With the landslide victory of Mariano Rajoy and the center-right Partido Popular (PP) on 20 November, many are wondering what this will mean for the Spanish Housing Market 2012? While Rajoy’s political campaign was fairly coy on policy details – given Spanish voter dissatisfaction with the governing Socialist party, it was enough of an advantage just being an alternative – PP did announce some policy measures related to the real estate market.
Speaking from the Lucas Fox Barcelona offices after the election win by Partido Popular (PP) with 44.6% of the votes, Lucas Fox Director Alex Vaughan said: “We congratulate Prime Minister Elect Mariano Rajoy and his team for a strong win that we are hopeful will have a quick and positive impact on the property market in Spain. The majority win by the PP means the new government will have the political stability and mandate necessary to take action to address the current financial crisis and its impact on the property market in this country.”
Spanish politics tends to have a long handover timeframe, so that while elected in November, Rajoy and his team are not due to take full rein of the government until 22 December. News of appointments to crucial ministerial portfolios such as housing and development have yet to be made, but real estate news portal Idealista has recently shared some of the early announcements regarding which of PP’s housing policies are expected to be green lit.
Reanimating the Spanish Housing Market 2012
PP has announced a number of tax incentives to help stimulate the Spanish Housing Market in 2012. These include:
- Maintaining property sales tax at 4%: Initially introduced by the outgoing Prime Minister Zapatero’s Socialist Party, property tax rates were halved from 8 to 4% until the end of 2011. PP has announced a continuation of this policy into 2012, maintaining the tax rate at the lower 4% level for at least another year.
- Reduction on ITP transfer tax: While details are yet to be fully announced, it is understood that PP plans to reduce taxes related to property transfers.
- Removal of income capping on tax rebates for residential housing purchases: In what could have a significant impact on the Spanish housing market 2012, PP plans to remove current tax rebate caps on purchases for residential properties (i.e. where the buyer intends to use the property as their main Spanish residence). At present, an income cap means only those who earn less than 24,000 euros annually are entitled to a tax deduction. PP intends to provide the tax rebate to any buyer and retroactively implement the policy to benefit any residential home buyers in 2011.
“Tax incentives such as the extension of the VAT reduction on new build property and a proposed cut to ITP transfer tax on second hand property purchases will help to sustain and build on the healthy signs in the property market that we observed in the third quarter,” Mr Vaughan said. Lucas Fox International Properties announced its best ever quarter for sales transactions in October this year, trading €19.5 million of properties in the three months from 1 July 2011.
“If implemented, these proposed tax incentives could stimulate the property market and help assist the lower end of the market to catch up with the renewed vigour at the high end,” Vaughan concluded. Housing market policies will be a key indicator of policy success for the incoming government. Subscribe to the Lucas Fox blog to keep up to date with analysis and policy developments related to the Spanish Housing Market 2012.
Lucas Fox International Properties, with its head office in Barcelona, today announce their most successful quarter since starting business in 2005. In the third quarter of 2011 the company completed on luxury Spanish property transactions worth 19.5 million in Barcelona, the Costa Brava and Ibiza.
The company showed unprecedented growth in high-end property sales and rental transactions during the third quarter, 2011. This quarter has been its most successful since the company’s founding in 2005. The success is enjoyed against the background of a lack of transactions from other high-end real estate businesses operating in the same territory. With a highly successful end to the third quarter 2011, Lucas Fox is to continue its plans for expansion during the fourth quarter, 2011 and into 2012.
Lucas Fox attribute their success to a unique, customer-focused strategy. The agency provides perfectly tailored transactions and solutions for high-end national and international buyers and sellers. Their success in a hard market is evident in feedback from both buyers and sellers.
Juan Varón, who sold his villa in Castelldefels with Lucas Fox comments, “The firm capably handled negotiations with the end buyer of our villa. The process was clear, professional and painless. We are thoroughly satisfied with the whole transaction”.
Property buyer, Jean Ducroux, who completed a purchase of a Maresme Villa, remarks, “I was very impressed with the courtesy, knowledge and support of the Lucas Fox staff which enabled me to secure the property that I wanted, at a great price.”
The quarter’s results are at odds with popular perceptions of the Spanish Real Estate market. Alex Vaughan, Director of Lucas Fox commented, “There is a lot of negative press about the Spanish property market. However Spain continues to be one of the top destinations for high net worth property buyers. Our projections for Barcelona, Costa Brava and Ibiza as published in our recent market reports, have become a reality. The quarter’s success means that our planned expansion will take place through 2012.”
Vaughan comments on why the company performed so well during the third quarter, 2011, ”Simply, we match the right buyer, to the right property. We do not waste the buyer or seller’s time proposing properties that they would not be interested in.”
