June 2015 Archive

Thursday 25th June 2015

Greece in financial crisis so how did the other PIGS survive?

The Greek tragedy continues to be played out daily with the country staring financial ruin in the face. The country has needed yet another bailout from Europe and must make drastic economic reforms or face dire consequences.

Although it is still in a very precarious situation, Greece seems to be hanging on with a lot of guidance from the EU.

Three years ago, Portugal, Ireland, Greece and Spain, known as the PIGS, were all in financial strife. All, except Greece, complied with austerity measures and pulled through.

Portugal and Ireland are showing signs of recovery with Ireland turning its economy around with great success. Ireland exited its bailout measures in 2013 and is now enjoying rapid economic growth. Portugal's economy is also starting to grow again and it is repaying its bailout.

The situation in Spain is also improving but with voters protesting against the austerity measures by turning their backs on the ruling PP Party in May’s local elections and a general election coming up later this year, the question has been, can Spain pull its financial situation around?

It has been a long, hard struggle for Spain with many businesses collapsing, the property bubble being burst and millions of people losing their jobs. Many even lost their homes.

Things are getting much better in Spain

Now there are many green shoots of recovery to hint at positive signs that things are improving in Spain. Tourism figures are up for a start. In the first two months of the year, Spain broke two tourism records. The country had 6.5 million international tourists in January and February, who spent more than €6.6 billion.

Everything points to this trend continuing with the strong pound attracting British holidaymakers while French and German tourists find their euro goes a lot further in Spain than back at home.

Tourism brings thousands of seasonal jobs in the hotels, restaurants and leisure industry. Very welcome news indeed. 

However for young people, job prospects in Spain are not looking so bright. Nearly half of all young adults in Spain do not have work. Many have moved abroad to work with Germany and Britain being favourite places to go, especially for qualified people. The property market has recovered however in many cases.

Weak euro boosts property market

The weak euro has helped exports and significantly the property market. Spain’s property market is picking up, thanks to low prices as well as the strong sterling. Many property seekers are from overseas with northern Europeans, especially the British, looking for homes in the popular coastal resorts of the Costa Blanca, Murcia and Costa del Sol.

An article in Bloomberg says Britons are the biggest investors as they feel Spain is a good place to put their money because they are getting poor rates from UK savings accounts and property prices are so high back home. This aligned to the Pension drawdown opportunity points to the stronger Property Market.

The article says that interest in some coastal resorts, like Marbella, is such that new homes are being built. Realistically the Costa Blanca is the area where most new builders are building their developments and where the majority of sales are happening.

Investment in Spanish property soared to €17.8 billion in 2014 compared to €4.9 billion in 2013, according to data from the Research Institute of Applied Economics (IRWA).

Nigel Salmon of Girasol Homes has also noticed a marked increase in interest from property buyers. "We are getting many more enquiries than this time last year and arranging many more viewings. As well as interest in the second-hand market, more new construction enquiries, interestingly we have a lot of buyers looking to buy plots so they can design and build their own home,” he said. There are a number of bespoke showhomes in the area which clients can now view, its is a very exciting property

That optimism of a recovery is being echoed in other sectors too.

"Spain has returned to about 95% of where it was in 2008,” says Professor Javier Diaz-Giménez of the IESE business school in Madrid. "That means 2008 is still a benchmark people look back at with nostalgia. At current growth rates, the economy will get back to where it was in 2008 at the end of next year. It’s a very late recovery.”

So, hopefully, it seems as though recovery is just around the corner.

If you are thinking of investing in the Spanish Property Market you need to talk to Girasol Homes Spain as soon as possible.

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