HundredsofthousandsofBritishinvestorsnowownhomesinSpainandmanywillhavemadeakilling。

Butitisgettingmuchhardertofindabargain,saysEmmaThelwellWhydotheBritishbuyinSpainFortheweather,obviously。

Butalsobecauseitiseasytogetto,thankstotheglutoflow-costairlinesofferingcheapandfrequentflights。

AndbecauseitischeapcomparedtoBritain:counciltaxratesareroughlyatenthofthoseintheUKandpetrolpricesareathirdcheaperthanhere。

Asaresult,SpainisbyfarthemostpopulardestinationforBritishinvestors:morethan750,000ofusownourownhaciendainthesun,andaround160,000Britshavesettledtherepermanently。

Andnotallofthesearepensionerslookingtoenjoytheirretirementthere。

ArecentICMsurveyforBBC2foundthatitiswhere24%of18-24-year-oldswouldmostliketomakeanewlife。

HowhasthisaffectedtheSpanishpropertymarket?

ThepersistentinfluxofBritshasinducedaboomthathasseenpricesrisingforthelastfewyears–theywereupanimpressive17。

4%in2004alone。

TheSpanishpropertymarketattractsaround£12bnayearfromBritishinvestors(equivalenttoalmost1。

5%ofSpanishGDP),andit’spredictedtoriseto£21bnannuallyby2009。

Butthisisn’tanewfad:BritonshavebeeninvestinginSpainsincethecheappackage-holidayboomofthe1960sand1970s,whenholidaymakersreturnedtosnapupcheapcoastalvillas。

IsSpanishpropertycheap?

Itwasuntilafewyearsago。

Traditionally,SpanishpropertywaspricedatalargediscounttotheUK。

Now,thepricesarenearingUKlevelsinsomeareas。

Indeed,arecentsurveybytheRoyalInstitutionofCharteredSurveyors(RICS)foundthat,justasLondontraditionallyleadsthewaywithpropertypricesintheUK,EuropeanholidaydestinationsseemtofollowBritain’smarkettrendstoo。

TherecentdemanddrovetheSpanishconstructionindustrytohitrecordhighslastyear,with700,000new-buildproperties–that’smorethanthecombinedtotalofGermany,FranceandtheBeneluxcountries。

Overthepastsixyears,new-buildshavebeenapredominantfeatureoftheCostas–financedbyinvestorsbuyingoff-planplots(seebox,below),whoexpecttosellthehomesforahealthyprofitoncetheyarebuilt。

Willpricescontinuetorise?

Notnecessarily。

Spanishpropertymaybeboomingnow,butthedaysofmakingaquickbuckcouldbeover。

PricesforvillasandflatsintheMediterraneanarepeaking,leavingthemvulnerabletoadrop。

ThemarketforsecondhomesisveryvolatileowingtoitsdependenceontheUKmarket。

Anddepressedconsumerconfidence,combinedwithageneralslowdownhere,havemadeBritishbuyersamorecautiousbunch。

Holidayhomesarethefirstthingspeopledisposeofwhentheyhavetoeconomise,andSpaincouldbehithardbecauseofthenumbersofamateurinvestorswhohaveboughtinthelastfiveyears。

TheUKslowdownisalreadybeingreflectedintheSpanishmarket:theaveragetimetosellhasrisenoverthelast12months,andthedesirefornew-buildsisdryingup。

Insomeareas,suchastheCostadelSol,thereisnowasurplus。

SoshouldoneavoidSpainfornow?

Themarketmaybecoolingdown,butmostanalystsreckonthat,ifahomeiswhatyouwant,thenSpainisstilladecentplacetoinvest–atleastinthelongterm。

Cheapertransport,easierownershipruleswithintheEUandrisingincomes,makeSpanishpropertyaworthwhilelong-terminvestment。

Butthoselookingtomakeaquickbuckneednotjumponthatplane。

Asashort-terminvestor,you’dbebetterofflookingatcheaperdestinations,suchasPortugal。

Nonetheless,propertypricesacrossSpainvarydramatically。

Bargainscanstillbefoundinland。

Thecoastismoreexpensive,althoughthecheapestpartisCostaBlanca,whereyoucanstillpickupafour-bedroomvillafor£250,000。

InthefashionableCostadelSol,youcouldpay£500,000plus。

Arethereanyhiddenrisks?

Afew。

Anybodythinkingofbuyingcertainlyneedstodotheirhomework。

UsetheinternettogetafeelforareapricesandquizlocalBrits:theywon’tbeshyoftellingyouwhichestateagentstoavoidandwillprobablythrowinacautionaryhorrorstory。

Nomatterwhatyourestateagentsays,hireanindependentlawyer–askthelocalbankforagoodone。

Becareful–youaremakingamajorcapitaloutlayonanassetpricedineuros;transferringsterlingcanprovecostlyandissubjecttocurrencyfluctuations,soitcanbeworthusingaspecialistcurrencydealer。

Anddon’tletyourselfbecomeavictimof‘Ferrarisyndrome’–gettingsweptawaywiththeromanceandbeautyofitallandoverreachingyourself。

Rememberyourlimitsandsticktothem。

Berealisticandpractical:propertyasaninvestmentisn’tagoldengoose,it’sabusiness。

Doesoff-planmeaneasymoney?

Off-planmeansbuyingapropertyonadevelopmentbeforeitiscompleted。

Ayearago,suchpurchasesmadeupamassive70%oftheSpanishmarket,butbewarned:itcanberisky,astwoMoneyWeekreadersfoundout。

InOctober2002,theypaidaEuro96,000downpaymentonaEuro300,000townhouseinMarbella,whichtheyhopedtosellforaroundEuro360,000oncompletionayearlater。

Butoncefinished,itdidntselltheylaterfoundoutthatthehousehadntbeenbuilttotheoriginalplans。

LastsummertheyweretolditmightsellforEuro285,000,Euro15,000lessthanthepurchaseprice。

Nearlythreeyearsonandthepropertystillhasntsold,thecouplehaventgottheirdepositbackandtheyhavespentEuro2,850onlegalbillsdisputingthealteredplans。

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