I live in a lovely part of Galicia, but also near one of the most embarrassing misadventures of the Spanish property boom of the mid 2000s, Costa Mino. This hideous development has been rusting away in the nearby valley it spoils for the last 8 or 9 years and so it was a great surprise to me when a BBVA bank manager I know told me that they had sold (admittedly at considerably reduced prices) their entire stock of Costa Mino new build properties and were trying to get more.
And yet this is how it goes: boom madness, bust followed by long and painful recession, green shoots of recovery that aren’t enough to inspire optimism, boom madness, bust… etc.. So are we in the green shoots of recovery stage?
I think yes, and this is why.
Firstly the EU has been posting decent financial growth figures and falling unemployment of late, and Spain is topping the charts for these good figures.
Secondly property market inflation is already rampant (ie. double digit annual price inflation) in the more desirable areas of Spain, which is to say the major cities and the best known Costas and islands.
Third, the huge property overhang that Spain still has is consistently clearing, albeit that it has a long way to go to find sensible market norms. Interestingly the overhang is coming down third fastest of all Spanish regions in Galicia.
And fourth, bank windows are now full of adverts for mortgages and personal loans.
Another boom is coming in a few years: is it really that simple?
Yes and no. Yes in the sense that if we’re about to enter another housing market boom period then almost any property purchase made now will seem like an amazing bargain in 3 or 4 years time …but no in the sense that all properties are not equal.
Galicia continues to have a huge demographic problem with the interior average age already very old and continuing to rise (as young people leave for the cities or other countries) as well as an unevenly distributed economy (again with the majority of the interior at the wrong end). As well as this 2017 has produced some alarming tempertaure extremes, and again the interior suffers the worst from those.
Therefore for anyone purchasing property with an eye on investment value the advice has to be to purchase near the coast and not too far from cities. “Location, location, location” really – it is true. And/or find a truly special property (views, architectural interest, etc.).
When prices rise these are always the properties that do best, and right now there are still a lot of properties available at good prices that tick these boxes. In 5 years there probably won’t be, although the chances are you’ll still be able to buy a house in Costa Mino.