Our Dream Home In Spain Cost £280k. House Prices Rose By 20% As We Searched

MADRID – Britons seeking to escape the UK housing crisis and find homes in the sun are discovering that prices are rising fast in some of the most popular destinations.

Spain is facing its own battle with a scarcity of property, and increasing demand from British and other international buyers is making the problem worse, estate agents say.

British buyers are also paying more for holiday homes and villas on average than Spanish buyers, according to a survey of purchases this year from the General Council of Notaries, which deals with house sales.

Donna and Bill Wyatt, who are co-directors of a blinds company, bought a three-bedroom house in Calahonda on the Costa del Sol in July for €315,000 (£277,860) after three years of house-hunting.

“We noticed that prices had gone up between 20 and 30 per cent in the time that we were looking,” Mr Wyatt, 53, from Bromley, London, said. “The prices were going up and up. We could have bought somewhere cheaper but it is a big decision to buy a house in a foreign country.”

The Wyatts, who have five children, say the competition for houses in the region is fierce, so they acted quickly when the right property came up. “We heard about the house on Thursday, did an online tour on Friday then we flew over on the Saturday and made an offer the same day,” said Mrs Wyatt, 54.

The couple wanted the house to visit Spain with family and for business reasons. Mr Wyatt said he was willing to pay more because the house is near the sea rather than in the hills.

“It is a place in the sun which is easy to get to and good for business, too,” added Mrs Wyatt.

Keith Spitalnick, of Target Property Spain, which helped the Wyatts find their home, works in nearby Mijas.

“It’s not just non-EU buyers feeling the pressure; young Spanish buyers are really struggling. Prices have been rising steadily and with so few homes coming ont o the market, it’s becoming genuinely difficult for first-time buyers to get a foothold here,” he told The i Paper.

“Foreign buyers now account for about 68 per cent of all transactions locally. The top groups we see are British at 19.5 per cent, followed by Dutch at 10.7 per cent and then Polish and Swedish buyers at 6.26 per cent each. This level of international demand adds a huge amount of competition and naturally pushes prices higher.”

Estate agents who deal with luxury property say prices are soaring in some of the most exclusive areas of Madrid and Barcelona, due in part to British buyers.

Albert Milián, director of Barnes in Barcelona, said Spanish buyers are purchasing homes for over €1m (£880m). “Previously they would never spend so much,” he told La Vanguardia newspaper last week.

Daniel Pérez Cid, the Bank of Spain’s director general for financial stability, said last week that property prices were rising but the “major problem” was lack of supply.

The central bank said last month that Spain was short of about 700,000 homes. In the UK, the Centre for Policy Studies think-tank found there was a shortfall of 6.5 million homes.

House prices vary significantly by area in both the UK and Spain, but the average in Spain is usually €250,000-€500,000 (£220,000-£440,000) for a three-bedroom property. In the UK, property portal Zoopla puts the average house price at £270,000 as of September.

In Spain, property is valued by square metre. The figures from the General Council of Notaries showed UK buyers who were not residents in Spain paid an average of €2,795 (£2,464) per sq m this year, while Spanish buyers paid €1,809 (£1,595) per sq m on average.

Foreign residents in Spain fell in between, paying an average of €1,912 (£1,686) per sqm.

Other non-EU nationals paid €3,126 (£2,756) per sq m on average, with Chinese buyers shelling out the most – €4,116 (£3,630) per sq m on average in the first six months of this year.