Spain house price falls good for long term

Friday, 27 April 2007 12:00 AM

Recent forecasts of house price falls in Spain will not affect the average British overseas property buyer and may be good in the long-term, experts say.

Property groups and foreign currency specialists argue Spain remains a good overseas property investment location and will benefit from steady growth in the long term.

"Spanish property company shares were clearly overpriced and investors are bailing out after finally recognising that prices cannot keep growing," commented Stuart Law, managing director of Assetz property group.

"This could be good news for the property market as a whole, as it will reduce the vast gearing of listed property companies, reduce the high levels of house building which has led to some oversupply in the market, and also decrease levels of illegal house building in Spain, which is very distressing for buyers when they discover their purchase is not secure."

However, Assetz believes there will not be a "significant house price drop" in Spain, and forecasts growth of around five to seven per cent per year going forward.

Tim Hodges, local director for the County Homesearch Company in Spain added he believed a correction in the market was long anticipated.

"This represents the start of a long anticipated correction in the market, and has been evident in accepted offers over the last few months," he said.

"It offers clear evidence that the quality of housing stock must now be reviewed and that the issues concerning off plan investors clouding the real marketplace must be addressed.

"However, Spain still represents a good long term investment and rental returns for holiday lets are superb. Interest rates are lower than in the UK and the mortgage market is becoming more liberalised whilst tightening up against illegal and low quality builds.

"Spain continues to have the best climate in Europe, excellent health service, frequent cheap flights and a welcoming approach to other Europeans and now could be an excellent opportunity for foreign investment."

Martin Cox of Global Currency Exchange Network argued inland Spain would do better than coastal areas thanks to lower prices.

"Although traditional coastal area purchases may be slowing down, the savvy UK buyer is diverting his attention to more inland areas of Spain where cheaper land prices potentially mean more value for money," he noted.

The Global Currency Exchange Network said established investment areas such as Spain, Italy and Cyprus offered stability, "borne out by years of interest from the British buyer".

Tags:
• uk property news