International real estate agents are struggling to give the impression that holiday hotspots like Spain, Portugal and Greece have seen resurgent property markets in the last year, and that buyers who get in quick will get a bargain before prices reflate. However, figures from Eurostat, the EU’s data agency, show much of this optimism to be ill-founded. Across 2013, much of Europe actually saw prices fall, especially in the continent’s holiday areas, while there are many developments in Spain that may never be sold at any price, and many more properties are in the hands of ‘bad’ banks designed to isolate toxic assets.
What does that mean for British property buyers?
Let’s use Spain as a case study.
In Spain, Britain supplies by far the majority of overseas buyers, and most British people are to be found in coastal areas – the traditional holiday hotspots hardest hit by the crash. In many of those areas, there are substantial developments built for a market that no longer exists and which are expected never to find buyers at any price. Unfinished, often sub-standard, the argument over these monuments to hubris centres on whose responsibility the expense is of knocking them down.
And after years of plummeting house prices in Spain, it’s understandable that British buyers would want to tread carefully, but while the picture is mixed there is some good news.
Well into 2014 the Spanish market was providing plenty of grounds for scepticism, but experts now predict price rises in 2015 and prices have actually begun to increase this year.
Professor Gonzalo Bernados, an expert in the property field at the University of Barcelona, believes that house prices in the best districts of Spain’s major cities – Madrid, Barcelonia and Valencia – will rise by as much as 10% in 2015.
Professor Bernados observes that the Spanish economy is showing signs of recovery and that when this is combined with low interest rates, it is more advantageous for many people to buy a home than to rent one.
In a note of warning to those considering buy-to-let, Professor Bernados foresees a decline in the rental market as Spain loses population and the economic pressure in favour of buying. This year has seen the highest number of home sales in Spain since 2011 and both sales and prices are forecast to rise next year.
There are positive signs even in Greece: foreign buyers doubled their investment in Greek property in the first half of 2014 compared to the same period the previous year, and Greek tourism is recovering faster than the rest of the country’s economy, meaning that now might be a good time to buy a property in Greece.
In Portugal, meanwhile, the news is also, finally, positive. RICS/Ci reports that market confidence is returning, with new buyer enquiries and transactions increasing. ‘PHMS results show sales activity continues to pick up,’ RICS stated in a report, ‘while prices appear to be a step closer to stabilisation.’
Europe’s real estate agents have been talking up the continent’s resurgent market for two years now. Last year, they had little enough evidence on their side: this year, their optimism is looking more realistic. If you’re in the market for a European home, now might be a good time to start looking!