An increase of 7.1% on purchases of properties this year is expected
2015 was listed as the starting point to resume growth in the housing market in Galicia, and it is estimated that by the end of 2016 the normalization of lending for projects contemplated within the real estate for both foreign investors and Spanish will be implemented.
According to reports from major banks, the property market in Spain has been stabilized since 2015, a process that started since 2012 with cities of great real estate movement and of great interest to foreign tourists as Mallorca, Marbella and the Costa del Sol, and then it spreads to Madrid, Barcelona and Valencia, and now also reached the green and Galicia coast.
After the purchase of real estate reached record highs in 2007, in 2008 it bottomed with the economic crisis caused by the explosion of a stock market bubble that was generated due to great speculation as to the price of real estate that is it initiated since 1998 due to the high level of liquidity that existed at that time, although in truth it never reached agreement on whether indeed he was speculating prices correspond to the real value of homes, eventually produce the falling prices, this coupled with the facilities that provided banks for mortgage loans that made it much easier to buy a home, and ultimately showed that it was too good to be true.
All this led to a fall in prices of 30 to 40%, in some extreme cases it reached 50%. These low prices changed the trend from 2014 when the most important cities like Madrid and Barcelona started their recovery. Therefore, foreign real estate investors have seen their great opportunity in this market, which have focused on the purchase of residential, office and commercial buildings in order to diversify their investments into other industries. While traditional investment locations such as London or Paris are suffering from the high prices that limit the ability to enter these markets, Spain offers lower barriers to entry for investors seeking investment opportunities, especially for foreign investors and tourists 5 continents seeking excellent investment options and even better vacation homes summer.
What are the expectations of Galician property market?
Buying homes in Galicia has increased gradually since 2015; an increase of 3.2% with more than 12,000 homes purchased during the year was recorded. However, as prices have been contracted by 0.4%. The properties on the Atlantic coast mainly in cities such as A Coruña and Pontevedra, but these are offset by the fall in prices in Lugo and Ourense, but in small percentages.
What it does is keeps growing rental market, which has after the housing crisis, was one of the sectors that have increased in popularity in real estate.
By 2016 some companies related to real estate project that this year the final push to finish lift the region in terms of real estate occurs. This is closely related to the performance of banks in that they are expected to continue the trend in improving their conditions for mortgage loans and the government, to make tax incentives for ordinary citizens as well as foreign and Spanish investors. The figures used for growth are around 7.1% increase in the purchase of property for this year, which is seen as a possible goal if taken into account that growth in real estate acquisition in 2015 was 3.2%.
In Galicia, the property prices are still low but the rebound will be here soon, and since European tourists have made their commitment to this region, especially the Scandinavians who have been increasing their investments abysmally, example of this is the Norwegian which they have grown by 108% and Swedes to an incredible 138%, although the English are those who maintain market supremacy with 19% of properties on behalf of citizens with nationality.
In addition, the requirements demanded to acquire a property in Galicia are not different from those required for a visit of tourists in the country. Citizens belonging to the European community have free entry to Spanish territory, the Arabs, thanks to the elimination of visa declared by the European Union, allows people coming from the United Arab Emirates travel freely, only on condition elapses 90 days or less in Europe, as is the case with American citizens.
Americans, Asians and Arabs who want a property in Europe, should seriously evaluate Galicia as the location where to place their capital as owning a home in the old continent will always be a luxury for anyone, and also today can find numerous options, from a rural house, beach apartments and modern apartments in the main cities of Galicia, for prices 5 years earlier had thought it was a scam. Therefore you can choose from a medieval castle to a modern apartment located near the coast. The same goes for prices ranging from a few thousand to million euros.
What is expected for the rest of Spain?
Prices of real estate in Spain, it is estimated that they will continue their upward trend during the course of 2016, such as happened in 2015 where the price increase ranged from 12% to 30% especially in the major cities such as Madrid and Barcelona accentuating this trend in the most exclusive areas and higher costs. However, analysts are a bit more conservative with projections made for 2016 where an increase in prices from a range of 3 to 5% and may vary to areas of greater tourist and real estate activity in the Costa del Sol, ie, Marbella, Malaga, Mallorca, among other cities where you can achieve an increase in property values up to 10%.
