Why 2020 is the ideal year to buy a second home in Spain

Some things never go out of style. Think The Beatles, fries with steak and leather jackets. And feel free to add the Spanish south coast to that list. We, Belgians, love sun, sea and beach. And so find our liking en masse on Costa Blanca and del Sol. Spain is by far the favorite vacation country for Belgians.

Many compatriots love sangria, tapas and 320 sunny days a year so much that they bought a house on the Spanish costas. Either as a second home, to spend all their vacations in the seaside town of their dreams. Or to settle there permanently, usually after retirement.

Perhaps you are also dreaming of your own place under the Spanish sun, but you are still a little cold feet? There's no need for that anywhere. The Mediterranean is always nice and warm. But of course we understand. A second home in Spain is a serious investment, a decision you don't just make between the soup and the French fries.

Still, 2020 is the ideal year to take the plunge. And for the following reasons:

Real estate prices continue to rise

In 2018, home prices in Spain went up by an average of 6.7 percent. That was the fifth year in a row that homes became more expensive, and the largest increase since 2007. The figures for 2019 are not yet in. But in the first ten months of last year, the trend was already continuing.

Prices are expected to continue to rise for some time. According to Moody's, a U.S. credit rating agency, nowhere in Europe will the price of real estate rise as much as in Spain. About 5.5 percent a year, Moody's guesses.

Meaning:

1/ A home in Spain is a good investment, which you can later monetize,

2/ Buying today is better than tomorrow, and tomorrow better than the day after.

Does this boom in prices also increase the likelihood of a new real estate bubble? No. The criteria for mortgages have become much stricter since the crisis. There are also more and more construction projects in the pipeline. Along with tourism, construction is the strongest pillar of the Spanish economy. Which leads to economic growth and increased attractiveness for investors. As a result, Spain is much better armed against an economic crisis.

You get much more value for your money than elsewhere in southern Europe

The days are behind us when, so to speak, you got a house with the purchase of a packet of potato chips. Houses in Spain are no longer as spotty as they once were. In particular, prices for new construction are rising at a rate of six or seven percent per year. Mainly because of higher construction costs, increased land prices, stricter standards and a customer demanding more quality.

However, this is not to say that Spain no longer has an attractive real estate market. More to the point: those who dream of having their own place under the sun are nowhere better off than in Spain. And more specifically on the Costa Blanca. There the land is cheaper and the average price per square meter is well below the national average. Compared to similar properties in France and Italy, those in Spain are priced a lot lower.

For reference, what do you buy for 250,000 euros....

...on the Costa Blanca?

A fantastic apartment in picturesque La Vila Joiosa, with direct access to the beach.

A newly built house with three bedrooms, two bathrooms, a roof terrace and shared pool, near the marina of Torrevieja.

A villa with three bedrooms, three bathrooms, private pool and roof terrace, in Vilamartin.

...on the Costa del Sol?

A two bedroom, two bathroom apartment, in an iconic complex in Benalmadena, surrounded by tropical gardens,

A two bedroom apartment or penthouse ten minutes from the beach in Marbella.

A two bedroom apartment just minutes from the beach, the city center and the marina of Estepona.

Tourism in Spain continues to grow

In 2018, 82.8 million people visited this sunny paradise. This makes Spain the most popular vacation country in Europe. And those tourists, according to the statistics, have a fatter wallet each year, more money to spend.

The rising number of visitors is not the only trend in tourism that is in your cards. Many tourists are tired of the gigantic skyscraper hotels and opt for smaller-scale accommodation with a more homely atmosphere. An apartment like yours, for example. Because playing Uno is more fun at the kitchen table than in the impersonal lobby of a hotel.

Thanks to the Internet, it is easier than ever for tourists to find local apartments. For example, through booking.com or Airbnb. And for owners, it's easier than ever to rent out their lodgings during the time they're not there. This can be done through Airbnb, or through local organizations that take on all the burden - from bookings to cleanup - in exchange for a percentage of the rental income.

Please note that especially homes in tourist areas, such as the Costa Blanca and Costa del Sol have rental potential.

Interest rates are at historic lows, but how long can you take advantage of them?

Interest rates are still historically low.

This means two things:

1/ That you are better off putting your money in bricks than in your savings book. The latter does not bring in more than some steed money.

2/ That borrowing is spot on. Mortgage rates are very low.

Investing in real estate is the smartest way to grow your money. Spain's Central Bank forecasts 10.5 percent yield on residential mortgages. That seems excessive. But even if it is half, it is still a lot more than most other investments.

Is there no catch at all? Yet. Spain's national debt is at record levels. Observers expect the government to impose new taxes on banks. These might well pass the taxes, making mortgage loans more expensive. You better not wait for that.

A lot of Belgian expertise

If you want to buy property in Spain, you need to know how such a purchase works. If not, you can easily fall into one of many pitfalls. To avoid such mishaps, it is better to deal with an expert. Gold Estates works with specialists, for example with a Belgian lawyer based in Spain and specialized in real estate. This way you will never have any surprises. Contact us without obligation for more information.

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