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Spain to become "a buyers' market" for '07

2nd January 2007 | back to article listings BACK    print this article PRINT

Due to excess supply and stagnant house prices, this year Spanish property will be a buyers market according to a leading expert in the field.

By all accounts Spain is not the property Mecca of old as we begin 2007 as years of boom have been followed by intense development leading to competition among sellers, forcing prices down.

Property investment specialist Assetz notes that capital growth in the country fell from 12 per cent earlier in 2006 to 10.8 per cent in November and is likely to continue slowing into the new year, after which it is likely to stabilise.

Similarly, the Knight Frank global house price index states that house prices grew 9.7 per cent in the third quarter of last year, down from 13.5 per cent over the same period in 2005.

Mark Stucklin chief executive of Spanish Property Insight said it is not all doom and gloom for Spanish homeowners: "The shares of property companies quoted on the Madrid stock exchange rose by more than 60 per cent in 2006.

"In theory stock valuations are forward looking, which means the stock market is (wildly) optimistic about the future of the Spanish property market."

However, he added that he does not "share this enthusiasm, at least not in the short term".

Gone are the dizzy heydays of the mid 1990s and early 2000s when Brits could pick up a cheap property on the coast, safe in the knowledge that it would accumulate rapidly in value both in terms of capital appreciation and rental yields.

The growth in real estate development, particularly on the south and east coast, has caused excess supply, which has stemmed landlords' incomes.

But Mr Stucklin believes that the move towards a buyers' market will mean that those looking to invest will have higher expectations of their desired property, forcing developers to focus on building top-of-the range apartments and villas in ideal locations.

"I am optimistic about the best quality property and developments in Spain, which I think will benefit from a flight to quality as the market dips," he explained.

Mr Stucklin concluded by warning potential investors to choose their property carefully.

"2007 is going to be a buyer's market," he advised. "If you are hoping to buy, go for quality. If you are hoping to sell, lower your price expectations."

Brits looking to invest in Spain are reminded that from yesterday, the Spanish government cut capital gains tax on foreigners' property sales and personal income by almost a half to 18 per cent.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3194.html. Alternatively, please see our full press release archive.

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