Investment Property in Spain
For most middle-income people buying a Spanish property is not only affordable but cheap. A well appointed two bedroom apartment can start at half the price of an average UK home. Will the value of the property appreciate? As we start the new millennium the omens are good. Monetary control in Europe is tight. Interest rates are low. Inflation is down.
But care is required, in Spain the price of homes more than doubled between 1984 and 1990 largely because the supply of property could not keep pace with demand. From 1990 to 1997 price increases broadly matched inflation, but since then dramatically increased yet again. They are linked to the economies of other European countries, such as the United Kingdom and Germany, where in times of recession a property abroad may be one of the first things to be sacrificed. Equally a buoyant economy causes excess demand with an 18-month waiting time for new properties.
Spanish house prices may be low, but they are also volatile, appearing to appreciate in four to six year cycles with 2004 showing a slowdown and 2005 a drop. Looking to the long term however, Spanish property prices have the highest rate of inflation in the world. It may be due to a low starting point, but 18% per annum over the last 20 years is good in anyone's money.
