We didn’t buy our house here in Spain as an investment which is just as well because it is obviously worth a lot less now than when we bought it in 2004. Although it would be nice to think that our house had increased in value, the drop would only pose a problem if we intended to sell it.
BBVA bank's research and analysis department predict that house prices in Spain will fall by 10 per cent this year and 12 per cent next year, and by 2012 will have plummeted an accumulated 30 per cent from the time the real estate boom ended in 2008.
The report, does include one positive note: the dropping prices, combined with falling interest rates - which it predicts will hit 0.5 per cent by the end of this year - mean that the housing market will become more accessible to potential buyers than it has been in 20 years. Good for buyers but not so hot for sellers.
The BBVA report puts the number of unsold homes in Spain at 1.2 million, more than double the figure offered by the Spanish Association of Developers (APCE). The overstock will not begin to be absorbed until well into 2010, and will then gradually diminish, not returning to 2005 levels until the end of 2012, it says.
That means that anyone who bought their property here as an investment will have to wait until after 2012 to see any sort of return on their money. There is no doubt that the market will change but may not return to a boom years for a long time if ever at all. In my opinion that is not a bad thing; buying off plan and snatching at whatever you could get was not good for buyers. The only beneficiaries were the sellers and the constructors who saw an opportunity to charge spiralling prices for property.
We were lucky, we bought the house that we wanted in a location that suited us. Nearly five years on, we are still happy with our purchase and have yet to find a location that would suit us better. Others may have been less fortunate and ended up with a pig in a poke.