The spread of the pandemic has seen stock markets plummet on a global scale, with heavy losses absorbed by indexes and individual investors. Property markets have also been affected as countries like Spain, have been forced to stop doing business. However, there are key differences between stocks and property making the latter a safer bet in the long run.
LEVERAGE
Real estate is a great advantage here. It is possible to invest in property in Spain without personally having to use all of your money or even without personally having all that cash in the bank. On the other hand, it is a mission to find financial institutions willing to let you borrow money to buy shares. Mortgages allow approved individuals to finance up to 80% of the cost of a house in Spain. The amount they are willing to loan depends on the property’s residual value amongst other things. It enables you to acquire the property with a relatively low outgoing of your personal cash and pay the capital borrowed on a long term basis, with relatively low-interest rates. Eventually, once the capital borrowed has been paid-off, the property is yours outright. Many who buy to let, end up using the income generated to make the mortgage payments.
INFLATION
Economists expect inflation to spike once the pandemic has come and gone and world economies begin to recover. Bonds are seen as being most at risk from inflationary trends. The reason is that the promise of security is usually undermined by low guaranteed returns. This has an impact on the buying power of investors over time.
To take steps to limit the reduction of the value of an investment due to inflation, real estate is an excellent contender. Rental income can be pegged to market rates, meaning that as rental prices rise, your income also grows. Likewise, though the value of houses in Spain can fluctuate in the short-term; history shows that real estate assets always outperform even the best-performing stocks on the long-term.
A TANGIBLE ASSET
real estate assets exist physically, you can live in your home in Spain full-time or part-time during your holidays or you can rent it to others to generate an income from it. Whatever use you choose to explore, one thing is for sure, with a property you get a guaranteed return from your investment. Plus, the longer you hold onto your property, the likelier it is for it to appreciate over time.
Spain’s Costa del Sol is a prime example of the inherent value of bricks and mortar. One of Europe’s top destinations for sun-seekers and beach huggers, investing in a home under the sun in places like Marbella, Sotogrande and Estepona always comes up trumps in the long-term, no matter the situation. Plus, it provides you personally with a dream home in beautiful weather, spectacular, tropical surroundings at your disposal whenever you feel like it.
