The Pain in Spain

Advice on the Spanish property market and how, for some, the dream of a new life in the sun has turned into a nightmare.

Many of the homeowners who bought property in Spain during the last few years, either as an investment or to use as a holiday home, are now feeling the pressure as they struggle to keep up with the payments on their mortgages.

Lured by the low cost of living, sunshine and laid back lifestyle, could it be that the dream for thousands of people has turned into a bitter pill of reality? It seems that on every street in every town you drive along nowadays, there are ‘Se Vende’ (for sale) signs adorning the balconies and fences of beautiful villas and apartments as the owners, convinced of a property market crash, struggle desperately to sell what they now see as a millstone around their neck.

Although this ‘Pain in Spain’ may be a nightmare for some, the opposite side of the same coin, in a way of balancing the universe, is a dream for others as buyers of property in Spain now have a vast array of stunning properties to choose from, some of which are on sale for as much as 50% of what they would have had to pay for them at the beginning of 2008.

So what does all this mean? Well, property owners in reality are really only seeing losses on paper, as the full market price (whatever that may be) is only ever realised when the property is sold, so unless an owner was selling anyway, the actual perceived value is irrelevant. In a market where there are more ‘panic sellers’ than there are buyers, then it follows that it will take homeowners longer to clinch a sale than previously, when there were lots of ‘panic buyers’ around, i.e. buyers who rushed to buy before the ‘prices go up any more’.

After any ‘price correction’ there is always a period of reflection whilst people adjust to the new circumstances and although it may take some months or even a couple of years, we should see a renewed interest in Spanish property as governments around the world bring their economies back under control.

So some words of advice to homeowners would be to sit tight, ride the storm and enjoy your holiday home away from the rain, high prices and doom and gloom merchants until you are once again sitting pretty on your investment. Remember, property has a market value and that is, as always, a moving target. What goes up has to come down, what goes down has to come up, etc.

About the Author
Written by Mark Buckingham for Rent Accom Spain. Rent or buy your perfect Spanish retreat direct from the owner.