More and more people are looking to invest in property abroad. Different markets offer different advantages. In the last few years, Spain, a true European bull, has returned to the arena in full force.
Outside Europe? Why (not)?!
Real estate investment has always been one of the most classic and conservative investments.
Until recently, this has been mostly limited to buying property in your home country, and not without reason, as buying property in your home country is an almost entirely risk-free process, but selling it often requires a lot of patience and time. And in this process, market stability, legal certainty and political stability are key factors. Therefore, staying in the home market is always the smartest choice.
For us, the European Union’s single market is in fact a domestic market, so if you are thinking of investing abroad, it is worth choosing one of the 27 European countries.
Why Spain?
Spain’s housing market will outperform the rest of the EU in 2023 and 2024, according to an analysis by ING Bank (Spain House Prices Go Against Eurozone Trends, ING, 10/2023 )
(Chart: Annual house price developments in the largest euro area economies in the second quarter of 2023; Source: Eurostat / ING)
Despite rising interest rates, Spanish house prices continue to rise. According to Eurostat data, Spanish house prices rose by 2.1% quarter-on-quarter in September, well above the euro area’s quarterly growth rate of 0.1%.
In several euro area countries, including Germany, France and the Netherlands, house prices fell again on a quarterly basis in the second quarter. As shown in the graph below, house prices in Spain rose by 3.7% on an annual basis, while in the euro area they fell by 1.7% on average. Overall, house prices in Spain increased by 12.51% between 2021 and 2023.
So despite the sharp rise in mortgage rates, Spanish house prices are still rising and holding up much better than in the rest of the euro area.
When should you take action?
- In short: immediately.
According to EUROSTAT’s last quarterly statement for 2023, “it has never been such a good deal to exchange domestic property for Spanish” (stated a real-estate blogger in Hungary / Vakmajom). But this also means that the financing model of mortgaging domestic property and then using this source to buy property in Spain, which provides the investor with steady appreciation and additional operating income, is also a good one.
The thirteen-year evolution of the Eurostat House Price Index shows that the Spanish property market has been very cautious in its recovery following the global economic crisis. It took a long time to recover from the bursting of the housing bubble, but by 2023, market and banking sector consolidation and government reforms have resulted in a stable and steadily growing market that is unique in Europe. And the real growth phase lies ahead.
However, it is important to note that while overall, Hungarian house prices have almost tripled and Slovakian prices have almost doubled in the last thirteen years, Spanish prices have risen by only 12% over the whole period. But this increase was achieved in the last two years – at a time when the whole European market was in decline.
Another important positive fact is that prices per square metre in city centres are now more than competitive with domestic prices.
