THE TIME TO BUY?

News

Dave Bull / 2008-12-05 16:24:25

I don't know about you but it seems that whoever you talk to, they have an opinion about the current "crisis" and how it will affect us all blah blah... you get the idea. And pretty much all of them to a man (or woman!) suddenly adopt the appearance of Fraser from Dad's Army and look bleakly at the sky while saying "we're doomed." Ok, it does't actually happen like that but I think you know what I mean; we talk ourselves into a miserable state, when in reality, it doesn't affect most of us, most of the time. So I thought it was about time we looked at the prospects for our little corner of Europe, before the four horses arrive!

WEAK POUND

Estate agents have reported that the weak pound is not helping sales of properties on the Costa Blanca and that people are pulling out of the few sales they have negotiated because of it. Brits seeking a home, or holiday escape, here in Spain have waited to sell their UK home only to find that the strong euro has raised the price beyond their limits. The soaring euro is making life difficult for prospective buyers from the Uk to buy pretty much anywhere else in Europe too. According to HiFX foreign exchange experts, the rise in the euro had put about £28,000 on to the price of averagely priced (200,000€) property in Spain over the last ten months.
If people can still afford it after that, they then have to find more cash to buy their dream home because they will be needing a higher deposit, thanks to, your friend and mine, the banks. For example, Banco Halifax, the Spanish division of Britain's biggest lender, has just raised the amount needed for a deposit from a massive 30% to an incredible 40% - which means that any buyer will have to find about sixteen thousand quid more to buy the average spanish house.

BUYERS

Jaqui Daly of Savills Property Consultants in the Uk, however, doesn't see things quite so gloomily. She states that there are two types of buyers of properties in Spain. The investor and the Lifestyle Buyer, 'Two types of Britons buy overseas. Lifestyle buyers just want to relax and don't worry about renting out or selling for a profit. Investor buyers want maximum returns and may themselves use a property little or not at all. In recent years the investors have grown rapidly but in the future, thanks to the changing market conditions, the lifestylers will dominate,' she predicts.

'There are lots of 50- and 60-somethings who want to live some or all of the time abroad and they've got plenty of equity and require little or no mortgage. They're still heading for the sun,' she insists, citing a recent survey by Savills and agency Holiday-Rentals.co.uk of 1,500 Britons owning homes abroad.

Experts say that with the world economy looking a bit like my bank account the focus of the buyers that are out there - will head towards the traditionally low-cost areas, such as Spain. They also add, somewhat gravely, that Spain is at much less of a risk of a property crash than the UK because households in Europe do not tend to overstretch themselves during the good times.

TREND

At present there are about 425,000 Britons who own homes overseas (officially!) and that figure looks to continue to rise, with 50 per cent of those surveyed saying that they were looking to buy a property abroad as a holiday home and not to make money. The long term future and the continuing trend of buying a property abroad looks set to continue. Buying soon, and while the developers and estate agents are almost offering the world, might not be such a daft idea!

The good news for those who do want to buy is that there are plenty of homes available and therefore developers do not have much choice but to negotiate with you.

A developer in Alicante told me that he as a project of 55 apartments being built at the moment and that, when finished, they would have sold for 150,000 euros each last year. now they are advertised at 99,000 euros and, he whispered, he would "discuss" the price if requested. Other incentives are being offered from the original - free flights to free cars (well, a Daewoo Matiz) and huge discounts.

INTEREST RATE CUT

Last Thursday the interest rate in the UK was cut by another full 1% (2% in the last two months) in an effort to boost the UK economy and Prime Minister, Gordon Brown urged other European leaders to follow his example, stating that only then would the "gloomy headlines" improve.

Unfortunately, those nice people who own the banks have said that they will not all be passing on the rate cut. Although the government can't force the banks to tow the line they will be putting pressure on them to help borrowers. Brown also said that savers shouldn't worry because if inflation was going up we would then be losing out as savers, but as it stands people should not think that they are missing out.

Tags: Spanish Dream, Property