There is constant talk of the price of property in Spain, whether it has gone up, down, entered a plateau, or risen in some cities but not others.
And some of the latest official government statistics to be released show that homes in Spain are now among the cheapest in Europe. First quarter of 2014, the average price per square meter was €1,459 making a typical 90 sqm 3-bed house €131,310.
Just as a comparator, for Italy, the price per square metre stood at €2,119, placing the price for an average three-bedroom home at €190,710 and for France, a 3-bed house costs around €202,500 based on Notary data for the same period, (€71,190 more than the Spanish average).
Now we all know that using averages is not always accurate, but based on these figures, the price of housing in Spain would be 54% cheaper than in France and 45% than in Italy. The Eurostat House Price Index backs this up at the end of 2013, with a low of 70.75 for Spain, 101.75 for France and 84.64 for Italy, using 2010 as the base point of 100.
This is great news for would-be buyers of a Spanish holiday home or for overseas investors in Spain.
But does this mean Property in Spain is good value?
In some respects, if prices don’t fall more, a buyer today might feel quite smug, having perfectly timed the market, buying right at the bottom or even during a dip, or ‘price siesta’. But as many a seasoned investor knows, it is rare to be able to predict market timing perfectly.
Some buyers have been tempted by cheap bank repossessions, only to find the buying process is confusing, or that the perceived price may not be as cheap as first seemed, or that the lower price is more than balanced out by the mortgage rate and related expenses, which come with the property.
So here we come to ‘value’, not just the lowest price. Value is still a relative concept, as is price, comparable to other properties, in similar locations or other types of investment.
Placing a value on something relates to the regard or esteem with which something is held, or the worth, or desirability of a home. So a property might look cheap, price-wise, but if the property is in a poor location with a scarcity of amenities, or transportation links and no-one is likely to want to buy it for personal use or to rent it, then it does not represent great value.
Likewise, if a holiday home is cheap, yet it does not have the correct build permits or licences, it is not great value, because it is more than likely unsaleable or illegal.
There is also the issue of how much you get from your holiday home to know whether it has been good ‘value’, or a good use of your money. In purely financial terms, unless you use your holiday home regularly the purchase and running costs could outweigh the price of equivalent rented accommodation. Unless you place a really high ‘value’ on the convenience of having a home-from-home, or the reassurance of having your own possessions around you and the comfort of knowing what facilities will be there when you arrive. Or the feel-good factor of knowing you can host family and friends and give them pleasure too, or simply to know you will be surrounded by friends you have made over the time spent at your holiday home.
So ‘value’ can be a subjective one, with the emotional attachments, as well as a hard financial one based on the returns and capital appreciation of the holiday home purchase.
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