The Spanish property market slowed considerably in 2006 according to government figures, but wise investors could profit from the slowdown. Prices rose by 9.1% last year, compared to 12.8% in 2005 and regional growth was patchy. Previously hot markets such as Alicante saw a decrease in price inflation, according to the figures but in cheaper areas such as Seville and Castellon prices continued to grow at a healthy pace. Experts believe the market will continue to slow throughout 2007 but the lower priced properties will entice investors back to the market.
Rising interest rates, excessive property prices and concerns about corruption and property laws are to blame for the cooling market, says Mark Stucklin, from website Spanishpropertyinsight.com. ‘Spanish property prices have risen on average 100% in the last 5 years, and demand, both local and foreign, is cooling in response to all these factors. Properties are taking longer than ever to sell, and the stock of unsold properties is increasing,’ he said. Competition from developing second home sectors such as Morocco is also bringing down the price of Spanish property.
But commentators are predicting a soft landing rather than a crash and believe prices will continue to grow slowly but surely in 2007. Spanish bank Caixa Catalunya and C.B.Richard Ellis both forecast average property price increases of 8%.
Savvy investors would do well to take advantage of the present market, according to Mr Stucklin: ‘2007 will be a good year for buyers who are prepared to look around, and do their research,’ he said.
