK as a deposit can be limited in these times of a weak pound.
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