Will there be a property crash?
Obviously, no one knows for sure whether there is going to be a property crash or not, and if so, how significant it might be, however, Spain is in a much better position than it was in 2008.
Spain has learned a lot since 2008 and there are a few key things that will protect the property market compared to those dark days.
Firstly, personal debt in Spain is a lot lower than some other European countries. For example, Household debt v GDP is as follows – Spain 58%, France 67%, UK 86%, Sweden 92%, Netherlands 101%.
This relatively low personal debt level is partly due to credit cards not being used in Spain to the same extent as in similar Western countries and when they are used, they typically have to be paid off within 3 months.
Secondly, most mortgages in Spain have a fixed interest rate for the entire term of the mortgage. As such, almost all homeowners in Spain will be protected as interest rates (and mortgage costs) rise to combat inflation. In countries where lenders offer variable or short-term fixed 100% mortgages, such as the Netherlands, the impact of any interest rate rise could be disastrous to the housing market.
Finally, the increase in property prices in Spain has not been as significant as a lot of other countries, prices have only recently gone above their highest ever level which was just before the 2008 crash. Property prices in most of Northern Europe have almost doubled in this same period and in certain hot spots by far more.
In summary, if there is a property crash across Europe then Spain could end up being a relatively safe haven.
If you want to know more about property here in Spain, please get in contact.
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