There could be a rare ray of sunshine in the Spanish property market, with news that the central Government plans to scrap inheritance tax. Spain has been hit worst than most European countries by the credit crunch - Herm Meijer, property analyst at bankers JP Morgan recently stated that the Spanish property market is ‘the worst in Europe’ and that prices would ‘fall by 15% to 20% this year’. But comments by Spanish finance minister Pedro Solbes in the Financial Times this week should make UK investors prick up their ears.

The Spanish Government is desperately trying to cope with the fallout from the current crisis in the property market, a market on which Spain is heavily over dependent. The credit crunch and the attendant fall in overpriced property values may have started in the US, but it has spread virus like through world markets. The old saying is that if the American economy sneezes, Europe catches a cold - in this case we’re seeing a nasty dose of Spanish flu.
I’ts largely down to a huge oversupply in the market - far too many newbuild properties in the Costas, and a belated crackdown on illegal building has shattered confidence in the market. And an already faltering Spanish economy has become hugely dependent on the building trade and on the banks supplying mortgages for all the houses and apartments nobody wants to buy.

That’s rotten news for the Spanish exchequer and for anybody trying to sell a property in certain areas of Spain right now. But it’s an ill wind. Pessimists would tell you to hold off from the market for a while yet, but anybody buying for the long term will already be seeing bargains coming to the market. Take the five or ten year view and a little price dip post purchase won’t hurt you. And the Government’s hints (no more as yet) that they may be about to scrap inheritance tax makes long-term buys all the more appealing. It’s a good time for retiring expats to start researching the market.