How to Profit from a Spanish Property Market Crash

Well, all we can say today is thank God for Spain.  Why?  Because we were getting so fed up with everyone and his dog discussing if, when, where and how far which property market in the world was going to crash first…so now that a few more alleged scandals have inveigled their way into the Spanish property market in the last week or so and the price of shares in construction firms have crashed down, the media can finally all heave a collective sigh of relief and begin typing out words of doom citing the Spanish property market as the catalyst for a global real estate crash - and everyone and his dog can now speak from a position of informed authority.

We all knew it would start somewhere so thank God for Spain because it has set the ball in motion and stopped everyone boring on and on about which market first, where, when and so on and so forth.  Over supply and over priced supply at that are being cited as the main reasons for a crash which has barely begun and which, according to senior analysts at Lombard Street Research will last for at least a year and a half in Spain - and which, according to seemingly everyone else, will result in the value of houses all over the world dropping by huge percentages.  Well, all that aside for a moment anyway please because it’s boring and negative, we thought we’d tell you how to profit from a Spanish property market crash just in case you aren’t that bothered by all the hype and scare mongering reporting tactics going on and you’re just interested in property and making money from it.

On the one hand, if you’ve already invested in Spanish property – don’t panic.  Now’s probably not the time to sell but now’s not the time to walk away in despair either.  Let us guess - you’re probably addicted to each and every single article in the press at the moment with those profiting from the property industry saying there’ll be no crash and those in the business of sensationalist reporting stating quite categorically that the value of millions of second home owners’ properties in Spain is about to crash.  Well, tear yourself away from the news because it’s really not good to read too much of it!  Just know that if a period of price readjustment comes and your investment property or second home falls in value you will just have to hang on to it for a longer period of time to see a decent ROI.

No, we’re not being flippant - yes a price crash is a serious blow to hopes, dreams, plans and ambitions – but the good thing about property in a market as mature and in demand as Spain’s is that there will always come a golden period of strong demand again during which time affordability levels will rise and the natural value of your property asset will re-float itself.  So, don’t panic…

If you haven’t already bought property in Spain start looking around for what you want to buy.  Look at the most in demand areas with holiday makers and retirees.  Understand your market and what they demand - in the form of a rental villa or apartment with pool/communal facilities for tourism demand, and in the form of easy to manage property stock in beautiful locations for the retiree market.  Instead of looking at what you can afford with your current budget, price yourself up and look at developments you consider to be about 30% beyond your current budget. 

Now watch the prices in Spain begin to readjust, wait, bide your time and when you think no one is buying in Spain anymore for fear of how low a crashing market is going to fall, make your move!  In a property market crash it suddenly becomes a buyer’s market.  As a buyer who is not particularly attached to their property assets and sees them merely as an investment approach, you as an investor are in the best position possible to profit from Spanish property during a market crash because you wait and you see and you make your move when everyone else is despairing and saying the market is dead – and you can haggle hard with vendors or developers keen to offload their stock in exchange for a much needed cash injection.  You understand that a market as popular as Spain’s - where there will always be a certain level of tourism demand as well as demand among would-be second home or retirement property owners, and which is a market physically accessible from across Europe and where there is a mature mortgage market – will always have life in it.  Therefore a crash is just an opportunity for you to buy in low!

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