03 Oct Financing Property in Spain – Why Invest
Returns on Spanish property are expected to reach 10.9% for the 2018 year. According to the Central Bank of Spain, this is the highest in 10 years – since 2008. Financing property in Spain is rapidly becoming a favourite avenue for investment. Capital gains make up more than 6% of the figure and the remainder comes from gross rental yield.
Growth and Change in the Spanish Property Market
Predictions for the Spanish property market haven’t been this good in a decade and it isn’t hard to see why. Mortgage rates remain at around 2% and are not likely to increase in the near future. While returns are at all-time high, mortgage rates are at an all-time low.
Ultimately, it’s as if there is a double whammy bonus for investors. Although inflation rates are showing signs of an increase globally, the Spanish market appears to remain resistant. Although this is the second time since 2008 that positive rates are indicated, the current boom is clear.
In 2010, returns were positive but only slightly above the mortgage rate of the time. Currently, return rates are five times above the current rate. Use an overseas mortgage calculator to experiment with figures relating to your potential investment.
The trend that indicates that returns showing over the mortgage rate at this kind of level is one not to be ignored. Additionally, the real bonus is the trend in real estate prices. They continue to remain below the average price ten years ago. A combination of high returns against low property prices means this market is an excellent place to start for an entry level investor.
Financing Property in Spain
Because the Spanish real estate market continues to be one of the cheapest markets in Europe, it provides an excellent investment opportunity for both the new investor and the experienced investor alike.
Consequently, financing property in Spain has become more accessible not only for those in the know, but also for those dipping their toes in foreign property investment. Barcelona and Madrid are both favourites in terms of high yields across Europe. Because of this, it is now easier to find a broker that can help to obtain finance for Spanish investment.
While it seems almost too good to be true, there is even more good news. Barcelona and Madrid rank highly in terms of rental cost per square metre. Ranked 7th and 11th across Europe means lower property costs and higher rental returns. This means that new investors can expect decent returns early on in their investment.
The good news about the Spanish property market is that foreign investment is growing. 100,000 properties purchased by foreigners in 2017 is part of an upward trend.
Supporting the sustainability in the Spanish property market growth is the evidence of economic development. Unemployment in Spain has dropped from 265% to 16%. This dramatic decrease means that there are more jobs and the financial economy is more buoyant, making property a more accessible asset and thus demand and availability have both increased substantially.
If ever there was a good time to invest in Spanish property, this is it. Speaking to experienced brokers such as Sam Hoban from Belgravia Property is an excellent place to start. For advice on foreign investment purchases, it is always a good idea to seek independent advice and Belgravia Property Finance is an excellent firm to start with.