As the new decade and Brexit are taking place, more British expats are moving abroad and looking to buy a property overseas for a better lifestyle. At the same time, property investors are searching for competitive returns in Europe’s top housing markets. It is no doubt that Spain is still amongst the best places to buy a property in Europe in 2020. Indeed, international buyers have made roughly 20 percent of all of the property transactions in Spain and Britons have traditionally been the number one people seeking to buy a property in Spain.
Our currency experts here at Halo Financial have considered all the challenges, risks and necessities to keep in mind when buying a property in Spain. So, whether you are looking for a holiday home, a property investment or just an abode to live in at a later date, here are the top 5 places to buy a property in Spain in 2020.
Where to buy a property in Spain in 2020?
Property sales, foreign demand and rental prices are all soaring in Valencia, which is a popular choice for those who desire a sought-after Mediterranean lifestyle. According to the Idealista website, property prices rose 16.1% in the year to October 2018.
Nearly one out of every three sales in the region goes to foreigners and sales are also growing rapidly, up 16.7% year-on-year. It the same for rental returns in the city, which are up 10% at the end of Quarter 3 2018, while the sought-after area of Puerto de Sagunto saw rental values rise by 21%, according to Idealista.
Demand is rising rapidly, with agent Lucas Fox Valencia seeing an annual rise of 76% in rental transactions in the first nine months of 2018. Prices average €1,816 per month, nearly half of those in Madrid. Most foreign rental clients are either from the United Kingdom or the United States.
For the year to October 2018, property prices in Madrid rose 19.2%, faster than any other part of the Spanish mainland, according to the latest data from the Idealista website. Agency, Anticipa Real Estate, estimates that the market will continue in that vein, increasing 11.9% in 2019. In some popular areas of the city, houses have already exceeded the previous peak of 2007.
As you would expect, Madrid is a top target for international buyers and investors. In the first six months of the year there were 4,911 property sales to foreigners, an annual increase of 5.4%. Madrid property is now close to its peak values of 2007. Property buyers also show a high degree of contentment with their purchases. According to a study from Spanish developer, Vía Célere, 91% of respondents were happy with their Madrid home.
There is strong demand for rental property in the capital, with the price per month rising 13.2% in the year to October 2018. The average monthly rental price for the first nine months of 2018 was €3,279, according to the Lucas Fox agency, significantly higher than in Barcelona.
Málaga is a top holiday destination and so it is ideal for those looking to buy property to bring about a lifestyle change or to retire. Being a popular destination, property prices are increasingly strongly. In fact, values rose 18.8% in the year to October 2018, according to the Idealista website. And they are set to continue rising into 2019, market experts believe.
In 2018, the regional capital is set to top the 19,464 sales in 2007, the last market peak before the global financial crash. Despite strong property price rises, apartments can still be found in Málaga at under €175,000. If you are looking for rental options, then Málaga is worth consideration.
Rents have risen 11% in the year to October 2018, bringing the highest returns in Andalusia with an average of €771 per month and the sixth highest province in Spain, the latest figures suggest.
Property sales in and around the university city in South Eastern Spain have grown by almost a quarter during the first nine months of 2018, the fastest growth in Spain. Government figures show there have been 12,536 sales until the end of September, up 24.1% on the previous year and the highest rise in the country. Market experts believe the strong demand is set to continue into 2019 and the area is very popular with British buyers. Around a quarter of sales in Murcia go to foreigners and an overwhelming 57% of those home sales involve Britons. That means that one in six properties in the Murcia region was bought by Britons.
As well as having high property ownership figures, Britons have accounted for around 42% of tourism spending in Murcia in the first nine months of the year. The next highest foreign property sales go to Germans on 11%, according to figures from Spanish notaires for the first half of the year. The new Murcia International Airport at Corvera is due to open in January 2019, which is likely to open up more flight options for European travellers, including low-cost routes from the UK. Whenever new flight routes are launched, property sales usually increase.
Mallorca has been a long-time prime property hotspot, thanks to its wonderful weather, spectacular coastline and mountain scenery and a choice of luxury homes. In fact, the EuroWeekly website calls it the perfect place for a second home. Foreign buyers are very active in the market, led by British and German buyers.
According to the Mallorca Daily Bulletin, in 2017, almost 40% of the total properties sold in the Balearics went to foreign property buyers; of those property sales, around 10% were over €450,000. City life on the islands is also becoming more popular, offering home buyers the best of both worlds: the buzz of a city like Mallorca’s capital, Palma, with beautiful beaches and the more laid back island lifestyle. The number of luxury properties bought by investors in Mallorca has also gone up considerably in 2018 and 2019.
Mallorca is the main island in the Spanish Balearics. The capital of the island and the Balearics, Palma de Mallorca, is in southwest Mallorca. Property prices across the Balearic Islands rose 8.4% in the year to Quarter 2, 2018, according to the most recent data from national statistics specialist, INE.
Kian Khaleghian of Von Poll Real Estate, with 320-plus locations internationally and six in Mallorca, says, “You have all the amenities that come with living on an island of a million inhabitants, many of whom are English and/or German-speaking. The Island benefits from state-of-the-art hospitals, historic sites, plenty of art and cultural events, an immense variety of world cuisines and according to The Telegraph, the best fibre optic internet speeds in Europe.
