Thursday, September 15, 2005

Spanish house price over inflation "myth"

Research carried out on behalf of Spanish property investment site Kyero has branded reports of house price over inflation a "myth," and pointed to Spanish Red Guide 2006 figures, which have shown price appreciation of between 25 to 30 per cent some areas.

Kyero research suggested that there was little evidence of generalised house price over inflation. While top end properties, such as a four bedroom house in Costa Blanca have seen price decreases of around 5.8 per cent since June 2005, to 365,000 euros since June, Costa del Sol prices on the whole have remained constant.

"My impression is that it's primarily properties at the very top end of the market that are experiencing slight price erosion, most notably in some of Spain's more developed areas," said Kyero managing director Martin Bell. "That's not quite the same thing as a general slump in the price of all Spanish property."

Property investors have been advised to leave the most developed territories if they want to hunt for a bargain, as the level of development has dictated the level of house price inflation. While some are catching up with the Costas and are now steady, areas such as Tarragona and Costa del Azahar are still showing very healthy growth of 18 ? 20 per cent.

Two bedroom properties have appreciated by 28,000 euros and 20,300 euros respectively over the summer months.Crucially for property investment, demand for property has shown no signs of easing said Assetz director Stuart Law. "Capital growth in Spain is high and still forecast to grow at ten per cent a year for the next five years at least. Off-plan purchases at discounted rates still offer the best opportunity to maximise profits."

"Year-round sunshine and the extensive development in recent years of world class golf courses, makes 30- 35 weeks annual rental a realistic goal, with potential gross yields of 10 per cent plus. Investors looking towards lower priced East European markets should balance gains against a less predictable economic climate and lower levels of infrastructure, he added. "Even though property is cheaper in emerging markets, for reliability and stability of investment income, more mature markets such as Spain still stack up brilliantly against the competition."

Investment consultancy DBK has recently revealed figures showing the overall level of 2004 sales, with a record 181,000 coastal properties sold through the course of the year ? 13.1 per cent up on 2003 and almost 25 per cent of the total number of properties sold in Spain. Preliminary research has shown the number of sales sustained into the first half of 2005.


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