“We employ staff that know a buyer’s native market and negotiation process. They translate and compare these similarities and differences to the international buyer. This simplifies, and clarifies, the whole transaction. This is one stand out difference that our competitors are not able to offer. I am confident this is why we’re completing many more transactions with international clients than our competitors”, adds Vaughan.
Stijn Teeuwen, Director of Lucas Fox, summarised his thoughts on the quarters outstanding performance, “This incredibly successful quarter was realized by the dedication of our staff conducting professional negotiations and first class customer service. “
Teeuwen continued, “Although for some the market is hard, we are continuing to enjoy growth because simply, we put the client first.”
Anthony Leaton, Marketing Director stated, “In the present market climate you complete transactions at this level by analyzing and realizing the client’s expectations. Our team is consistently changing and adopting new processes, technology and marketing-communications to facilitate this”
“We predict that the high level of demand from international buyers will continue to grow. As a result we will be launching new, exciting client services and announcing at least one new office opening in the fourth quarter 2011”, Leaton concluded.
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In recent overseas property news: After her reassurances across the UK and Europe earlier this year, Spanish Housing Minister Beatriz Corredor has kept her promise and delivered a new suite of tools and safeguards for overseas residents interested in property for sale in Spain.
1. European Roadshow raised interest in property for sale in Spain
In April and May this year, Corredor and her colleague Spanish Minister for Development, Jose Blanco, held roadshow promotional tours in the UK, France, Germany, Sweden, and Russia to encourage Spanish property investment opportunities by promoting the Spanish property buying process.
In a direct response to the lowered confidence in some segments of foreign investors, Corredor and Blanco listed the gamut of advantages to buying property for sale in Spain from the climate and the local hospitality to the reinforced safeguards and regulatory protections now being introduced. At the time, Corredor promised in overseas property news media that new Spain real estate measures would be introduced to prevent some of the administrative entanglements property buyers had entered with imperfect information from local governments, disreputable developers and opportunistic go-betweens.
Now, Corredor has made good on her promise in May, with changes to the Spanish property buying process including the availability of an English-language land registry database and new regulations to protect buyers from unorganized local governments and unethical developers.
2. Reforms to the Spanish property buying process
The land registry allows users to download a full report on a property for sale in Spain (for €29). This overseas property news is a great bonus for potential investors who need a more comprehensive picture of their possible purchase. Other regulatory reforms introduced ensure there must be reference to any legal proceedings involving the property. This new requirement reduces the risk of buying properties that have been marked for demolition or have ongoing buildings codes violations, for example. Other regulatory measures introduced include:
- Stricter requirements for current constructions and off-plan developments before being eligible for listing as a property for sale in Spain
- A longer list of essential requirements that must be documented in the land registry
- Stricter and time-managed requirements for local governments to respond to their submission of paperwork and certifications associated with the Spanish property buying process.
Despite the database being a significant advance in information available for English-speakers across Europe and the globe, and the extensive overseas property news promotion undertaken as part of the Government’s roadshow tour, after its first month in operation there has yet to be an increase in traffic to the government site. Data is limited at present as the site only became operational in July 2011, but users are predominantly from Spain at present. Higher educated men aged 35 – 54 looking at the site at work are the predominant users. This could indicate that it is being used predominantly as a real estate industry tool.
3. Global reaction to the tools to assist the Spanish property buying process
Across the globe, a handful of German, UK and Russian investors are accessing the site while Brazilians are flocking to the database and overall government site where the database is situated. This reflects the observations made in the Lucas Fox Barcelona real estate market reports), suggesting that Brazilian, Chinese and Middle East investors could soon replicate the levels of interest seen amongst Russian affluent investors who have doubled in number this year as both tourists and property buyers.
The following graphs are constantly updated with the latest data from internet tool SEMRush, so you can bookmark this blog post and return monthly to see how well the Housing and Development Ministers are doing at promoting its availability as a resource for English-speaking buyers in overseas property news.
4. Spanish Property Buying Process Resources
The new English-language land registry is available at:
The new guide to the Spanish property buying process is available at:
With overseas property news analysts calculating foreign interest in property for sale in Spain up by 6% this year and with the government’s push for greater global awareness of – and interest in – the Spanish property buying process, the new land registry should become an essential tool during Spain real estate enquiries.
At the start of the year, Spanish property tax law changed when a raft of 2009 legislative measures began to take effect. This included the abolition of a deduction for the purchase of property for sale in Spain. Now, as part of the latest economic measures introduced by the national government to stimulate the Spanish property market, Spanish property tax is being reversed – at least til the end of this year – with a halving of sales tax on new properties.
The tax laws that took effect in January have had a dampening effect on the Spanish property market. Analysing the lacklustre numbers of urban property transactions in the latest Barcelona real estate market report, Lucas Fox Director Alex Vaughan pointed to the tax abolition as a key contributing factor to the level of trade in property for sale in Spain:
“The slowdown in Barcelona property sales at the lower end of the market is partly due to the introduction of new mortgage taxation laws but also due to the lack of finance available to local buyers.”
