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The Spanish Property Market Hype

Thousands of English people with homes in Spain have been left in shock after seeing property values drop by as much as 65% earlier this year.

Those hit the worst have been the get-rich-quick investors and people who have bought off-plan or along the popular coast areas that are considerably overbuilt.

The biggest price falls have been in the two-bedroom apartment market because quite simply, there is so many of them about.

So it?s bad news for anyone wanting to make a quick buck, but what about the long-term investor?

It?s clearly recent buyers that will be most alarmed by the recent price drops, but most people who bought a few years ago remain relatively unconcerned, as they have already made considerable returns on investment.

Most experts agree that the best advice for anyone who has bought recently in Spain is to hold onto it, as prices will recover eventually. Spain still remains an excellent long-term investment location with very good rental potential.

Sellers and investors simply have to be more realistic about prices. The past few years have seen many investors get very rich very quick in Spain?s popular coastal areas.

There are around one million Britons with homes in Spain and most of these actually live here permanently. Spain has always been a home away from home for the Brits, who buy between 50,000 and 70,000 Spanish properties each year. This is nearly 40% of the total number of Spanish properties sold to foreign buyers.

A recent slump in the market is unlikely to curb such a high and consistent demand for what most Britons traditionally feel is a familiar safe & sound investment location - Spain.

Simon Conn, from Conti Financial Services, points out that ?Spain is a well-established market and the British looking for second homes or property investment opportunities will still want to buy there?.

People with homes on the costas shouldn?t really be concerned about short-term price fluctuations, unless they need to sell quickly for whatever reason. Those there for the long term have nothing to worry about, as property values invariably fluctuate.

It must also be remembered that many Brits have made permanent moves to Spain and have no intention of moving or selling their property whatsoever.

Buyer?s Market

More good news. For the first in many years, Spain is a buyer?s market and while most people are focussing on the negative side of the price drops, they seem to be forgetting that there are some fantastic bargains around at the moment.

Short-term investors are selling at a loss, while long-term investors are buying at significantly less than they would have before the drop in property value. In some areas, you can pick up a property for the same price you would have paid three years ago. It might even pay to wait a while and see if prices will drop further along the popular coastal areas.

Avoiding the Hotspots

Most of the overdevelopment has occurred in Spain?s property hotspots, like the Costa del Sol. These are the areas to avoid. Experts have long been advising people to seek out opportunities in less developed regions like the Costa de la Luz, for example, which runs basically from Gibraltar to Portugal. Also there are still many inland areas with huge potential for capital growth.

Quality Investments

Generally speaking, it?s the lower quality properties that have been hit the worst by the recent slump.

Although there may be some tempting bargains around at the moment don?t be tempted compromise on quality. Aim for the quality developments and always negotiate hard on prices. If you?re buying off plan, make sure you get see a developer's previous work before hand.

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