Depending on the source you read that the prices in Spain have decreased at an average rate of 30 to 50%. People rightly wonder: will the prices decrease even more? In other words, should we purchase now or still wait a little? One thing is certain: a bit of attention is always required in case of “average rates”.
On average there can be a decrease of – for example- 30%, but the fact that the prices in certain suburbs of Madrid decrease does not mean that the prices of first class houses and apartments will decrease at the same rate or that they cannot increase instead. House prices still depend very much on their location and the local demand and supply. Experts as Jones Lang Lasalle and Knight Frank agree in their most recent reports that we have now reached the turning point. Decreasing prices are gradually bottoming out. La Caixa and Standard & Poor’s also believe that from half 2014 but certainly in 2015 we may expect price increases at full power.
Why can we expect price increases and where? Our focus lies mainly on the coast areas since that remains the most favourite place of Belgians to purchase real estate. There are several reasons for the price increases. One is that the stock of turnkey houses starts to decrease because the demand goes up again and during the last 3 years much less has been built. Especially in the coast areas at the South Costa Blanca and the Region of Murcia the real estate developers are building at full force again. Banco Sabadell alone has today 60 ongoing projects.
Another reason is that the demand for modern, austere houses and apartments exceeds the supply at the moment and avid use is made of this situation. 75% of the Belgians opt today for a new, modern and austere house. The same applies for the Scandinavians, Dutch and Germans. Why new? The main reason is that the law about sustainability and quality has been sharply adjusted over the past few years and that leads to more compact, economical, well insulated houses which perform much better when it comes to consumption than the existing houses that are for sale. When it comes to style most of the Belgians opt for villas and apartments with large terraces, high wall-to-wall windows for optimal light conditions, open kitchens and if at all possible, south-west facing. If that comes with a large infinity pool in an exotic garden, whether private or not, most customers are hooked immediately. The traditional Spanish building style uses mostly small, arched windows, small terraces and a pool completely surrounded by tiles or concrete which is north-east facing. The Spanish want to keep their houses as cool as possible by preventing the sun and hence warmth from coming in.
How much does the average Belgian spend?
At the Costa Blanca approximately 150 000 to 160 000 euros, costs included. At the Costa del Sol that amounts to approximately 100 000 euros more, so 250 000 euros. The costs have increased at an average rate of 7% in 2013. Today you pay on average 14 % costs. That is inclusive of VAT (10% throughout Spain) or transfer tax (depending on the region 8% or more), notary costs, taxes and a solicitor. In Spain this solicitor is really necessary because the notary carries out far less research than a Belgian notary. Verifying if there is a mortgage on the property, if there are debts to utility companies, if the property is licensed, etc., are all tasks to be carried out by a solicitor. You should take into account 2500 to 3500 euros of costs every year. That includes property tax, local taxes, common costs, personal income tax, insurance, utility costs, etc.
Why do Belgians purchase?
The main reason is still the sun, followed by a search for a better quality of life and today, more than ever, an investment and a way to secure their hard-earned money.