The abolition of the Spanish property tax in January was estimated by some economics analysts to be equivalent to a 17% rebate on sales prices. For the average Barcelona property at the midyear point in 2011, that would amount to a discount of €106.760 on a property worth the Barcelona average of €628.000. The new tax incentive halves sales tax on properties from the current 8% to 4% until the end of the year. That would amount to a saving of €25.120. Will this be enough to stimulate transactions again and encourage local buyers at the lower end of the Barcelona and Spanish property market?
Impact on property for sale in Spain (transactions)
The impact on the Spanish property market can be seen in the number of urban property transactions for Spain and in the selected areas that cover Barcelona, Costa Brava and Ibiza. It is a surprisingly consistent story: Spanish property transactions via merchandising saw a bump in January and February (indicated in the below graphs with dots) perhaps indicating buyers scrambling for purchases before the tax abolition, and a depressed property market performing from March through to June. It is presumed that the rise seen in the first two months is actually a statistical catchup on sales transactions that took place at the end of 2010: it will take some months before provisional data is replaced with final figures.
Impact on property for sale in Spain (mortgages)
The same picture is even more obvious from mortgage data for Spain over the last eleven months (June 2011 data has not yet been released by the National Institute of Statistics, where all the data in this blog post comes from). Mortgages constituted each month for urban properties reveals a sever decline in the first four months of the tax abolition, i.e. between January and April 2011 (indicated with dots in the below graph).
While the Barcelona luxury property market (and elsewhere), is driven by demand for high quality properties currently in short supply, the majority of the Spanish property market is influenced by the financial incentives available at the time of purchase, and the availability of capital. Both of these factors have restricted the level of movement in the Spanish property market this year, according to Lucas Fox Director, Alex Vaughan.
These latest changes to Spanish property tax show how quickly the Spanish property market can alter with the introduction of new economic policy. Having professional services advice that is conversant with the latest legislative changes is essential to ensuring the best financial outcome from any transaction to buy property for sale in Spain.
Three Reports Outline the Resilience of the Spanish Luxury Real Estate Market
Lucas Fox International Properties today release a formal analysis of the Spanish luxury real estate for the first two quarters of 2011.
Projections and data feature the regions of Barcelona, Costa Brava and Ibiza.
Key insights from the reports include:
- The lack of property finance available and changes to mortgage taxation have led to an overall slowdown in Spanish property sales in the first half of 2011, the luxury property market has shown more resilience than other sectors of the market.
- International buyers are acquiring luxury properties in Barcelona, the Costa Brava and Ibiza without mortgage financing.
- There is a growth in property investment in Spain from Russian, Dutch, and Swiss buyers and investors.
- Tourism growth in Barcelona, Costa Brava and Ibiza in 2011 has had a positive effect on demand for short-term rental properties.
Based on the analysis, Lucas Fox Directors offer forecasts for the remainder of 2011:
Barcelona Property Market
Alex Vaughan, Director of Lucas Fox said:
“While the first half of the 2011 has seen further drops on key housing indicators in Barcelona, the luxury end of the market has held steady in sales prices and seen some increases in rental price for exclusive properties located in the centre of Barcelona. The lack of quality luxury apartments and houses should mean that prices in this segment of the market will remain stable.
We predict that for the immediate future buyers will be able to secure Barcelona properties at competitive prices. Given the current economic conditions and lack of finance available to local buyers, international clients should be willing to hold on to their properties for longer as it will be several years before the next growth cycle. ”
Costa Brava Property Market
Tom Maidment, Director of Lucas Fox Costa Brava said:
“The high demand, for high end luxury properties in the Costa Brava region make these properties more price resilient than those in other parts of Spain. Demand for luxury properties continues apace, mainly driven by international clients from the Eurozone and a high level of demand for sea front villas from buyers from Russia and ex Soviet states.”
Ibiza Property Market
Alex Vaughan, Director of Lucas Fox said:
“We expect a very positive second half of 2011 with a large amount of transactions in the €1m plus segment of the market… We believe that the luxury property market on Ibiza has great potential and that there will be a return to annual capital growth next year.”
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Notes to Editors:
Company: Founded in 2005, Lucas Fox specialises in offering quality luxury properties, a professional approach and a high level of service. The company has offices in Barcelona, the Costa Brava and Ibiza.
Data: Collated from leading Spanish real estate portals, national and governmental statistics, and luxury buyers. Data in the reports is specific to Barcelona, Costa Brava and Ibiza.
