Spanish Property Investment Advice 

Brought to you each week by our property expert, Iain Maitland.

Posted on 10 March 2006

Property prices on the up

It's official - Spain is hot! A new report from the European Commission reveals that improving economic conditions in key European markets will push property prices up higher this year. Spain is named first and foremost as it has an economy that's growing by 3.1 per cent. Within Spain, Murcia and Alicante are tipped as offering the most impressive growth potential for buyers. From where I am sitting, the smart investment money is starting to move inland to places such as the Jalon and Orba valleys where prices are more affordable but you still have quick and easy access to airports, beaches, and nightlife. More on this shortly.

With the European base rate now at 2.5 per cent, the big question is where next? For me, it is upwards without a doubt. The markets are clearly already factoring in a base rate of 3.0 per cent by the end of the year so plan your borrowings on this basis. Many analysts are blaming rising inflation and it is true that the European Central Bank has raised its inflation targets for this year. In turn, rising inflation is being attributed on property price rises and increased mortgage lending across southern Europe. That is not going to ease in the immediate future for sure.

Another just-out report from the Office for National Statistics shows that Spain accounts for 27 per cent of the 23 billion pounds spent by UK buyers on second homes worldwide. Spain has led this market for many years and that will continue. The sooner that some of these underhand deals and tax fiddles are eliminated in Spain the better it will be for the market. It is good to see that the Spanish government is attempting again to stamp out the black money deals that remain commonplace in parts of the country. There are many examples of sellers who have asked buyers to declare a buying price that is much lower than the advertised price with the balance being paid in cash. This helps sellers with capital gains tax liabilities and buyers with stamp duty liabilities. New laws should be in place by the end of the year which oblige sellers and buyers to reveal their tax identification numbers before completing a property deal. More news soon...Until next week,

Warmest Wishes

Iain Maitland

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