Despite evidence that property prices are already rising in Spain, it seems the national market is still highly undervalued, suggesting this really could be a great time buy that holiday home in the sun or make an investment in the Spanish real estate market.
British overseas buyers, who spend more on Spanish property than any other foreign nation will be further tempted from April, when the UK government will introduce an additional 3pc tax over the standard stamp duty on the purchase of second British homes. Furthermore, higher national incomes and a weak Euro mean even more value for money for Brits and those in Northern Europe.
The data comes from a recent analysis of global housing markets by the Organisation for Economic Development (OECD), which measures property prices relative to local income from over a decade of data. It is calculated on an ‘average’ benchmark of 100 A reading of 105 suggests the market is 5pc overvalued, while a reading of 90 means the market is 10pc undervalued. Spain came in as some of the most undervalued at 74 (26pc undervalued), while the UK is at 107, Germany at 116 and the Netherlands at 83.
It is important to note that this data does not directly correlate with short term price rises. In fact, data from Knight Frank suggest that the Spanish market increased by just 1.2pc (annual change (Q3 2014 – Q4 2015). Sweden, for example, is valued at 14pc overvalued but saw an 11pc price hike in the same period.
Location is, of course, critical to local prices. Local infrastructure will be one of the most influencing factors to economic growth. Areas in Spain lacking in this department are still suffering from oversupply – perhaps contributing to the fairly modest national rise. Some Spanish banks are so eager to offload their excess inventory that they are offering mortgages to foreign buyers at 113pc suggesting exceptionally low valuations.
Fortunately for owners / buyers in the Costa del Sol / Marbella / Malaga region, with its thriving tourist industry and established infrastructure, all the signs are pointing to the region leading the way in Spain’s recovery. 2016 should be a very interesting year.
The OECD report has been covered in depth by Kate Palmer for The Telegraph.
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