Tel: +34 933 562 989
Tel: +34 933 562 989
Press photos can be provided by request: firstname.lastname@example.org
The reports are available for download at no cost at:
Market Reports include predictions for the next six months
With the release of the Lucas Fox Market Reports this week, there is bound to be some contention as the agency’s Directors share their insights and predictions on the future for Barcelona luxury property, Costa Brava villas and Ibiza real estate for the next six months and into 2012.
Each half-year, Lucas Fox International Properties releases a compilation of data to summarize the local property market conditions in its three principal locations: Barcelona, Costa Brava and Ibiza. With the launch of a new design and more comprehensive analysis for the market report formats, Lucas Fox Directors have shared their analysis of the markets they are working in day by day, month by month.
Barcelona real estate may be a slightly more reliable market to analyze and second-guess than the at-times volatile national housing market has been over the past few years. Meanwhile, the prices of Costa Brava villas and the continuing demand in Ibiza real estate show that there are some signs of a steadying trend – particularly at the luxury end of the market – making it possible to forecast the next six months without too much out of a leap of faith. All the same, there are distinctly different perspectives amongst analysts as to the state of the local housing markets, and the Directors were well aware there are bound to be alternative (and vocal) opinions.
Some analysts have suggested that there is still some bottoming of the market to occur, while others are enthusiastically looking for bargain-priced properties.
Given these differences in interpreting the housing markets, the Directors wanted to offer their clients and regular readers a firmer sense of what is happening locally, so that investors and sellers can make more objective decisions.
“We predict that for the immediate future buyers will be able to secure Barcelona properties at competitive prices”, affirms Alex Vaughan, Director of Lucas Fox. However, he also tempers his confidence with a recognition that the market is changing in the way people are buying properties, and the investment cycles necessary to hold on to quality luxury property in Barcelona: “. Given the current economic conditions and lack of finance available to local buyers, international clients should be willing to hold on to their properties for longer as it will be several years before the next growth cycle.”
The Lucas Fox Market Reports for January – June 2011 review the market dynamics for Barcelona luxury property, Costa Brava villas and apartments and Ibiza real estate. They are available for download from the Lucas Fox website and from the property guides page of our blog. Make sure you also subscribe to the Lucas Fox blog to be kept up to date with future releases.
We recently reported on the UK roadtrip by Spain’s Housing Minister, Beatriz Corredor, and Development Minister, Jose Blanco, that aimed to encourage Spain real estate investment. Our report focused on the main messages of the Ministers and how these matched recent advice from the pages of the Wall Street Journal on choosing the right time to invest in property.
Leading up to, and during, the road trip there were complaints and protests, flaming on expat forums and discussion boards, petitions, emails, a letter writing campaign, interviews, and action groups all mobilized by angry Britons who had lost property investing in Spain real estate.
While many have successfully and happily invested in properties in Spain, there were some areas that suffered from inflated housing market prices, and other areas where corrupt planners and opportunistic lawyers set up business to make money from buyers who had not done their homework.
During the May roadshow, the message of Ministers Corredor and Blanco included a tacit acknowledgement that there were some issues with Spanish property investment and the national economy (with Corredor noting that some UK expats had lost their property, and Blanco sharing that a key motivation of the roadshow was to help sell off bank-held property to speed up the national economic motors).
The pair described the level of safeguards in place for new investors wary of repeating the previous property investment mistakes. These include:
- tighter planning regulation,
- a public sales register listing the legal status of properties in the sales market, and
- a new police unit to quickly respond to any sign of corruption in planning and sales processes.
Development Minister Jose Blanco was also quick to remind the English of all of the great things they love about Spain:
- the weather,
- the accessibility,
- the proximity, and
- the safety.
At the time, the majority of UK media seemed to accentuate the focus on the disgruntled investors and their angry complaints during the promotional trip. This would give the causal observer the impression that, overall, the mission was unsuccessful and would perhaps need for the Corredor and Blanco team to regroup before repeating the exercise in France, Germany, Sweden and Russia.
However, now that the dust has settled a week or two more, perhaps the media angle has given Corredor and Blanco the opportunity they needed to clear up any doubts about the past and start afresh. By countering the negative focus, the Ministers have had the chance to mention the strengthened regulatory environment, and to remind Britons what they love about Spain.
This may have been what was needed to clear the air and rebuild any lost confidence. Since the roadshow there has been a surge of interest in Spain property by UK residents again: A survey announced last week that 8 out of 10 Britons confirm they are planning to buy in Spain as part of their retirement strategy. The healthy tourist figures for Spain for the first quarter 2011 are set to continue throughout the forthcoming summer, bringing more visitors with the potential to assess Spain real estate for future property purchases while visiting.
With resurgent interest amongst UK buyers eyeing Spain real estate, the Ministerial roadshow team may have played just the right cards to star afresh on a new Spain property investment push: their return to London later this year will offer a chance to assess.