http://www.spanishpropertyinsight.com/buff/2008/08/03/what%e2%80%99s-going-on-in-the-spanish-property-market-q2-2008-report/ The lowdown on Spanish property Sat, 11 Feb 2012 18:45:42 +0000 hourly 1 http://wordpress.org/?v=3.2.1 http://www.spanishpropertyinsight.com/buff/2008/08/03/what%e2%80%99s-going-on-in-the-spanish-property-market-q2-2008-report/comment-page-1/#comment-203 Surveyor Mon, 04 Aug 2008 14:22:27 +0000 http://www.spanishpropertyinsight.com/buff/?p=199#comment-203 From experience on Costa del Sol, still sales are happening, most often by well established estate agents working with individuals, rather than the 'processing' heavy marketing agents who churned through the buyers before. It's not now possible for them to create the atmosphere where they can frighten the prospect into buying by saying that there is a queue of people who will buy if he doesn't. They are more prudent buyers now, who take their time, often making the purchase subject to survey. The agents have clients who decide that they want a place on their own terms and know that they are one of the few to have the cash available. Also remember if somebody sells their main property they have to reinvest within 2 years or they have to pay capital gains tax. Also the demand is from the whole of North Europe including Russia. There are always people making money, even if its the accountants dealing with receiverships and bankruptcies! There is substantial demand waiting until the market is seen to be bottoming - and they are not buying yet. The other end of the market is the low priced property where a group or family can buy without a mortgage. It's the middle range that's suffering, largely from lack of mortgage finance. If the money was there they would be buying. 'Distress' purchasers are looking for a discount of 50% on the bank valuation of a property before they will consider acquisition. With buying and selling costs of up to 20% plus costs of holding for some time and the 'need' for a profit of at least 20% to balance the risk, its easy to see why that might be. Another interesting 'whammy' to hit heavily discounted sellers and buyers is that the tax authorities can see that the recorded sale price is substantially lower than previous sales in the area. They then accuse the parties of non-declaration of part of the price and demand payment of tax up to a higher level of price plus levying a fine for non-declaration. It's up to the buyer and seller to appeal against that, but very difficult to prove that there has NOT been any B-money involved. From experience on Costa del Sol, still sales are happening, most often by well established estate agents working with individuals, rather than the ‘processing’ heavy marketing agents who churned through the buyers before. It’s not now possible for them to create the atmosphere where they can frighten the prospect into buying by saying that there is a queue of people who will buy if he doesn’t. They are more prudent buyers now, who take their time, often making the purchase subject to survey. The agents have clients who decide that they want a place on their own terms and know that they are one of the few to have the cash available.
Also remember if somebody sells their main property they have to reinvest within 2 years or they have to pay capital gains tax. Also the demand is from the whole of North Europe including Russia. There are always people making money, even if its the accountants dealing with receiverships and bankruptcies! There is substantial demand waiting until the market is seen to be bottoming – and they are not buying yet. The other end of the market is the low priced property where a group or family can buy without a mortgage. It’s the middle range that’s suffering, largely from lack of mortgage finance. If the money was there they would be buying.
‘Distress’ purchasers are looking for a discount of 50% on the bank valuation of a property before they will consider acquisition. With buying and selling costs of up to 20% plus costs of holding for some time and the ‘need’ for a profit of at least 20% to balance the risk, its easy to see why that might be.
Another interesting ‘whammy’ to hit heavily discounted sellers and buyers is that the tax authorities can see that the recorded sale price is substantially lower than previous sales in the area. They then accuse the parties of non-declaration of part of the price and demand payment of tax up to a higher level of price plus levying a fine for non-declaration. It’s up to the buyer and seller to appeal against that, but very difficult to prove that there has NOT been any B-money involved.

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