British Expats Find Themselves Trapped By the Collapse of the Spanish Economy
Up until very recently, it was the dream of many British people to up sticks and relocate to Spain, attracted by the warm climate and the availability and attractive prices of housing. Dozens of real estate companies all along the Mediterranean coasts were falling over themselves in their desire to sign up British people and offer them attractive deals on new build houses and villas where they could start their new life in the sun.
Nobody predicted that the Spanish economy would implode in such spectacular fashion, and nobody realised that when it did, many thousands of people would be stuck with houses that were only worth a fraction of what they paid. On average across the country the Spanish housing market has seen a 17% decrease in prices from their peak, and in areas such as the Costa Del Sol where there is a huge oversupply of property, the situation is worse with drops of up to 65% in certain areas being reported.
Every cloud has a silver lining though, and for someone with spare cash to invest in a Spanish property, now is a good time to do it. From the moment you collect your hire car at car hire Malaga airport, you’ll see adverts for brokers and agents who want your business. With hard bargaining, you should be able to secure a holiday home for a lot less than you could a few years back. The risk is, however, that if you buy in a new build estate that yours will be one of the few houses to be occupied and that you’ll be living in a half finished building site.
For British people who moved out to Spain at the peak of the property boom, many are trapped in negative equity. If they are happy to remain in Spain there is little problem, but those wishing to sell up and return home are facing a substantial loss on their property meaning they are unable to afford to buy a property on their return to the UK. Many who moved to Spain have lost their jobs in the economic downturn, and are struggling to meet their mortgage payments. Repossession will put them in a worse financial position than selling up at a loss. Renting out properties to tourists is a possibility, but holiday makers are choosy and nobody wants to drive from car hire Malaga airport to stay in a house surrounded by other deserted houses, or in a neighbourhood that appears to be run down or neglected. It will take years for the Spanish property market to bounce back, and many doubt that previous price levels will ever be reached again.