Keys to invest in a second home with the market down | My money

Keys to invest in a second home with the market down |  My money

The legendary fondness of the Spanish population for real estate investment is not only reflected in the fact that more than 80% of the habitual residence is owned. The Spanish are also leaders in Europe for having second homes: 14.3% of households own at least one, twice as many as in France or Italy. The figure is around 4 million properties, according to the latest data from the housing census.

This trend began in the 1970s and 1980s and is explained by the increase in the level of income, the exodus from the countryside to the city (turning the village house into a second residence) and the arrival of the foreign buyer, whom 18% of the sales made last year are attributed. In the case of the islands, a third of the sales are made by foreigners and on the Mediterranean coast, a fifth, according to data from Tinsa. A foreign push that is currently being questioned by the Balearic Government, which proposes to limit the purchase of housing by foreigners, emulating initiatives announced in other countries. However, it is Madrid and Barcelona residents who account for a third of the second homes in Spain (22% Madrid residents and 12% Barcelona residents), widely dispersed throughout the national territory.

From Real Estate Appraisals (Tinsa) they talk about average increases in the prices of second homes in Spain last year of between 5% and 10%, “with a significant number of areas with increases above 10%, and even reaching or exceeding 20% ​​in some cases,” they indicate in a study. A purchase that, in addition to being a source of enjoyment, also becomes an investment that can be key at the time of the owner’s retirement to complement his income. According to data from Caixabank, in 2019 the average age for acquiring a second home is 47.6 years.

Regarding the rent, and saving the differences typical of the different coasts, a Tecnocasa report on the weekly rental prices in the main areas of the Spanish coast, shows that renting an apartment on the Spanish beaches became 9.7% more expensive the last summer. Thus, the average cost of renting in the summer of 2022 stood, on average, at more than 1,000 euros a week, 90 euros more compared to 2021.

The average rent on the beach stood at 1,000 euros per week, 10% more year-on-year

“If we carry out a comparison with 2020, the rise is much more abrupt, since we went from 826 euros per week to 1,016 euros in 2022, which implies an increase (23%) that is increasingly difficult to assume”, indicate. The confinement due to the Covid-19 pandemic, the desire to travel and the accumulated savings of families boosted prices, but for this 2023 some things are changing. Perhaps the most obvious is the increase in the cost of financing with the rise in mortgage rates, which initially aims to stop the acquisition of a house on the beach.

Cristina Arias, Director of the Tinsa Research Service, recalls that second home mortgages offered by banks cover 60% of the appraisal value compared to 80% that can be obtained for a habitual residence. Therefore, less interest charges will be paid, although the necessary previous savings will be greater. This expert also warns that “the rise in interest rates improves the attractiveness of other financial assets that compete with second homes as an investment: there are conflicting effects on the demand for this type.”

For her part, Rebeca Pérez, CEO and founder of the real estate platform Inviertis Properties, indicates that the impact of the rise in interest rates and potential restrictions “may affect more the acquisition of habitual residence, whose users tend to be more economically limited and the amounts to be mortgaged are higher” And he adds: “Only 20% of buyer-investors registered on our platform request financingAnd when they do, they don’t leverage much more than half of the investment, so we’re not noticing it,” he explains.

15% of Spanish households have a second home: a record in Europe

Even so, there are other factors that point to a decline in demand: “In 2023, the macroeconomic scenario of increasing interest rates, the erosion of inflation in household savings and the slowdown in economic growth in Europe make hope that in 2023 the demand will moderate”, explains Cristina Arias.

Rebeca Pérez also foresees “a decrease in demand from the second quarter of 2023 that moderates the growth of prices, although general decreases are not expected, but rather by specific areas.” Regarding the demand that she detects through her platform, she comments that “More and more properties are being requested from us in areas such as Alicante and Malaga, which have a magnificent relationship between investment and profitability.”. Although he appreciates that foreign investment linked to tourism in coastal and island areas shows signs of stagnation.

According to data provided by Fotocasa, 30% of the owners of a second home rent it out, and on many occasions they enjoy it seasonally and then rent it out. This mixed-use nature and the seasonality centered on the summer months makes it difficult to establish a return comparable to traditional rentals.

The data offered by on the evolution of prices in coastal towns indicate very mixed results. On the Costa Brava, El Vendrell, Begur and Santa Cristina D’Aro They have registered price increases of more than 12% between January 2022 and January 2023, while in Rosas and Mongat they barely reached a 2% rise.

The Mediterranean coast brings together the largest number of second homes with Alicante, Valencia and Malaga in the top positions. Marbella, Torrevieja and Altea have had the most notable price increases, above 16%, with Benicarlo, Gandia and Moncofar in last positions among the selected municipalities with increases well below inflation. Conil and Almonte, with increases of more than 20%, are in the top positions on the Atlantic coast, although with very different prices per square meter: 2,677 euros and 989 euros, respectively. The 14% drop in Isla Cristina stands out.

The north coast offers the most moderate evolutions in the last twelve months. The Galician towns of Foz and Viveiro achieve significant increases, while Laredo, Sanxenso, Cangas or San Vicente de la Barquera They have seen the price of their properties decrease in this period.

Finally, in the islands, the strength of the Balearic Islands continues with very significant increases in San Antoni de Portmany (33%) and with a price per square meter of 5,204 euros, Soller (21%), Santa Eulalia de Rius (17, 5%), although the Canarian municipality of Santa Cruz de la Palma slips in with an increase of 26%. They are undoubtedly data that require a very thorough analysis when making a purchase in coastal areas, either to enjoy or as a real estate investment.


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