Does the rain in Spain fall mainly on the property market?

                                                                                         

Spain is a perennial favourite for British tourists and property investors alike. It may be due to the relaxed lifestyle, the sun-soaked beaches or the traditionally easy path to earning a bit of cash through holiday lets - whatever the reason, Spain consistently appears on the list of top investment hotspots for buyers from the UK.
Earlier this year, A Place in the Sun magazine placed the Mediterranean country firmly in the top spot regarding overseas property purchases for the second year running, while the most recent figures from the Department of Communities and Local Government indicate that Spain is the destination of choice for more than one-third (34 per cent) of Britons with second homes.
But recent media reports have been casting a bit of a shadow on future potential in this historically reliable market. For example, a new report from retail analysts Verdict Research suggested that the era of "rapid house price inflation" in the Spanish property market has finally reached an end, with the market actually going "into reverse".
Meanwhile, research from currency specialist HiFX has found that interest in European property investment in a variety of locations has flagged recently as the euro has increased in strength against the pound. Mark Bodega, director of the firm, explained that people buying in sterling may be deterred by increased costs and are waiting for the balance to tip in the opposite direction.
He also raised concerns about oversupply in Spain as an issue affecting the market, saying that it "has ... been particularly badly hit, with talk of falling Spain property prices, especially in the over-supplied Costa regions, making new buyers wary of investing in the country".
Remi Gashi, Spanish mortgage consultant for Savills Private Finance, echoed Mr Bodega's comments, explaining that "a question of control and regulation" was impacting upon Spanish property prices. He said that "something like 900,000 permits for new
builds" were issued in 2007, which may not be reflective of the market demand. "If they continue oversupplying, then eventually the prices will be pushed down," he warned.
However, does the current situation provide enough evidence to give prospective property investors reason to pause? The answer, it seems, is that it depends. The days of making easy money may be over, but if property is seen as a long-term investment, the popularity of Spain is likely continue to guarantee returns for some years into the future.
Mr Gashi emphasised that these predictions should not lead property investors to believe that buyers and holidaymakers are losing interest in the country. It is "still one of the biggest destinations for holidaymakers" and has a climate that makes people "still want to buy there", he remarked.
"They're going to get millions and millions of people going there [to Spain] - that's hardly going to change," he added.

About the author:
Jim Barnaby is a real estate investment broker and successful property investment adviser delivering research and selected UK and overseas property investment solutions with experience in spanish properties, french property investment, German property, Cyprus holiday homes, Property in Cape Verde, German property investment, cape verde property buy to let property.

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