Several factors have contributed to the growth of the Spanish holiday home market.

• Firstly, the country’s economy has been steadily improving, which has led to an increase in disposable income among Spaniards.
• Secondly, the rise of online platforms, such as Airbnb, has made it easier for property owners to rent out their homes to tourists, thereby increasing the demand for holiday homes.
• Thirdly, Spain’s popularity as a tourist destination has led to an influx of foreign buyers, particularly from the UK, Germany, and France.
• The ending of the pandemic restrictions has led to a surge in demand.

Pricing and cost factors

In addition to the impact of demand factors, the cost of building has increased in response to global factors. The result is that, particularly in areas such Costa Blanca where prices had been considerably lower and development land has become less available, prices have increased considerably recently.

The cost premium for new build properties and resales has become quite large. It is difficult to quantify accurately as it depends on location and type of property. However, it can be as much as 50%. This differential has been maintained by the way property is marketed to northern European buyers. Commission rates for new property is often more than double that for resales. That and the higher price of new properties means that it is in agents interests to ignore the resale properties when engaging with clients.

Buying new or resale property

Prospective buyers of new property need to be aware of the consequences of the new property premium. Before commiting they should assess whether the difference is worth it to them.

New properties offer many benefits:

• Modern design and interiors
• Options to customise the property
• Guarantees for the buiding and equipment
• Years without need for maintenance
• Up to date specifications such as insulation

However, there are disadvantages:

• You may have to wait until the property is finished. It could take months or even years.
• In rare occasions the development may not be completed and you will have to rely of bank guarantees if the developer fails
• The final look of the development and the surrounding area may turn out to be different to expectations

The relative investment prospects need to be considered. As new property carries such a high premium in some areas and buying costs are significant, should you want to sell after a short period, recovering your money may be difficult. There is no certainty about that as local and market conditions vary. However, the risks can be seen and need to be considered.

Whether you choose new or resale should depend on your own circumstances, There is little value in buying secondhand if it isn’t the right place and right type of property for you. Buying decisions should always be lead by your needs and wants.

Should you buy now or wait? Will prices continue to increase?

Well, those are difficult questions to answer. If you do wait the only certainty is you will delay enjoying the benefits of owning your own place in the sun.

The future trend for prices is dependant on multiple factors that are difficult to predict. History though tells us that over time property values do increase but in the short and medium term there can be many ups and downs. Normally, you can expect periods of growth followed by a correction.

So, are we at the peak of this cycle?

It is very likely that except perhaps at the premium end of the market, prices are at their peak for new property. Cost pressures will ease over the next year. It may be that resales may have a period of catching up. Nothing can be guaranteed.

BUT, if you have the money and have a strong desire to have a Spanish holiday home you can be sure the only way of having one is to take the plunge. You may make money on it in the short term. You may have to wait for a while. You lose, at least initially but you will have your home to enjoy.

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