The latest press releases indicate that prices in Spain have risen by more than 10% in a year for the first time since 2007.
2007 was the start of the crash in prices that continued until 2014 and have only gradually stabilised for the average property, but recently soared for the most popular. And who is buying the most popular? Well, investors are the ones with the unlimited money and the result is seen in the increasing rents that are needed to give them the required return. This results in a price increase ripple down the market, essential workers can’t find places to live and the authorities have started to consider legislation to prevent it. Legislating rarely corrects a market and, whilst aimed at one sector, can compound and make another worse.
So how do the prices appear to be rising?
In addition to the prime spots where occupier and investor demand overlaps, the developers will sell the first phase of a development at a reasonable price, but then offer the 2nd Phase at a price above that, whether justifiable in the wider market or not, so that they can show the ‘growth’ in value of the property. “Quick, come onboard to buy before prices have to rise again”. But remember, ‘when you see the bandwagon coming, it’s already too late to get on board’.
