Despite reports of foreign buyers snapping up bargain properties in Spain, the country’s real estate market will not recovery fully until banks relax their lending rules, it is claimed.

Currently the maximum loan to value for non-residents in Spain is around 60% but a buyer also needs to pay up 15% of the purchase price in taxes and fees so some considerable upfront outlay is still needed to buy a dream home in Spain.

Unless you’re buying a bank repossession where they may lend up to 100% or even plus costs, you really need easy access to around half the money to buy a Spanish property.

Whilst we do not want another property bubble fueled by 100% plus loan to value mortgages for unqualified borrowers, if well qualified clients can raise finance there would be a large increase in foreign buyers entering the market.
We have seen the market pick up from the lows post credit crunch with the firm’s sales in our area up 60% in 2013 compared with 2012. Already for the first three months of 2014 sales have jumped from an average of 7.6 sales per month to 12.6, another 60% rise, but we believe these figures could easily be higher.

The latest official figures confirm that mortgage numbers in Spain have dropped for the 46th consecutive month up to February 2014. Experts believe that the country is in no danger of a full recovery, let alone a property boom, as average house prices have fallen by 30% since 2008 and mortgage lending dropped from a peak of €173 billion in 2007 to just €26 billion in 2013.

In many areas prices have fallen more. Actually in Alcaidesa  it is over 50% since the most recent peak of the market in 2007. With national unemployment not below 25% since 2012, it’s the foreigners that Spain is relying on to keep the property market alive.

Sales to foreigners are indeed on the up, they were at a nine year high in 2013 when non-Spaniards bought €6.45 billion worth of property. Data from the Council of Notaries shows that 21.4% of all residential property sales in Spain in 2013 was to foreign buyers, that is 55,187 homes, up 9.8% on 2012.