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Spanish builders are tempting home buyers with free cars, mortgage holidays and hard cash as they try to lift the gloom shrouding the housing sector. Some companies are also diving into the rental market.

At the annual SIMA property fair in Madrid last week, the number of promoters was down by a third from the previous year, many of them victims of the deepening housing crisis. With fewer buyers milling around models of white-washed housing estates, there were fewer lines to see sales representatives.

With prices of existing Spanish houses down by more than 4 percent since peaking in mid-2007 and the market still overvalued by up to 20 percent, according to the International Monetary Fund, some companies are shifting to rental properties. Brokers say U.S. and northern European funds are snapping up coastal plots for 20 percent to 25 percent less than the asking price and new apartment prices, even in Madrid, are down 15 percent to 20 percent on average - a trend yet to show up in official price data.

As the rental market accelerates, these buyers may benefit.

Spain has built more than five million new houses in the past decade, taking the stock of existing homes to 24 million, because of economic growth averaging 3.8 percent, historically low interest rates and an influx of immigrants to cities and foreigners to the coastal regions.

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UK property buyers, in shock following the sudden decline in the domestic market and state of the UK economy, are showing increased interest in the bargains now on offer in sunny Spain.

Spain’s property slowdown is seen as offering more opportunities compared with the constricting UK economy. Many Brits are realising they can get on the property ladder by grabbing a bargain-priced home in the sun, enjoy more property for their money, with lower mortgage repayments and running costs.

There is also more property choice in Spain amid a multitude of varying locations ranging from Real Spain villages to cosmopolitan Costa’s plus the famous lifestyle and climatic benefits of the Mediterranean.

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Following the re-election of the Spanish Socialist Party, Partido Socialista Obrero Espanol (PSOE), led by Jose Luis Rodriguez Zapatero, on March 9th, investers planning to buy property in Spain can look forward to a simpler, more buyer-friendly process.As part of the pre-election promises, the PSOE vowed to make life easier for buy-to-let investors by allocating funding to better regulate the Spanish property market.

Zapatero intends to encourage the purchase of properties for rental through mortgages, while improving security and guarantees for landlords and simultaneously boosting protection for tenants

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Last year, foreigners invested over 5,000 million euros in Spanish property, nearly 25% more than in 2006. In November the amount invested reached 520 million Euros which was 39% more than in November 2006.

These numbers show that foreigners still trust the Spanish property market. A holiday home in one of the coastal areas still proves to be an appealing purchase for investors.

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As reported by the National Statistics Institute (Instituto Nacional de Estadisticas) of Spain on the 17th of February 2008, over 10% of Spanish residents are foreigners. This means a total of 4,519,554 of the population are of a different nationality.

British Citizens make up close to 7% (6.97%) of this total with 314,951 being officially registered as residents of Spain.

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Spain is still one of the most attractive overseas property investment destinations for Brits looking to buy abroad. For the second year running, Spain took the title in front of France. According to the Office of National Statistics, nearly 380,000 Brits moved abroad in 2007, with many deciding to reside in another European country.
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There may be some bad reports about the Spanish property market, but if future buyers do their homework, they will be able to find some great deals… With many estate agents going out of business, and properties failing to sell, most investors may be thinking Spain is not be the best place to invest in at the moment. However, there is a surplus of newly-built and over-priced properties on the popular coastal areas. The recent years have seen prices rise to astronomical levels and the market is now beginning to stagnate, but many properties are still being unrealistically priced. There is an oversupply of property in these areas at the moment. A large number of vendors, who bought these homes off-plan several years ago, are now forced to reduce their asking price if they want to sell. All you have to do is look at how many For Sale signs you see on the balconies of large urbanisations to realise that the only way that one of these identical properties will sell is if it has the lowest price. Buyers are advised to try and negotiate a good price. They may be surprised at how low they can go, especially if the vendor is desperate for a quick sale. As for all property purchases in Spain, buyers are recommended to take out independent legal advice to ensure that all the legal searches are correctly taken out. There is no point buying a bargain to find out it is illegal.
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Here is some interesting information on the Spanish property market published during the last 6 months of 2007.

May 2007: One of the leading banks in Spain, GE Money, reported that buyers consider Spain as one of the best options for long-term property investment. Spain comes out top when 100 mortgage brokers and 1000 clients were asked their views on the overseas property market.

August 16th 2007: An Alliance and Leicester building society report showed that Spain was one of the first choice destinations in Europe for people wanting to start a new life. Their results show that 52 per cent were relocating because of the high cost of living in the UK, and 40 per cent were tired of the poor UK weather conditions.

August 23rd 2007: The UK’s Institute of Public Policy Research (IPPR) reported that number of British citizens leaving the country had never been so high. Spain came in second position in the top ten list of destinations and was the leading country within Europe.

August 31st 2007: Close to 3000 UK homeowners took part in the Overseas Desirability Report which concluded in that more than 40 per cent of them show an interest in buying a property abroad and that a home in Spain would be their first choice.

October 9th 2007: The largest English-language Spanish property portal, Kyero.com reported that the average property price in Spain risen to 248,000 euros which was a 1.4 per cent increase over the previous month.

October 10th 2007: The Yorkshire bank announced that 43 per cent of UK adults dream of buying a property in the sun, with Spain being their preferred destination. 66 per cent said that the weather was the main reason they wanted a home abroad and 32 per cent said they considered Spain a good long-term investment.

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