Buying in Spain as an investment

Rental prices rose in Spain by 0.8% in November 2017, according to the latest data from the National Statistics Institute (INE), linking 13 months of increases. According to the figures that manages idealist, the price of housing for rent in Spain has increased by 18.4% in 2017. This means that buying a property in Spain as an investment is very interesting.

For Fernando Encinar, director of Idealist studies, “the year 2017 has undoubtedly been the year of renting in Spain and one of the main reasons for the takeoff of rents is employment,” he said. this phenomenon of renting would not be understood: all the small and medium investors who in the last three years have decided to transfer their savings from their bank accounts into flats to bring them to the rental market.

It is not a real estate bubble and the investor is not an evil speculator.

Who are the people who buy in Spain?

The profile of the nervous investor who bought a house to sell it soon after with large capital gains that proliferated 10-14 years ago has disappeared from the market. The new investor is calmer, more relaxed and assumes the profitability that renting the house produces, without selling. “

Furthermore, according to the real estate portal Vitrio, buying a house to rent as a holiday home is becoming a business, and “very profitable”. In areas where the influx of tourists is greatest in Spain, “this phenomenon is changing the market with a sharp rise in prices that hinders access to housing for those seeking a long-term residence”.

Urban land prices, in an upward trend:

The latest data from the Ministry of Development shows that the average price per square metre of urban land increased in the third quarter of last year 2017 by 7.8% year-on-year, to 162 euros.

In municipalities with more than 50,000 inhabitants, the average price per square metre rose by 5.6% year-on-year, after 287.5 euros per square metre.

The list of Spanish areas where the square meter is most expensive is led by Madrid, with 485.7 euros, followed by Barcelona (447.6 euros) and the Balearic Islands (375.7 euros). The Costa Blanca and Alicante still remain at the top of the Spanish property investment list for most foreigners buying a house in Spain.

Increase of the land registry but not as much

On the other hand, a total of 1,296 municipalities raise the IBI in 2018. The amount paid annually by owners, inhabitants and lands in the concept of property tax (IBI), depending on the municipalities, will increase in 2018 in 1,296 Spanish municipalities, while it will decrease in 534 localities, in accordance with the coefficients for updating cadastral values approved last Friday by the Council of Ministers.

However, it is important to bear in mind that town halls have the option and the faculty to reduce the percentage applied to the cadastral value and modify downwards the cadastral tax that you have to pay for your real estate in Spain and most of them for electoral reasons.