The market in Spain is appealing for investors because of the fact that prices have been dropping and are lower than ever before. People can’t avoid at least looking for properties there when flats can be found for 46 thousand euros and houses for 79 thousand….even city and coastal properties!
TINSA, the main property price index group, states that falling prices have reached an average of around 31%. This rate, although staggering, may still be even too low.
Unofficial but reliable sources have stated that prices have fallen by 45% since their height in 2007. Until the market settles down and even starts to pick up speed again, some predict a total drop of between 65 and 75 percent.
This might seem like a pretty depressing number, but with the current state of finances in Spain, a further drop of this magnitude may actually be possible. Sadly, this means that the current prices in August of 2012 could actually drop by another 21 to 32 percent.
So, if you’re interested in investing in Spain, you should start looking for properties that fall above the 31.5% BMV—below market value—so that your property will at least match the current prices of the market in the worse cases.
WHEN WILL PRICES RISE AGAIN?
That is the mystery. However, the economic situation is so bad that cash and liquidity are dominating, so any current owners are highly eager to sell. Most professionals predict that the drops will keep happening in 2012. Different small markets have their own trends, so we are investigating to see where you should invest among them.
We are predicting, in agreement with the experts, that when prices hit their absolute worst, there will be a plateau. When this happens, prices should start to rise again, but this may not happen everywhere. Therefore, overall prices will probably rise again in around three to four years in the areas where there is demand.
Like we’ve said before, it is hard to say with 100% accuracy how much of a fall we can expect to see and how long prices will continue to fall. But in the end, we suppose that’s all part of the game.