50% Fall in price

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This topic contains 18 replies, has 11 voices, and was last updated by Profile photo of katy katy 6 years, 8 months ago.

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  • #55492
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    Anonymous
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    I know various comments about price falls have been posted/postulated over the last few years on here, but most of this was generally assumptions of what people expected might happen or using an absurd example of a single owner reducing and absolutely absurdly priced property.

    Well, I have know seen my first REAL property reduction of 50+% in the complex that i sold in last year.

    The complex was built in 3 phases, all apartments being identical, of course each phase was more expensive than the last. In 2006/2007 Phase III apartments were advertised from 223,000 Euros.

    Fotocasa now shows a bank selling one for 110,000 Euros with a 100% mortgage possible!!

    Ok the apartment is Almerimar, which a lot of people on here don’t like, but the complex is essentially first line, and a 20 minute walk into the heart of the port along the beach promenade. It’s not an un-sellable box 20 miles in-land in the middle of a desert.

    Some owners still advertising at 200,000 Euros!

    I think 2011 is going to be an interesting year for the Spanish Market

  • #97588
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    Anonymous
    Participant

    About eighteen months ago, a SPI member whose opinions I’ve always read with interest – ‘Pablo Silver or Lead’ – wrote:

    “I think a lot of people do not understand the scale of the global credit/debt/banking crisis that is unfolding before us. Tens of millions will find their saving gone but unfortunately their debts still here.

    Spain is one of the most vulnerable economies. When we emerge out of the back of this, the property landscape will be very differant, that may be very difficult for people who have not experianced very good properties in very good areas strugling to sell at -50% of their previous highs (as they did in the UK in the early 1990’s, this time it will be much worse in Spain).

    I have stated before that many villas/appartments will be effectively worthless and by definition many good ones will have vendors only too willing to take circa E60k. When? My guess late 2011/12″?

    As he also said, we’re not going anywhere so we’ll see.

  • #97592
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    Anonymous
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    When you consider affordabilty, 50% below peak still looks a little expensive to me.

    I looked at two house today, and I would estimate them both to be around 50% of peak (or less), and I can see that they are likely to go still lower.

    Both were a little inland though. The expat urbs seem to be doing a little better in this area, maybe 40% down on peak, and there are a few sales going through.

  • #97594
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    Anonymous
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    Ive just bought a villa on a polaris world resort for 100k less than it was 2 years ago, i cant see people selling for much less than i paid, if they do go any lower the owners might as well hand the keys back to the bank and let the bank take the hit.

  • #97595
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    Anonymous
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    Something is only worth what someone will pay for it.

    The argument that people cannot sell below a certain value has IMHO little to do with the reality of prices in the market.

    If some sellers really are unable to sell at market value, they are just removed from the market. There are plenty of other sellers to go around.

    Demand, or the lack of, will ultimately set the price of property.

  • #97596
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    Anonymous
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    I just came across an advert for a house I saw last week, it is in El Altet, near (possibly too near) to Alicante airport.

    In April last year it was advertised for a little over 465000€

    This week, it is 192000€, around a 60% fall.

    Not a bad house at all, all services are connected, it’s in a reasonable area, and looks pretty solid. Nonetheless, IMHO still a little over-priced. I would think fair value to be 178000€ or less.

    I don’t really think this demonstrates how much lower prices are though. Simply that there were lots of dreamers, who had no idea what their property was really worth. This house would never have sold for 465K last year (or ever). It’s important to keep in mind all the silly prices that were around in the fairly recent past, it’s all to easy to see a 50% reduction and convince yourself that it’s a great deal. Often it is not IME!

  • #97597
    Profile photo of katy
    katy
    Spectator

    Absolutely agree! I have seen the very same pricing system around the CDS. I know I have said this before but it’s the old MFI pricing system from years ago. 50% off everything that was never worth what they were asking.

