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Spain 'still stronger' than volatile east

7th December 2006 | back to article listings BACK    print this article PRINT

In the face of stiff competition from the east, the Spanish property market is holding strong due to its ease of access from the UK and Brits' traditional affection for living in the country, claims a foreign property investment expert.

Over the last few years, property markets in eastern Europe have, to some extent, managed to cash in on the lower end of Spain's market, chiefly due to high house price inflation in the country leaving many homes out of low-budget buyers' means.

But recently there has been reports of burgeoning property growth further a field, specifically, in the former Portuguese colony of Cape Verde and Morocco.

Despite these competitors, Paul McMullan, web manager for Spanish property specialist escapes2.com, believes that Brits' demand for Spain is unwavering.

"I think Spain will still be the most popular by far because it is so easy to get to – around two and a half hours," he said. "You can get cheap flights, so for people who are just looking for a weekend away it’s very easy to get to."

He explained that countries in eastern Europe and Africa have benefited "mainly because prices have been high in Spain", implying that Brits' primary focus is still on the western Mediterranean country.

Mr McMullan added: "Places like Cape Verde are coming to the forefront because of price really, and also because they have announced direct flights there."

Property markets in eastern Europe have been performing well of late but the latest statistics have shown that their growth has begun to slow down.

Latvia and Bulgaria now head the Knight Frank Global House Price Index – a list of 32 nations' growth rates – recording 39.2 and 19 per cent annual growth respectively. Even though this is far and away above traditional holiday destination favourites Spain and France (up 9.7 and 8.9 per cent year-on-year respectively), the figures from eastern Europe are considerably below last year's results.

In the third quarter of 2005, Latvia recorded growth of 65.9 per cent, representing a fall of 41 per cent, while Bulgaria fared just as bad with its growth falling by the same amount.

Furthermore, property in Hungary actually fell in price by one per cent, as Liam Miller, head of Knight Frank Residential Research explained. "The reasons for Hungary's poor performance are related to existing low affordability in the market and poor stock quality which means existing owners are competing in a market with new stock which is often of a much higher specification."

Although some investors may still look to the volatile east to make a quick buck, the majority of those searching for foreign property are still turning to the traditional market of Spain due to its stability and maturity.

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