The main reasons behind the "boom" in Spanish real estate during the last decade are very well known:
1. Historically low interest rates.
2. The Spanish invest their savings in their house or apartment: Spain has the highest EU percentage of owner households (92%).
3. Ponzi scheme of Spanish local (municipal) administrations.
4. Foreign demand.
In 2006 more houses were built in Spain than in Germany, France and the UK together! The Spanish real estate market is constricting since 2008. Every year sales and mortgage lending is going regarding the previous year. The reason the market has not completely collapsed is that the Spanish banks need to offload a lot of real estate and are offering very soft conditions.
However, it seems unlikely that the prices will go up any time soon given the huge stock of real estate these banks have on their balance sheet. Furthermore the financial crisis does give the banks much margin to lend to new buyers. Finally buyers are difficult to find because the general feeling that the prices will continue to go down for some time.
The prices will gradually continue to go down. Nevertheless foreign demand for Spanish real estate will always be there especially for these retired northern Europeans that went to spend some years in the sun.
We follow the legal developments and movements in the Spanish markets closely. Buying real estate in this market is for quite some reasons challenging. Project developers, banks, construction companies, municipalities, they all have huge financial problems and you do not wish to become victim of their need for cash by buying real estate with hidden problems.
If you despite the downward trend have found a bargain or simply a house or apartment you wish to buy make you get proper legal advice because right now a lot of companies and people in the real estate sector urgently need your money.
Let these dire times not completely stop you from looking to Spanish real estate. You can find interesting opportunities and this will only grow. Keep a close look at the Spanish market but be aware of the risks. For that you should consult De Haan & Mulder.