Costa Del Sol Property Review May 2011
The global economic crisis has had a profound impact on the Costa del Sol property market, resulting in a period of stagnation. There are however early indicators of improvement within the housing market.
Property sales in Spain saw a 5.9 percent increase in 2010 on the previous year, with an increase of 14.8 percent in the last quarter. A regional breakdown saw eleven of Spain’s autonomous regions showing growth in property sales, whilst six remained in decline.
The Costa del Sol area performed above the average for Spain in terms of sales for 2010. A report published by the Ministry of Development for the last three months of 2010 recorded 6457 house sales in Malaga province. This showed a rise of thirty-one percent over the previous three months.
Much of the improvement is credited to a rise in interest from foreign buyers, with fourteen percent of purchases made by non-Spanish residents. Annual figures show that it is the foreign buyers who are sustaining the return to growth of Costa Del Sol property sales. A total of 22224 Costa del Sol properties were sold in 2009, which increased slightly in 2010 to 22442. With the number of overseas customers subtracted from both years’ totals, the result would be negative, and would stand at 19,103 Costa del Sol properties sold in 2009 compared to 19,074 sold in 2010.
The drop in property prices on the Costa del Sol has partly been credited for the increased sales. A number of new developments are now being offered at prices considerably below their original asking price, with falls in some cases of over 30 percent. This price drop certainly improves the regions prospects for gaining foreign investors. The economic problems of the last few years have not dented the Russian economy as badly as other nations. It is notable that a survey in March of this year at the Moscow International Investment Show, showed Spain as the second most popular country for Russian buyers, after Bulgaria. According to the survey, most Russian buyers are looking for apartments, with twenty-seven percent looking for investment property and fifty three percent looking for a holiday home.
With inbound investment into the property market being a high priority for economic recovery in Spain, the Spanish government have been addressing outstanding issues in the housing market. Traditionally British investors have accounted for one third of non-Spanish property purchases on the Costa del Sol. There is however a perception in the UK that the Spanish housing market suffers from issues of illegal building and subsequent demolition orders. Legislative reforms are currently being undertaken that will compel local councils to provide legal documentation to property buyers. These documents will clearly outline a properties boundaries, details of planning permission and access rights. Such a move may allay buyers’ fears and result in an improvement in the buying process. Attracting British buyers to return to investing in Spain has been high on the agenda, with a number of interviews from senior government ministers appearing in the British press.
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