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Britons target 'cheap' holiday homes as Spanish house prices fall,,,

Bargain-hunting Britons are jumping on to the Spanish property ladder as house prices continue to fall, a specialist mortgage broker has reported.

It says there has been a surge of interest in Spanish properties, which have suffered their biggest slump in value over the past year since the onset of the financial crisis in 2007.

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Bargain hunting: Spanish properties have suffered their biggest slump in value since the financial crisis arrived

But overseas mortgage specialist Conti has seen a 33 per cent rise in Spanish mortgage enquiries over May and June compared to previous monthly averages.

That comes despite the monthly house price index from appraisal company Tinsa, showing that Spanish property values were down by 10.8 per cent year-on-year.

Claire Nessling, director at Conti, says there is a combination of factors which are contributing to the boosted budgets of buyers. She said: ‘The Spanish market has reached a low point, so buyers are using it as an opportunity to shop for a bargain.’

Meanwhile, the growing strength of the pound against the euro and historically low interest rates are making holiday homes attractively affordable.‘It ticks a number of boxes that Britain doesn’t; including the weather,’ she added.

As a provider of mortgages in 45 countries, Conti says there is a healthy appetite for lending in Spain. It adds that figures from the Spanish National Statistics Institute, INE, show that the annual decline in property sales in May was 9 per cent, a lot less than the declines from January to March this year, which were between 21 and 33 per cent.

  More... Spain edges closer to financial disaster

BEWARE THE PAIN IN SPAIN The pain in Spain: Income from Tara Ghale's business has dropped and there's few buyers for her home

Those considering a move to Spain or buying there, however, should consider the country's economic plight.

Expats who moved to spain are suffering, as the country struggles with its banks problems, high unemployment and the eurozone debt crisis

One such expat, Tara Ghale, 44, has seen profits from her catering company tumble with the country’s economic crisis.

She now supplements her monthly income with help from her parents and has missed some of her £640-a-month mortgage payments to make sure she can afford other essentials.

Miss Ghale bought her three-bedroom house in the village of Alhaurin el Grande, near Marbella, for £217,000.

But 12 months ago she put it on the market for £192,000 to try to move back to Britain. She has had scant interest.

‘Things have gone downhill so fast,’ she said.

‘The situation at the moment is very worrying. I never dreamed I’d be living the life I am now when I moved out here seven years ago.

‘I know lots of Brit expats who were doing really well a few years ago but are now in dire financial straits because of the economic downturn in Spain.

If you do buy, think long-term

Despite the rising interest, there is much debate over whether this is a good time for Britons to be buying into the Spanish property market, as the nation’s economy, banking system and property market suffers.

However, Ms Nessling said: ‘If you are looking for the long term market, then it is [a good time to buy], for holiday and retirement homes.’

She added: ‘You should always go through the same process that you would follow if you were buying a property in the UK.

Take independent advice from an English-speaking lawyer who is not connected to your seller, estate agent or property developer. And ensure an independent valuation of the property is carried out, even if you’re buying in cash.’

AVOID THE TRAPS

Conti’s advice for Spanish property buyers: 'It pays to be selective. Many so-called bargains are being offered at knock-down prices because they’re of poor quality and in undesirable locations.

'It’s very easy to be pulled in by descriptions of ‘cheap’ or ‘knock down’ prices, but you really don’t want to end up with a toxic asset simply because you didn’t do your homework or take the right advice.

'It may be wise to look at re-sales, where you can get references from previous buyers and check any other re-sales being offered on the same development. As a result, you’ll get a much better idea of the property’s true market value.’

That warning comes as reports rise of an increase in sharp property salesmen looking to take advantage of Britons hunting for bargains.

Money Mail reported last week how holidaymakers risk being duped out of their life savings by salesmen desperate to offload bargain properties and time .

A glut of temptingly cheap homes have come on the market in Spain this year, following a property crash in which prices have been slashed in half.

But the reason many of these homes are so cheap is because developers or the banks that repossessed them are desperate to get them off their books.

Many are among the estimated 300,000 Spanish homes that do not have planning permission, and are often without mains water, gas or electricity.

Overseas mortgage broker Simon Conn says: ‘In many cases, people are seduced by the sea, sangria and relaxed Spanish lifestyle. They do not think straight about why a property is so cheap.

‘Before you buy, always ask yourself: Is the price low because the owner has fallen on hard times or just needs to sell? Or is it a property that should never have been built in the first place?’

The '50% off' property bargains

Chris Mercer of Spanish estate agent Mercer, based in Costa Calida, said: 'Prices are certainly coming down but they have been for the past few years.'

'Many of the people selling are those who bought into the Spanish property market in 2001 and 2002 when the euro to sterling was much better.'

But getting finance on most properties is a struggle.

Mercer said Spanish lenders are reluctant to lend more than 60 per cent of the value of privately sold homes. In other words, buyers will need a 40 per cent deposit.

However, banks will be more generous on homes they have repossessed and are selling off. Mercer says it is possible to borrow 100 per cent of the value on bank-owned properties.

Mercer claims that the market has shifted more to euro based buyers, in particular Belgian buyers in his area who are keen to take advantage of low prices.

He flags up two villas that would have gone for as much as €290,000 at the market peak in 2006:

Property in Spain: 2 bedroom, 2 bathroom villa with private pool in Murcia, priced at 125,000 euros (£98,425)

This two-bedroom, two-bathroom property (1 en suite) villa, with a private pool and a golf development in Mazarron, Murcia, is a twelve minute drive from the beach and ten minutes from the future Paramount theme park. It is on the market at €125,000 or £98,425.

Property in Spain: 3 bedroom, 3 bathroom with a private pool at 189,995/ £149,602

This three-bedroom, three-bathroom (two of them en suite) villa has a private pool and is on the same development as the other property. The price is €189,995 or £149,602.




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