The main difference between 2015 and 2016, is that the previous year was considered as the year of consolidation, prices and that for 2016 and 2017, the real estate market recovers and prices that used to be achieved during the 2007 and 2008. On the other hand, demand shows no growth as pronounced as projections made prior to 2015 glimpsed the need to take stock about 450 thousand homes, but after the end of 2015, it is estimated that with a stock of 420 thousand homes will be enough to keep even demand even greater supply.
To help the growth of demand, banks continue to seek potential buyers to offer mortgage loans, however, this time has been restricted a little more the conditions for granting loans compared to previous contracts for 2008 in order to prevent the history of the housing crisis from recurring. Therefore, this year 2016 is expected to grow 30% of people who commit to pay a mortgage. Banking institutions have simply given to provide loans almost 100% only for people earning more than 4,000 euros a month, and they are solvents payment of other loans, despite these restrictions, interest rates in Spain They remain low, which creates an environment conducive to buying real estate environment, but is expected to spend much more time and therefore increasing interest in the United States marks a worldwide trend and is likely to Spain to follow.
Therefore, it is expected that many people choose to buy a home this year, because the conditions are ripe for it. Analysts say firms almost any worker can borrow money because with only 20 thousand euros in savings is possible to get a mortgage, and even young couples not very high wages can get homes that reach about 100 and 150 thousand euros. Although this market is where there are still failures to achieve buy property, because in Spain has been complicated getting employment for young professionals and some have very low to qualify for a mortgage wages.
Anyway, projections indicate that can reach a 20% increase in purchases of property, mainly at the low property prices, which make it possible for almost all people have opportunity to buy a house. Sure, today should be aware that with the progressive increase in prices, real estate brokers and are so forced to compromise on the price of a property, and with the increasing demand, most buyers limited to not negotiate and pay the price originally offered.
The sector that does not look good for the housing market, which itself has well been the lifeline of real Spanish roots since the crisis of 2008 and has kept growing since then, it is expected a slightly more conservative outlook for this year with an increase of 5%, which will result in major cities. This modest figure is generated by all the conditions mentioned in the preceding paragraphs, that is, low prices, relatively easy to obtain and low interest rate loans. The audience that will focus the rental market will be mainly young adults who for economic reasons, it is difficult to acquire a property.
How to promote foreign investment in Spain?
The measures taken by the government to rescue and improve the economy directly influenced the recovery of Galician and Spanish property market in general. Some of these measures are:
Thanks to the improvement presented by the Spanish economy in the last two years has been that banks have eased their conditions for credit loans, and therefore now foreign investors are easier to get money from Spanish institutions to invest in Spain. This has also encouraged starting new enough ambitious real estate projects across the country.
Recently, the Spanish government has applied a procedure known in other European countries known as the Golden Visa. This allows acquiring Spanish residence by buying a property that exceeds 500,000 euros, among other requirements. However, the number of citizens who have entered the country through this methodology has not yet made a big effect, probably by the new measure. Yet the government hopes that this will help the massification of foreign investment in Spain such as happened in Portugal for example.
Another measure that resulted as a consequence side effect of the crisis was that comparatively, the property prices in Spain significantly reduced their prices while retaining the same quality standards of the rest of Europe. Therefore, you can buy properties very similar in luxury in Paris, London or Madrid, the difference is that the properties in Madrid are prices much better than those found in France or England not whose real estate markets were not beaten so strongly by the crisis.
Also through meetings held directly with businessmen from these countries, mainly from Qatar and the UAE to work directly with the building plan Galician exports through trade missions funded joint Galicia, placed in direct contact with these entrepreneurs and organizations related to construction sector companies.
Conclusion: All the conditions are ripe to invest this year and those to come in Galicia. The forecasts are positive growth for the purchase and rental of properties in the region, the same happens with prices, their increase is expected. Therefore, if you are thinking of investing in Spain, Galicia is presented as one of your best options with a range wide range of properties that you can choose whether you wish to enjoy the countryside or the coast.
Written by: CAPD
Contribution to the reader: This article explains in detail the future projections for the housing market raised, first in Galicia and then the general behavior throughout Spain, along with some ways to promote foreign investment especially in Spain.