Despite the uncertainties, the property sector in Spain, and particularly on the Mediterranean coast, is in good health, with promising prospects for investors and residents alike.
We can say with confidence that the current reports warning of an economic slowdown do not reflect the activity the property sector is experiencing across Spain.
Residents and investors are attracted by the advantages and security our country offers. The property bubble years, characterised by large-scale construction of questionable quality, are behind us. The trend now is towards sustainable urban development that respects the environment, creating more efficient and practical living spaces.
The property sector's current optimism and sound practice contrast with the pessimism reported in the media, prompted by the social, political and economic changes transforming society. In the property market, these changes have encouraged new business opportunities, including holiday rentals. Platforms such as Airbnb and Booking have stimulated the sector, attracting investors to Mediterranean coastal areas and large cities.
Another factor is the availability and cost of home-purchase financing offered by banks and new mortgage providers. Financing costs are currently at their lowest ever in Spain, with interest rates ranging from 1% to 2.5%. Taking into account all interest payable over the mortgage term, buying a home now will be more economical than at other times.
Finally, the strong rental market attracts many buyers, often from abroad, seeking annual returns of 5% or 6%, currently being achieved in Spain and particularly on the Mediterranean coast. With returns of 5% or 6% and financing costs of 1%–2%, this leaves a net annual return of 4%, making borrowing attractive for property investors.
