A good part of the local property market here in Almeria is driven by external factors i. e.investment income from countries such as the UK where economic conditions have a bearing. The UK is a major driver of the market here so it is always nice to know what is going on back home as that gives us a little clue as to what we can expect as a knock on effect.
News from the UK’s Royal Institution of Chartered Surveyors suggests that house prices have started to rise again for the first time in 15 months. The three months to November saw 4% more chartered surveyors reporting rises in prices than falls. October’s figures showed a balance of 8% reporting falls.
Buyer enquiries have consistently risen over the past six months and the market slowdown appears to have come to an end. Relatively low interest rates and a healthy job climate have helped avoid the housing crashes that have followed previous slowdowns in the 1970s and 1990s.
And surveyor confidence is at its highest in 18 months and property sales and bank lending figures for November have increased. Market conditions are tightening as the level of property coming onto the market continues to fall, returning the bargaining initiative to the seller.
The decision by Gordon Brown not to allow residential property to be included as part of a Self Invested Personal Pension (SSIP) has diminished property investment possibilities in the UK and Spain, though RICS does not expect this to have an impact on the market next year. However, individuals may soon be able to take advantage of property investment tax breaks by using a Real Estate Investment Trust to invest indirectly in residential property.
In the coming year, RICS expects a rise in UK house prices of 4% in 2006 and 4% in 2007. RICS predicted an upturn of 3% for 2005 based upon the Office of the Deputy Prime Minister index, which is likely to be close to the eventual figure to be announced in February.
With the housing market showing signs of a recovery from a marked drop in activity in the latter half of 2004, purchases are also expected to rise firmly in 2006, having fallen for two successive years. RICS expects mortgage approvals to rise from a five year low of 1.127 million in 2005 to reach 1.336 million in 2006.
The UK is not the be all and end all when it comes to trying to understand where the local Spanish market is going, but it is positive news for Spanish property prices as confidence will return to the UK market which will have a knock on effect here!
So chin up home owners!
Mark Mountney is a partner in Rose Financial Services, a specialist mortgage brokerage based in the Parque Comercial, Mojacar. He is a fully qualified mortgage and financial adviser in the UK with some 10 years experience in managing his own firm. Mark was also a founder of The Association of Mortgage Advisors, the trade association for mortgage intermediaries with 13,000 members.