From bubble to boom
The Spanish property market has had a checkered past and is one that is characterized by booms and busts. At present, the market in Spain is looking noticeably healthier, with figures indicating that sales had soared in October 2017 and were up 28%. Things weren’t always looking so rosy for investors in Spain or those who owned a holiday home there though.
Read on for our recap of the history of the property market in Spain.
The property bubble
There have been a number of property bubbles in Spain, all of which are characterised by long-term increases in the price of property in the region. The most recent one took place between 1996 and 2008 and saw the prices grow at alarming rates.
Because of the global financial crisis that occurred globally between 2007 and 2008 that economists have described as the first financial crisis since the Great Depression, the price of property steadily began to fall again during the time that this was happening.
Adjustable mortgage rates during the bubble
A notable element of the Spanish real estate bubble is the fact that around 98% of the loans that were taken out during the bubble period were adjustable rate mortgages. These mortgages combine to form over 60%of the value of the Spanish GDP. This should give an indication that a lot of people owe a lot of money on their mortgages in Spain.
To compound the problem, as the crisis has erupted after 2008, people find that their interest rates have risen and so have their mortgage payments. Because of this, people that purchased property in Spain during the bubble are still dealing with the consequences of being saddled with debt which, for many, has lead to them finding themselves in negative equity.
What are things looking like now?
The property market in Spain in 2007, and while figures still suggest that things figures are still 39.8% below this level, there is significantly more confidence in the market at present. The property market in Spain remained strong throughout 2017 and it is thought that things will continue like this during 2018. If you own a property in Spain and have any type of concerns regarding mortgages, negative equity or lost deposits, get in touch and someone from our knowledgeable team will be happy to help.