Even though Spain has been a stronghold for property investors over the last several years, there has been a definite slow down in market prices. Several reasons can be attributed to the recent slow down such as increased competition from countries such as Morocco and Bulgaria that are potentially able to offer a greater yield in a shorter time, and a wave of bad publicity that has damaged the Spanish real estate market as a whole. This should not deter you as the Spanish property market could now be considered as a buyers market as panicked investors are attempting to sell at the first sign of a slow down in price increases.

Although there has been a demonstrable slow down in Spanish property price increases, this should be put into context. Spanish property inflation in 2003 was at nearly 19%, in 2004 it was at 17% and in 2005 it was 13%. Against these high figures, a normalisation of property inflation can initially look catastrophic, however, this is not necessarily the case and Spanish government figures show a 9% increase from 2005-2006, so there appears to be a soft slowdown.

Due to the varied nature of Spain both culturally and geographically, each province can be seen as autonomous in its own right when property prices are calculated, with the highly priced resorts in the Costa’s compared to the lower costs of the more traditional northern regions. This obviously translates to varied gains per region.

Prices for average regional property prices in Spain are provided courtesy of Spanish Property Insight at www.spanishpropertyinsight.com

As the figures show above, there is a large variance of increases based on region. At the lowest end Madrid at 6.1% up to Aragon and Galicia growing at 12.9%.

Property professionals have found a tightening of the market, although high end properties are still fetching a premium, therefore, it is imperative that as much research is conducted as possible. There are property owners that will have bought their Spanish properties at the height of the property boom in 2003-2004 that will likely have to sell at a level significantly below expectations and this is where you may be able to grab a bargain by making reasonable offers. Moreover, figures show that there were 800,000 housing starts in Spain in 2006, which works out as the same in the UK, Germany and France combined. This being the case, there will likely be a significant imbalance in the market which could lead to nervous developers offering property at heavily discounted rates.