Spanish property is still overvalued, according to study by the OCU.
The Spanish Consumersâ Association's report carried out its research for a buy-to-let study, comparing prices and rents for four cities: Madrid, Barcelona, Seville and Valencia.
"Despite accumulated property prices drops since 2008, the vast majority of areas studied still offer poor rental returns," concludes the report.
"Property prices continue to remain disproportionately high compared to rental rates, which is like saying that property prices are still overvalued in our country," says spokesperson Lleana Izverniceanu, quoted by Spanish Property Insight.
Inded, just seven per cent of homes in the 300 neighbourhoods analysed were thought to offer worthwhile rental returns, with 85 per cent of properties too expensive for investors. The report is aimed at careful investors, rather than those hoping to achieve returns through speculative purchases, although it adds that values are not expected to recovery significantly in the medium turn.
Nonetheless, investors and holiday home buyers are snapping up Spain's affordable homes and apartments.
Sales of existing Spanish homes have rocketed by more than 50 per cent in the past 12 months.
Figures from the National Institute of Statistics shows that overall sales jumped 15 per cent year-on-year in February 2015, with transactions for existing homes surging 52 per cent - significantly better than the new build market, which saw sales fall 30 per cent annually.
Spanish homebuilder Taylor Wimpey EspaÃ±a says it has enjoyed a "bumper start" to 2015. Visitors to the company website are up by 16 per cent and sales have increased during Q1 in all three locations in which Taylor Wimpey EspaÃ±a operates: Mallorca, the Costa Blanca and the Costa del Sol.
The company served buyers from 22 countries during Q1 2015, while those from Russia, Britain, Germany, Scandinavia and Spain made up 61% of the total number of sales.
"Spain offers a unique combination to buyers looking for sun-kissed luxury," comments Marc Pritchard, Sales and Marketing Director.
"Its numerous blue flag beaches (Spain has 573 in total â more than any other country) are perfect for families, while those with older children or travelling as a couple delight in its championship quality golf courses. The clement weather means that outdoor activities are rarely 'rained off' as they are in colder climes and the combination of sun and water makes for some fantastic memories."