A study released last week by the Spanish Sociedad de Tasación, revealed that house prices have dropped by almost 50% in six years in mainland Spain, and also the islands such as Majorca and the Canaries. During 2007, at the height of the Spanish property boom, real estate averaged almost €2400 per square metre, but the 2014 price at the end of the first quarter of the year stood at just €1270 a square metre.
However, it is not all bad news, because the decline in the value of properties in Spain is dropping, at a rate of 6.3% on a year-to-year basis.
Real estate agent Graham Martin, who owns an agency selling Javea Property based in the Alicante province of Spain, claims the area has not been hit as hard as other towns in the country, thanks to an increase in the number of foreign buyers from the UK, France and Russia.
Mr Martin stated French buyers were his main clients at his agency during the first five months of 2014, and estimates they will be responsible for at least 60% of his total sales over the year. France can be reached within around seven hours by car from Alicante, and the area boosts one of the best climates in the world according to the World Health Organization, so owning a home in this part of Spain is a very attractive proposition. However, in spite of the upward turn of property sales in the area to foreign buyers, Mr Martin believes prices will not rise until the large surplus of empty properties which are mainly new constructions is absorbed.
The French, who are purchasing properties in the area tend to be buying to use the property as a second holiday home as opposed to buying with the intention of relocating to the area. Finding and maintaining a job all year round in the Spanish coastal resorts is difficult with much work being seasonal, and banks are very cautious over lending to would-be buyers who have not been in their current employment situation for an extended length of time; which is only to be expected because over lending was the cause of many of the financial problems the country now faces.
“With the cost of living so much higher in France than in Spain, it is not surprising buyers are taking advantage of the continuing low housing prices and purchasing with the hope of getting a good return on their investment within a few years when prices will inevitably go back up,” said Mr Martin.
If you are interested in seeing the type of properties and current prices available in the area of Javea, Alicante, visit Graham Martin’s website via the link below.