The New Year brings a good panorama for property buyers and investors. 2011 has been the year in which property investors and home-buyers have kept a closer eye on property prices in Spain. Better prices; better quality of the new property stock; encouraging rental market; more security to investors; are, in short, some of the key points for investors and home buyers in Spain in 2012.
1) Better prices for buyers in 2012.Property prices have dropped in 2011, an average of 6,85% according to the Ministry of Public Work. Prices level has reached 2005’s figures and the economic climate suggests that further fall will come.
2) The market is touching rock bottom.2011 has probably been the worst year in terms of property prices and sales drop. If the price fall in 2010 was by 3% compared to 2009, the mentioned fall of 6.85% in 2011 compared to 2010 confirms that the market is reaching its lowest at the right speed.
3) Cash is king not only for Particular vendors but also for Banks and Savings Banks.Get your cash ready for upfront payments to guarantee juicy discounts from owners direct and financial institutions.
4) Buy-To-Let still being the only short-term strategy for property investors.Unless you are a high-end investor with your clients’ portfolio, the economic situation in Spain still does not give hope for reselling in the short- and mid-terms.
5) Once again and probably forever: location, location, location …. + property specifications.Avoid subprime properties. Subprime tends to be easy to identify. Subprime properties in Spain are in poor locations and are bad-quality properties: poor building specifications, no lifts and frequently they need expensive refurbishment.
6) The best opportunities will come from those in need to sell. If a bank’s portfolio is the largest in the country, it should be because its stock is difficult to sell. Indeed, generally banks have the worst properties in Spain because the owners could not sell or rent in order to repay the mortgage. Spanish local estate agents are giving you the opportunity to find private sellers who need cash and want to sell a good flat or house. If you have the time and ability to work locally, you have a higher possibility of succeeding in the Spanish market.
7) Timing. At this moment (the beginning of 2012), Spanish property bargains are most likely to be in the hands of private owners rather than in Banks’ repossessed property portfolios.
7+1) Banks will still be driving the market in 2012. Banks are not only holding the largest property portfolios but also they are also using their financial strength to tip the balance towards their own business. Banks are the easiest option but potentially not the best right now. It may chance shortly if the economic climate still hitting private owners.
9) Banks’ mortgage restrictions are still tough and mortgage conditions are not improving despite the fact that Banks tend to mask bad mortgages with residual discounts: free arrangement fees, very low notary fees (the bank pays the notary bill), etc. You must shop around and find the best mortgage. A key question that any buyer must consider: will it be worthwhile asking for a fixed rate rather than a variable if the Euribor starts rising again?
10) THE TIP OF THE YEAR: As a starting point when dealing with a seller directly, reduce your offer by 20% of the asking price. That is the way to guarantee a bargain in the negotiation process.
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