Time to Buy Property in Spain?

In Spain and the UK, there seems to be general disagreement about the state of their respective housing markets.

In the UK, This is Money reports that house prices are now higher than they were a year ago as Britain's property revival gathers pace.

Meanwhile in Spain, 4 out of 5 of this weeks news articles cover the disparity between government spin about house prices and market reality.

In Government & IMF Disagree Over Spanish House Prices we read that, according to official data, the Spanish government is calling the bottom of the market and time for buyers to return.

The problem is that the official data doesn't at all support this contention. The larger problem is that the official data is of no real value to anyone - due to a mix of shoddy reporting, inaccurate source data, and conflicting political and commercial interests.

So what is really happening in Spain? My best guess about Spain is in line with Mark Stucklin's - that house prices have fallen further than official data suggest.

When a Spanish property is priced competitively - it sells.

At the start of 2009, I asked What Will You Pay for a Spanish Property in 2010?. That advice still holds up - as well as advice in this article about How to Value Spanish Property.

So, while official data state that Spanish property prices have only fallen 6% or so from their (inflation-adjusted) peak, I believe the actual fall to be between 20-25%. Obviously, this will vary by area and property, but I believe there is some truth in the government assertion that the bottom of the market is nigh.

I also believe the IMF view that further falls will come - because Spain's economy is so weak, its politicians so ineffective and their policies so irrelevant.

I think that, with careful research, you can safely invest in Spanish property today, and be confident that you are buying at, or very near to, the bottom of the market - as I suggest in UK Recovery and the Spanish Property Market.

It seems that many of you are thinking along those lines too. In last week's newsletter, I mentioned the AIPP Guide to Buying Overseas Property Safely. At the time we published that article, we included a form to request a hard copy of the guide by post. So many of you did so that you completely depleted stocks of the guide in just a few days.

You can still read the guide online, but that level of interest seems to speak of a group of people ready and waiting to pounce on property - when the time and price are right.

So, what about the UK? Are property prices really increasing? My guess is that it's a case of some and some, and I'd guess that the largest influence is the current weakness of Sterling attracting foreign buyers.

That, and a limited supply of properties will artificially and temporarily drive up property prices in some areas. Although the fundamental economic indicators in the UK are much more healthy than in Spain, they're not yet healthy enough to ensure a steady and smooth recovery.

In Spain, and in the UK, the trick, as ever, is to find a realistically priced property - and make a cheeky offer.