According to recent data published by The Statistical Information Center of Notaries in Spain (the organisation that records property transactions), foreign buying activity is heading towards levels last seen during the property boom a decade ago. Real estate transactions in Spain are at the highest level since 2008.
So what does the data suggest?
The latest property transaction figures suggest renewed investor confidence and an increase in investor appetite, especially foreign property investment. The data implies that investor sentiment is returning to the near highs experienced during the pre-housing crisis.
According to Minsterio de Fomento, the Ministry responsible for public works and property, current real estate prices in Spain are low compared to historical values. A confirmation of a market price-bottom (the end of a decline in housing prices) was confirmed in 2014 as prices started to rise consistently, quarter on quarter – the first time in a decade since the Global Financial Crisis.
Spanish property prices have posted their first real positive return since the housing crisis in 2008. What’s more, the 11.2% positive returns that started in 2014 are more than five times the cost of mortgages (≈2%). This means returns exceed borrowing costs and thus, a net return on investment.
Real estate prices in Spain today, are lower than property prices a decade ago. An opportunity that is rarely available without access to a personal time machine.
Over the past decade, Spain’s housing market prices are the second lowest in Europe, according to Eurostat data ‘European Monitor of House Prices’.
Compared to other European cities, Spain’s cheap real estate prices and high rental yields make it one of the preferred locations in Europe for returns on property investment. For comparison, Barcelona rental yields are currently 5% - the highest in Europe for capital cities according to Deloitte Property Index. Madrid and Valencia are in fourth and fifth place, on par with Rome and Amsterdam, but at a significant lower property price. Property in Madrid and Valencia are cheaper than Rome and Amsterdam, therefore, the net rental yield is higher in Spain compared to other European cities.
Comparing to other European cities such as London and Paris, Barcelona and Madrid are seventy-five and sixty-six percent respectively cheaper, yet without any additional risk. Low cost and high rental yield - it’s these compelling reasons that make Spanish real estate an attractive investment proposition.