Although I am referring to the real estate market, the title of this post is not inspired by the British reality television series made for the BBC some years ago that also dealt with buying this type of property.
As it happens in other countries and is covered in our Long Stay Visas (I) post, for non-EU individuals acquiring property is a vehicle towards the residency permit in Spain. Under a law passed in 2013 for promoting investment for helping to overcome the financial and real estate crisis from the previous years, there is a relatively streamlined process to obtain a VISA (also valid for working) for a person that buys property for €500,000 or more. Obviously, this is not a sum at everyone’s disposal.
Beyond the financial position of each individual and who it can how it can ease coming to Spain legally and without too much bureaucracy, should you consider getting into the Spanish Real Estate market now, in the middle of 2017? I discourage it, particularly if it is for pure investment reasons. Nevertheless, if you have a different opinion, you will always find people/businesses/organisms stating the opposite.
The main reason I am against such a move is that there are still a lot repossessed houses in the hands of banks. And do you think is in their interest that you make money out of all the flats they possess against their will? Getting rid of all those ‘assets’ has been one of their main goals since the 2007-2008 crisis and the explosion of the Real Estate market bubble that followed it. Arguments they/the society are presenting? Prices are rebounding. “You don’t need the house? Rent it!!” This proposition has some similarities to what was said prior to the crisis: “house prices never go down”. Yeah.
The second factor I can point you to is demographics: Spain has one of the lowest fertility rates in the world. And it implies what it implies: equal or less population in the mid-and long term and therefore less housing demand, also for renting.
Of course, the “location, location, location” theme is still valid when buying in certain highly exclusive areas: downtowns of the main cities, highly affluent districts or suburbs around them, and top touristic destinations like Marbella or Mallorca. Nevertheless, if someone has the money to invest there – that interestingly is in line with the amount of the Visa requirements presented at the beginning – that person’s financial perspective and approach escapes to the average property for which I was exposing my reasoning against getting now into property market in this country.
In a good degree, buying for renting is at the present an attractive option thanks to the AirBnB and succedanea economy, particularly if you are in a well located area for tourism or business reasons – going back again to the “location, location, location” theme. Trips to Spain are highly likely to remain or increase their current record in the short and medium term – ask hoteliers about it! However, can this alone drive Real Estate prices up? Will people still come to Spain or your area in the long term when other destinations are back into action or simply people get bored of coming every year to Spain? Will the economy do its bit so the business activity remains stable or keeps growing as it has done in the last four years?
Nobody can predict the future, but I feel that it is important highlighting structural factors that are often neglected due to business and politics interests. What’s your view? Are you thinking of buying a house in Spain? Do you know anyone who has done so? When and why?
Links of Interest
Residence Program for investors, entrepreneurs and qualified non-EU nationals
Pisitófilos Creditófagos (blog in Spanish that mainly deals about the economy and real-estate market in a very critical way)
Photos: Madrid’s skyline. Houses in the South of Tenerife.