Spanish Property Market in 2009 - Reasons To be Optimistic

As a difficult year for the Spanish property market draws to a close and with future financial concerns at the forefront of many people’s minds, we ask how this market will fair in 2009?

In the last ten years, more and more Brits have taken the plunge of investing in Spanish property, be it in the form of a holiday home, buy to let investment or permanent relocation. Casas de Lorca, established developers in Murcia, south east Spain, offer their thoughts about what they expect to see during the next twelve months. Looking at the key underlying market influencers, they offer concrete reasons as to why the more alarmist predictions of slumps should be exiled and why interest in Spain by Britons will continue to thrive well into the next decade.

Experts believe that both UK and Euro interest rates will continue to fall throughout the first half of 2009 helping to stimulate both the UK and Spanish property markets. As lower interest rates and greater governmental pressure on banks increases lending, the UK property market is likely to be stimulated. As people manage to sell their UK homes, more can buy their dream home and relocate to Spain as is the desire of many. Casas de Lorca has a large database of clients who have decided that they wish to purchase a luxury villa in inland Murcia but are waiting to sell their home in the UK; therefore if the falling UK interest rate simulates the domestic property market, then not only will there be more new buyers for Spanish property but it will allow Casas de Lorca’s existing prospective buyers to complete their purchases.

Aside from economic factors, Casas de Lorca say the popularity of Spain as a holiday destination over the last year has reasserted itself. Twelve months ago, there was a large growth in potential property purchasers looking for new, emerging, often viewed as ‘better value’ markets than Spain leading to a glut of property stock, especially on the popular Costas. Towards the end of 2008 however, many of the flight routes to emerging European destinations were cancelled leaving buyers less sure of the more untried and untested destinations. Nevertheless, the resultant over supply of holiday homes in Spain led to price reductions in some areas, which can be viewed in a positive as well as negative light. Whist some investors became unsure about potential price drops, others saw the opportunity to grab a bargain and this is set to continue in 2009.

Whatever the changing economic circumstances, the underlying reasons why Brits love Spain remain unchanged. The year round sunshine, easy going lifestyle and comparatively lower cost of living are still strong pull factors. For the climate alone it is regarded as one of the preferred destinations for the retirement market. In addition, many looking to retire abroad are coming to the conclusion that emerging destinations may not have the same quality of health care or the familiar culture they see as Spain offering them.

Mike Hamilton, Sales and Marketing Director of Casas de Lorca believes that although 2009 may present more difficulties than in recent years, he remains unconcerned about the Spanish property market and its long lasting attractiveness to Britons. He says:

“Despite current difficulties, I believe the various underlying factors leave cause for optimism in the Spanish property market, chief among them the Brits’ enduring love of Spain. For example, I have forecast for strong growth in our villa sales. The classic designed villas set on five acre plots have continued to sell well during the credit crisis, so I predict that if dropping interest rates begin to stimulate the UK property market we will be seeing at least a 30% growth versus 2008. It will take time for the property market to begin to recover, but with low interest rates and uncertainty in the stock market it is difficult to see where else people would look to invest.”

News submitted by Sally Cranham, Casas De Lorca