We are immersed in a time of uncertainty at all levels, also in the real estate market. Therefore, whether to buy a second home now or wait, has become a big question for many people.
The complicated economic situation derived from COVID-19 leads us to think that this is not the best situation to assume a new investment. However, several factors make this the appropriate time to buy a second home.
When to buy a second home - Favourable indicators
It is convenient to check some factors before deciding whether to buy a second home, both in times of crisis or prosperity. Currently, we find these circumstances:
- Price adjustment: the worst omens have not come true, and there has not been a drastic drop in prices in the real estate sector, but the upward trend has slowed. Although the experts' predictions do not coincide, in general, they do point to a decline and subsequent stabilization of prices.
- Low-interest rates: House prices are not going up, and, for now, it seems that the interest on mortgage loans will not either. Predictions suggest that the Euribor will remain negative in the coming months.
- Working from home: this tendency has spread notably due to the pandemic. A circumstance that has brought to light that many houses don't meet the requirements for it. Buying a second home allows you to have a place where you can comfortably carry out your daily work activity and, at the same time, have another residence to unwind.
- Recoverable investment: a home is a safe-asset value when investing. When the health situation improves, you can always put that residence in the rental market and get profits. According to Indicadores del Mercado de la Vivienda (Bank of Spain Housing Market Indicators), gross rental yield stood at 3.7% in the third quarter of 2020, a level similar to previous years.
What else should we keep in mind?
In addition to those advantages of buying a second home in current circumstances, it is also convenient to assess other important factors. For example, the location of the property is essential. Getting the right choice will be the key to a possible revaluation and the means of obtaining a good return when you want to rent or sell.
Additionally, we must not forget to calculate those unavoidable expenses implicit in the purchase of a second residence. We have to assume some costs, and not only for the purchasing process itself.
We would have to pay taxes derived from the act of buying. Afterwards, we would have to face the IBI (council tax) and the usual expenses of any dwelling: maintenance, supplies, other taxes, etc.
In conclusion, it is the right time to buy a second home, but, it's imperative to calculate your budget thinking all the costs derived from the operation.
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