Spain's taxation approach helping property sales in Tenerife?
Spain is stepping up its tax plans to tackle the country’s deficit, but buyers are snapping up property regardless as further price drops are predicted for 2012.
The Spanish government’s predictions initially stated that national debt would amount to 6 per cent of GDP for 2011, but it was revealed last week that these figures were incorrect and that the country deficit is closer to 8 per cent.
Since then, Spain’s government has added that the debt “could be even higher”, according to The Daily Mail, prompting the recently elected Popular Party to go back on its pledge not to raise taxes. Property tax is expected to increase for homes above average value, Spain’s swift economic action has been welcomed by the EU as the country tries to reassure international investors who are snapping up properties at low prices.
Indeed, reports at the end of December from Global Property Guide found that foreign property transactions surged by 24.7 per cent in the third quarter of 2011, compared to the same period in 2010.
Alicante, Barcelona, the Balearic, Canary Islands and Malaga were all highlighted as popular areas for buyers, with research from Scotibank Group showing that house prices across Spain have fallen by 25 per cent since 2007. These price drops are now expected to continue in 2012.
Knight Frank’s Prime Global Forecast has predicted that global economic uncertainty will push Madrid’s property values down in the next 12 months. But with investors attracted by Spain’s declining property prices, Madrid’s fall of “less than five per cent” may provide more opportunities for international buyers. As Murcia prepares for the construction of its much-awaited Paramount Theme Park, buyers can benefit from the national downward trend while costs remain low.
Julio Adams said “Demand for key ready homes in this area is already high and we expect an equity boost of around 15 per cent for early buyers when the first spade goes in to start construction of Paramount Park.” With some Spanish regions seeing a gradual recovery and the number of foreign transactions on the up, the government’s reworked deficit plans may take Spain’s housing market in a positive new direction for the New Year.
The average price of a Spanish home fell by 8% in 2011, with further price falls anticipated in 2012, research shows.
