Thursday, September 9, 2010

Falling prices and favorable exchange rates boost Spanish properties

Property searches are up for Spain as investors look to capitalize on falling prices and favorable exchange rates. Spanish property sales are expected to enjoy a new boost as Sterling regains the 20% lost to the Euro since 2008. Many agents have said that price falls in Spain are drawing investors back to the country.

Capital Gains Tax changes in the recent UK Emergency Budget are an extra incentive for more Brits to buy a second home in Spain, where the capital gains tax is the same as the UK basic of 18%, but with no extra 10% penalty for being a wealthier owner. There is no CGT payable in Spain for official ex-Pat residents if, within two years, the seller reinvests the proceeds of the permanent house sale in a replacement property - deducting the buying costs from the profits when the sell the replacement house is sold.

According to British newspaper the Financial Times, Spain has become eight per cent cheaper for Brits in the last 12 months due to the strengthening GBP. The number of people searching for properties in Spain in particular rose by 48 per cent in the same period, while they were up 341 per cent since December 2008.

The latest figures from Property portal fotocasa.es have revealed positive signs for the Spain property sector with re-sale prices rising for the first time in 24 months. The portal has reported a 0.6 per cent average price rise within the country, with some regions posting improvements of almost five per cent.

Chris Mercer, director of Mercers property agents, said that the figures are an indication of life coming back to the market, but he warned that it still remains very price sensitive.

He added that Buyers paying a 20 per cent deposit then the rent will comfortably pay the mortgage and as they are truly buying at the bottom of the market, they have an asset that will certainly appreciate in years to come."

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