Will we see a return on our investment?

In England we were used to house prices rising. Buying a house was seen as an investment, better than having your money in the bank. Pam and I profited from both of the properties we owned such that we had the equity to buy our home in Spain outright and still have money in the bank.

When we bought our home in Bigastro, Pam and I expected the situation to be the same as we experienced in England. Although we had no intentions of selling our new house, we hoped that it would increase in value for us and for our children who will eventually inherit it.

This chart shows what has actually happened.

2004	+18pc  We bought in 2003 and moved here in November 2004. That meant our house was already worth more than we had paid for it.
2005	+16pc The price of houses on the estate continued to rise.
2006	+15pc Still rising.
2007	+8pc Things still look bright but dark clouds are on the horizon.
2008	-3pc The first year of the slump but still the price of our properties were high.
2009	-10pc By this stage it was difficult to sell houses.
2010	-4pc A marginal slow down.
2011	-7pc The improvement reversed.
2012	-11pc By this stage trying to sell was impossible.
2013	-11pc Owners were practically giving their homes away and so sales increased.
2014	-3pc Hailed as a turnaround but then we saw something similar in 2010.

In Spain, prices have fallen by between 40 and 50pc over the six year period from 2008 and in some cases by over 60pc. The fact that the fall has started to bottom out is encouraging but even if the turn around in house prices continues, it will be a good few years before they recover to the values reached in 2007.

Of course, the value of a house is determined by what the buyer is prepared to pay for it and that is closely related to its location.

We had hoped that our urbanisation would have been completed to the standards that we saw in others but that was not the case. There are still vacant plots and two developments of houses that stand as empty, crumbling eyesores. The final stages of building came at the time when the market plummeted.

These factors must weigh against the desirability of our homes to buyers and hence depress their value.