Friday, January 16, 2009

A good time to buy but not to sell

Sometime within the next year will be the best time to buy a property here on the Costa Blanca.

Official figures show that properties along the coastline have seen their prices drop by up to 14%, the first fall after six year of considerable rises e.g. in 2003 prices increased by 21.6%.

The average prices per square metre of new and resale homes in Alicante province have dropped to 2,083 and 1,938 euros respectively. The price in Valencia province now stands at 2,106 and 2,015 respectively and in Murcia at 1,900 and 1,765 euros.

Another factor that could encourage buyers is the fall in bank interest rates.Yesterday the European Central Bank's (ECB) dropped interest rates to 2%, the lowest in the ECB's short history. The reference rate is expected to fall even more if the general economy shows no improvement. The Euribor rate (used by most banks to set mortgage repayments) has this week dropped below 2.7%, its lowest since December 2005.

The current exchange rate is seen as the only major barrier stopping potential buyers, from investing in Spain. This week has seen a glimpse of recovery with the rate increasing from almost parity at the end of 2008 to around 1.13 euros to the pound sterling today.

Experts warn the recovery will be slow, but agree the strength of the euro reached its peak over Christmas and its exchange rates against other currencies are expected to fall gradually.

Yippee! Let's not get greedy here and expect a return to the heady days when we got 1.5 and more to the pound - a return to 1.3 would help keep the wolves from the door.

1 comment:

Will said...

Our Spanish mortgage is one where the interest rate is only changed on the anniversary (23 August). We are currently paying well over 6% interest so, for us, August cannot come quick enough when, hopefully, the monthly payments will drop to something more sensible. Your article was encouraging in that it illustrates there are some ups to the present recession.
I wonder, however, whether the Brits have been scared off buying in Spain. The British press has published some very pessimistic pieces about the Spanish market. Only last week in the 'Observer' there was a piece about people losing money when their bank guarantees were not honoured when the developers went bust.