Spanish Property Price fall

As usual the British press have indulged in some Spain bashing, There's nothing like asome bad news from Spain to make you feel a bit more smug with life in old blighty is there? Bit like the illicit glow you get when the neighbours shed catches fire.

Headlines like "Spanish Villas Crash!" sell newspaper copies. I have lived in this wonderful country for nearly two decades and no one I know is having any panic attacks. Because of the popularity of Spain over the last thirty years we have had two separate property markets, domestic and foreign, unlike the UK, Ireland, Italy or France where you could equally expect to sell your house to either a Local or an imigrant.

These two markets have happily co-existed side by side, very few foreigners buying into Spanish Areas and very few Spanish buying into tourist areas. Only three times in the past thirty five years has there been any upset when due to either oil crises or over development, prices fell for a extremely short time.

At the turn of the century there were several changes in the real estate sector on the Costa's, introduction of the euro, currency and property speculation from the new states of Russia and Europe, low interest rates, banks flush with money to lend and middle aged people releasing equity from their homes to fund their investments all combined to fuel the largest growth in holiday property building ever been seen on the Costa Blanca and Costa Del Sol. This was further driven by the collapse of old fashoined investments such as pension funds, stock markets and insurance policies with investors looking for a safe haven for their money.

The Spanish domestic market was largely unaffected by all this still rising by 5 - 10% per year whilst the foreign market went into orbit with rises of 20 - 30% per year. Recently we've had over five years of massive increases in this sector with investors and developers making fantastic returns.

A lot of the press stories featured the crash of property developers funds on the local Stock market with some major developers losing aprrox 35% of their capital, what they failed to point out is that for the past seven years they have been profiting by as much as 72% per year.

What is happening is a readjustment in the property market. The investment markets and the local market need to get a little closer to each other that's all. Property buyers and property owners who hang around for the medium term will see a rapid return to normal growth, remember that property IS and ALWAYS HAS BEEN the best medium or long term investment vehicle. Short term blips may give the press some ammo but can never affect your medium to long term property investments.

A few people will get caught out (thankfully not our customers) but then some investors seem to behave like sheep or lemmings rushing towards the pot of gold with no real knowledge or simply because Jim from the pub invested so it must be a top investment. Maybe a certain area is in fashion... (remember Tuscany and Provence?).

I can see this happening also in other so called emerging markets such as the Baltic States, Romania, Bulgaria and Northern Cyprus. used to work as a consultant in some of these markets ten years ago and then was investing time not 2007. I can predict the newpaper property sections headlines in a couple of years, "Life savings gobbled up in Turkey" or "Couple lose everything in scary bulgary"

So property owner in Spain? My advice - Get yourself a bottle of Jumilla Red (Finca Luzon, relax, enjoy the sunshine and stop worrying - We are discussing bricks and mortar here and Spain has made 17% pa for the past 34 years despite these occasional hiccups and will continue to do so.

Article Source: http://www.myaddirectory.com

Russell Marsh is a webmaster based in Murcia. His very popular web site, Murcia Direct, caters for Polaris World and Murcia rentals and he also is a Golden Partner of Polaris World

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