By Sally Veal of the SpainBuyingGuide.com

As the new year begins, Spain finds itself in a difficult situation along with many other European countries. It is true that its economy, founded for many years on construction and house building, has taken a steep dive, forcing companies to close and creating high unemployment. As a result property prices have fallen by up to 40% in some areas, though this is by no means the whole picture.

The fact is that good property in Spain in a good location is always sought after and though prices in these areas may have fallen, they are still not very far from the asking price of three or more years ago. In Palma, Mallorca, apartments are holding a good price and on the island generally some property is still changing hands for millions of euros. It is a very popular destination for those from northern climes, so buying property to let there is one good option. The marinas on the coast are full of yachts all year round and the island’s economy is healthier than in other parts of Spain.

Interestingly, property purchases on the mainland by foreigners were up by 24.7% in the 3rd quarter of 2011 and now with Sterling gaining strength against the Euro, property in Spain will be cheaper for purchasers from the UK, so 2012 would be a good time to contemplate buying a house in Spain.

New property prices have not fallen as much as resale homes, so if you don’t mind updating a property, there are are some real bargains to be had all over Spain. The Mediterranean coast has seen an average 8% fall in prices since 2010 and overall at 30.4% fall since the start of the crisis in 2007.

Here there are many sound apartments and town houses with a low price tag, though don’t assume that this applies to every inch of the coast as there are still areas that are sought after by Spaniards and foreigners alike which have not seen such a dramatic fall in prices.

There is evidence that golf resorts are proving popular, especially with British buyers. Marc Pritchard, Sales and Marketing Director of Taylor Wimpey España says: “Buying on a golf course offers more benefits than just playing golf. I would advise anyone thinking about buying in Spain to consider a golf property.”

An estate agent in Figueras, north-east Spain, has said that one of the reasons people choose a golf property is the security attached to the complex. Most golf courses are situated in attractive areas too and the facilities are usually excellent with swimming pools, tennis courts, restaurants at the club house and so on.

The outgoing Spanish government had reduced IVA (VAT) on house purchases by 50% to just 4%. The good news is that the new government has said they will keep the low rate for the time being. This is a significant saving on any property purchase and is yet another sound reason for buying in Spain in 2012. Ernst & Young, the consultancy company said in December 2011 they believe a “Spanish recovery is likely in the second half of next year.” If that is the case, it could well prove a wise move to buy property in Spain before the end of 2012.

According to some websites, Murcia was one of the most searched for locations for Spanish property in August 2011 – with La Manga, Cartagena and Mar Menor being the areas with the most interest. Statistics from Kyero.com, Spain’s largest English language property portal, for the 3rd quarter of 2011 show that the national average asking price for property in Spain increased to €266,100 in September compared to €263,000 back in June 2011, suggesting a shortage of quality properties in the most popular regions.

This is a true picture of what is happening in Spain. Investors and purchasers from abroad are vying with Spaniards to buy good quality property in sought after areas. The prices having fallen, many realise that this will not last for ever and are trying to buy in the right place at the right price now. The French are heading for the Costa Brava as it is close to their own country and is green and beautiful all year round. There is a British presence here as well and currently there are some excellent properties at good prices on the market. A lovely 84-sq-metre two-bedroom apartment in a 1920s building, completely renovated and just 3 minutes from the sea is for sale at €290,000, beautifully furnished and equipped to the last teaspoon.

From all the evidence, Spain is an excellent choice just now with the Euro declining and the pound getting stronger. It is expected that the new Spanish government will introduce measures to stimulate property sales and this can only be good for the UK buyer. VAT being at an all-time low on property purchase with much choice available, despite the words of doom and gloom, now is a great opportunity to buy in Spain.

To understand the full step-by-step process to buying a property in Spain, collect The Overseas Guides Company’s ‘Spain Property Buying Guide’