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Spanish Property Prices Fall

The price of property in Spain, particularly in areas favoured by UK ex-pats has fallen by up to 30% over the past year. Together with a declining economy, the situation for many Brits who relocated to Spain is becoming untennable.

Thousands of Brits have invested in properties in Spain over recent years, some as holiday homes and some as a permanent residence. The lure of cheap homes and fantastic weather tempted huge numbers of people to sell-up in the UK and buy a property in the sun. As a result the construction industry in Spain has been thriving and provided the mainstay of the spanish economy for at least the past 5 years. But the recent downturn in the economy across europe, together with a much stronger Euro has made the spanish retreat much less attractive to Brits. The pound has devalued by around 20% against the Euro over the past 2 months making homes in Spain 20% more expensive. If that wasn't enough to make people think twice about buying a home in Spain, the fall in property prices is an additional worry.

Everything started to stack up against a move to Spain about 6 months ago when loans became harder to secure and property prices started to fall. When the strength of the Euro accelerated the final nail in the coffin was hammered home. Now very few people from the UK are buying a home in Spain and hundreds of newbuild projects are left without buyers. People fear further drops in prices and home sellers are finding it hard to find buyers, even at discounted prices.

The prospect of a price recovery looks slim at the moment and spanish home builders fear the worst. Unemployment in Spain is now running at 10% and we suspect that many of those out of work are redundant construction workers brought in to supply the demand over recent years.

Many Brits bought their homes in Spain several years ago when prices were very low and they are largely unaffected by these recent falls, but for people who bought within the past 2 years, the fall in prices, by up to 30% in some areas, will be a real concern. Anyone forced to sell-up now will be looking at big losses.

(update from - May 2008)

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