“With many famous golf courses, numerous international schools covering the American, British, French, German and Spanish curriculums, Palma also won the ‘Best Place to Live in the World’ according to The Sunday Times (UK) in 2015.”
The leading luxury lifestyle magazine, ABC Mallorca, refers to Puerto Portals as “the place to see and be seen during the summer where you’re more than likely to catch a glimpse of a few famous faces” including Hollywood stars, business titans and sports legends. Local agent, Redhawk Real Estate International, says although new construction levels remain relatively low compared to a decade ago, Mallorca and Palma, in particular, experienced a new influx in 2018, which could lead to apartment price reductions in 2019.
Managing Director, Nidya Melone, explains, “The successful undertaking of apartment complex construction in Palma’s centre in 2017 targeted a niche market of non-resident buyers interested in low maintenance, well-appointed and centrally located apartment units in the range of €500,000-€1 million.
“Continuing this trend, 2019 has seen several relevant new developments in the Bonanova and Nou Llevant areas, just to mention a few. These state-of-the-art apartment complexes with amenities such pools, spa and green garden areas, add several hundred residential and commercial units to the local property market in the next five years. At the same time, developers complement the local government’s plan to re-design the east end of Paseo Maritimo into a pedestrian-friendly and year-round shopping destination.
“To sum up, in the next few years visitors and residents alike will experience a new layer to Palma’s real estate market and the beginning of the expansion of Palma’s Old Town shopping district to the east side. The local real estate market supply side increase coupled with the new government restrictions regarding apartment holiday rentals, will most likely encourage a market price adjustment in the city’s apartment property market pricing in 2019.”
Why buy a property in Spain?
Property demand in Spain is rising – boosted by a growing number of international buyers. There were 352,768 older properties sold in Spain in the first months of 2018, up 11% over the same period in 2017, according to data from Spain’s Institute of Statistics. Funnily enough, there was a similar rise in new home sales, up 12% annually to 62,318. That is the equivalent of 18% of total sales, a similar proportion to a year ago. In addition, a record number of foreigners are deciding to buy a property in Spain.
Find more statistics at Statista
From January-June 2018, there were 53,359 sales to non-Spaniards, the highest figures since record began in 2007, according to Spanish notaries. Britons head demand, with 7,613 sales, up 8.8% year-on-year and a total share of 14.3%. The French are second on 4,211 sales, down 4.6% on Quarter 1 2017, with German buyers just behind with 4,138 sales, down 2.1% annually.
The top three nations showing the biggest increase in sales are Morocco on 28.8% year-on-year, Ireland on 24.7% and Denmark with a rise of 18.2%. Spain benefits from warm weather, an affordable lifestyle and cheap flights from destinations around Europe. Here are some leading property destinations.
Sandy Peterson, Independent Financial Adviser with Haven Financial Advisers in Mallorca, said, “With construction only representing around half of its previous weight in the Spanish economy, exports up, and both economic growth and unemployment improving, this paints a very rosy picture for the future of the Spanish economy. Most market commentators would agree that the tide has turned and Spain is on the up.”
Top challenges to buy a property in Spain:
1. Buying a property in Spain after Brexit
The fears and insecurities caused by the upcoming Brexit have led the number of British property seekers in Spain to rise considerably. The fact that Brexit has had a big impact on international property buyers is no doubt, and caused many people seeking to make their next life-changing move being held back by countless doubts and wonders such as “should I buy a property in Spain after Brexit?” “Is it a wise choice” “is it safe” or “can I even do this?” The answer is YES.
Not only you are fully able and have every right to buy a property in Spain, but the Spanish government is constantly motivating both EU and overseas residents to make this move. To give an example, the Golden Visa Scheme is a type of permit that encourages foreigners to realise investments in Spain, including moving to the country.
Find more about Brexit and buy a property in Spain:
- Top tips for emigrating after Brexit
- British buyers shrug off Brexit to buy in Spain
- What Brexit means for international property buyers
2. It is getting more expensive to buy a property in Spain
Although the majority of British people choose Spain as one of the top destinations to emigrate, there has been a big decline in residential Spanish property sales figures. This was mainly caused by the rising house prices, which makes it more difficult for people to buy a property in Spain. The price is continuing to rise on the areas and streets of the big cities as property supply is scarce. Additionally, properties’ price rose in all Spanish autonomous communities over the last year, which intensifies the challenges for foreigners to make the investment.
Find out more about this:
3. Mortgages to buy a property in Spain are rising
The amount of Spanish houses purchased through mortgage increased by 7.3% in May 2018, and as a consequence, mortgages value increased too. Official figures show that
Spanish mortgages and real estate sales are rising. The number of homes in Spain bought by mortgage finance rose 7.3% in the year to May 2018. Official figures from the Instituto Nacional de Estadistica (INE) show that the mortgage value in Spain increased to 2.8% (€117,044). In addition to this figures, it must be noted that there have been more than 31,000 mortgages approved in 2018, equivalent to roughly €3.8b capital involved and a 10.5% increase year-on-year.
Thinking to buy a property in Spain? Contact our currency and overseas property experts who will provide expert guidance on you next life-changing move.