Is this the right time to sell property in Spain? Everything was going well for Spain in 2015 – the economy was back on track, tourism was up again, with a record number of tourists visiting, and the property market was doing much better than it had for a while. That was until the General Elections of December which threw in a really confused mandate.
Of the four political parties in the fray, the ruling People's Party (PP), opposition Spanish Socialist Workers' Party and the new centre-right Citizens Ciudadanos got 20% of the votes, while the left-wing Podemos got 15%. That means no single political party is in a position to form a government on its own and there’s no understanding of any sort among any of them.
Frantic efforts are on to form a government, as if no government is formed in Spain by May 3 and the deadlock is not resolved, a fresh General Election will be called, which is expected to throw up an even more confused outcome. This political instability is a huge risk for Spain. Already, credit rating agencies have downgraded Spain from “Positive” to “Stable,” because of the chaotic atmosphere in the country’s politics.
For the Spanish property market, this political instability couldn’t have come at a worse time, as property prices were up by 5 to 10 percent nationwide and things were looking very bright indeed. Now there’s a risk that the region of Catalonia, of which Barcelona is a part of, may break away from Spain. So the uncertainty is a real dampener for the property market in Spain.
This has certainly made foreign investor reconsider putting their money into the Spanish property market right now. Foreign investors don’t really have any favourites among the four national political parties, but put a premium on political and economic stability, no matter where they invest their money. They panic at political uncertainty.
Spain was to take several important decisions related to the property market this year. But most of them have been put on the backburner owing to the fact there nobody has the power to take any decision in the Spanish government. So there’s a policy paralysis in the country, which is not good news either for homeowners or home buyers, particularly in a country like Spain which is so heavily dependent on foreign direct investment.
In spite of that, regions such as Madrid, Barcelona, Malaga, Valencia, Costa del Sol, Canary Islands and Alicante are still expected to do well in 2016, with home prices here expected to go up by 6% to 12%. Brits are so far the most prominent buyers of Spanish property, snatching up 15% of all purchases by foreign nationals. They are followed by the French – 10.5%, Russians – 8.4%, Germans – 7.5% and Belgians – 6.9%.
Spain has a Golden Visa scheme for foreign investors, which hasn’t been as successful as the Portuguese Golden Visa. Essentially, Spain offers residency permits to non-EU investors who buy property worth 500,000 EUR here. The Golden Visa scheme has so far found many takers among Russians and Chinese investors.
Apart from that, there’s huge interest in Spanish properties from the US, China and the Middle East. Twice as many Americans bought Spanish property in 2015 as they did in 2014. The growth in the interest from China has been high as well – 83%.
Indeed, foreign buyers account for 25 percent of all property sales in Spain. The Basque country has seen a 43% increase in interest. Catalonia has experienced a 41% rise in interest, Madrid -42.5%, Balearic Islands - 36% and the Canary Islands - 23.8%.