The US dollar roared higher on Wednesday following some hawkish comments from Federal Reserve Chair Jerome Powell, following the US central bank’s latest interest rate decision.
This is the highest annual figure since 2008 and shows that confidence has returned to the Spanish property market after the financial crisis burst the real estate bubble.
What’s more, average property prices rose by 7.6% last year, with the hottest location for sales being centred on Madrid, which saw a 92% leap in transactions.
And the trend looks set to continue in 2018 with a spokesman for the high-end estate agent Lucas Fox, Rod Jamieson, stating: “Madrid is where it is right now. The buzz around the city in the last 12 months is palpable.”
"Each week we are seeing exciting new constructions pop up across the city, whether it be an edgy real estate project or a state-of-the-art food mall, Madrid seems to have its finger on the pulse. The city generates almost 20 percent of the country’s GDP – this impressive growth rate coupled with its competitive tax rates has made the Spanish capital an extremely attractive destination for property investors looking for new opportunities, particularly in districts which had stagnated in the crisis and are now regenerating,” he says.
But it’s not just Madrid that is seeing the property market heat up, sales across the country also experienced double-digit rises last year.
And the good news for anyone thinking of making Spain their new home, or wanting to buy a holiday property there, is that prices have not yet caught up with sales.
In fact, average prices remain some 21% lower than they were at their 2007 peak, meaning there’s many a bargain still to be found, especially away from the major cities.
Places popular with foreign buyers include the Balearic islands of Mallorca and Ibiza, where around 35% of sales were completed by foreigners last year, with British and French purchasers leading the way.
The Canary Islands, too, saw an uptick in property transactions, with some 29% being made by foreign nationals.
Spain experienced a property boom from the 1990s until 2007 when the bubble burst. This left the country with a huge overcapacity of properties, many of them in coastal areas popular with foreign buyers and retirees. With the recovery in sales it is expected that the gap between supply and demand will narrow, meaning prices will rise further once the available properties have been sold.
Nevertheless, with construction levels still at only around 40% of their pre-crisis peak, it will likely be quite a while before there is a another serious oversupply of properties on the market.
Lucas Fox co-founder Stijn Teeuwen states that, apart from Madrid, the market is seeing surging demand in major cities, such as Barcelona and Valencia. This is then having a ripple-effect in neighbouring regions, which are also reporting steady price rises. He says:
“Aside from these new Lucas Fox locations, we expect to see more growth along the Barcelona coast (Maresme and Sitges) as some buyers get priced out of the Barcelona city market, as well as the desirable areas of Salamanca and Chamberí in central Madrid which appeal to foreign investors, Latin American buyers and wealthy local clients.”
The company also says that buyers are increasingly international, with many investors from as far afield as the United States, China and the Middle East piling into the market. He also states that traditionally strong buyers from Scandinavia, Germany and France have offset a fall in the number of Britons seeking to relocate to Spain, possibly worried by the effects of Brexit.
The drop in the number of Brits seeking homes in the sun has been most noticeable in coastal areas including traditional favourites such as Marbella and the Costa Brava, the company says.
Teeuwen expects 2018 will see the housing market make up further lost ground: “The Spanish property market is now in full recovery mode and offers a plethora of advantages for opportunistic buyers. Along with a growing economy, low interest rates and Spain’s obvious lifestyle benefits, Spain offers attractive property prices – up to 30% below the peak of 2007 in some areas.”
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