    Many Agents are claiming to have “bargains”, looking at their websites I don’t see any, especially if the fall in sterling is factured in. So where the **** are they….emperors new clothes again. 😆

  • #97607
    Profile photo of adiep
    adiep
    Participant

    Nice example of the lunacy that still pervades

    http://www.idealista.com/pagina/inmueble-fotos?codigoinmueble=VP0000002807654&numInm=5&secc_inm=fotos&edd=list

    There’s about 20 of these, all 600k plus, in puerto de santa maría – cádiz. Yes, that well known spot for jetsetters and millionaires (not)

    Fancy they may well be, but not worth more than 270k, reckon they’ll be lucky to get that even.

    This lot of bargains is owned by Altamira, 20 x 600k, 12m smackerooos sat there…

  • #97618
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    Anonymous
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    In Ireland, which had a similar bubble to Spain, is is only now that properties have fallen by 50% from their peak that the market is starting to move again. IMO the Spanish market will have to reach that level. before the market starts to recover.

    Katy is spot on with her ‘MFI pricing system’ observation. Any falls will have to be genuine ones along the lines listed by jp1 not marketing inventions.

    There is still a lot of denial and over pricing in this market. Unless there is a major sell off by the banks it will take 2-3 years for it to bottom.

  • #97619
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    Anonymous
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    Charlie

    times fly and old postings can come back to haunt us. 3 years ago I wrote this on the forum:

    “The official Spanish stats (just like the US ones) lag behind and don’t reflect the reality on the ground. These things take a long time to peak and a long time to trough. If the peak (in general terms) for the Costa’s popular with Brits was late 2004/5? Then allowing for both the local Spanish problems/conditions and the global economic back drop (rising i/r + credit tightening), the market probably wont bottom for another 3-5 years, say 2010 to 12. What % will property fall, it depends where/how you start measuring from, but many properties that are poorly planned, located and with other problems will effectively be un-sellable. Looking at certain markets it’s obvious that many properties for sale are 20 to 25% above an effective selling price. The problem is many vendors will never get ahead of the game and chase the market down. There is a risk by the time they and/or there Estate Agent realise the price needs reducing to get viewings the market may have shifted.

    So like I say regarding % falls. If a property is on the market today for E400k and it’s effective price in today’s market is E300k but the vendor doesn’t reduce to E300k until the market has gone away from him say to E200k, and he eventually sells for E200k.

    Is that a 50% fall or a 33% fall? And when you add in the total cost of buying, owning/operating and selling the numbers can get scary.”

    I did have the benefit of witnessing first hand the Florida boom (2002 to 2006) and the subsequent bust.

    Pablo Silver or Lead?

    PS. I got it totaly wrong on interest rates increasing (they went down). However with the only way for both i/r and mortgage rates to go being up over the next cycle I gues the bottom for Spanish prices may be after 2012? Who knows!

  • #97620
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    Anonymous
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    @brianc_li wrote:

    There is still a lot of denial and over pricing in this market. Unless there is a major sell off by the banks it will take 2-3 years for it to bottom.

    At (almost) 0% interest rate, banks don’t lose much by holding onto the properties.
    It might be a long stand-off.

  • #97621
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    Anonymous
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    @flosmichael wrote:

    At (almost) 0% interest rate, banks don’t lose much by holding onto the properties.
    It might be a long stand-off.

    Indeed it could be but on the other side of the argument, with the banks being asked to increase their bad debt provisions and an increasing number of bad loans on their books they may well be forced to shift a greater number of properties. That is what, to me, makes jp1’s first post on this thread so interesting. Are we starting to see the cracks appear?

  • #97622
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @brianc_li wrote:

    @flosmichael wrote:
    At (almost) 0% interest rate, banks don’t lose much by holding onto the properties.
    It might be a long stand-off.

    Indeed it could be but on the other side of the argument, with the banks being asked to increase their bad debt provisions and an increasing number of bad loans on their books they may well be forced to shift a greater number of properties. That is what, to me, makes jp1’s first post on this thread so interesting. Are we starting to see the cracks appear?

    But again the banks with the largest stock (santander,etc…) already had far higher provisions than was necessary. So unless the BOS raises it again, they should be able to hold out.

  • #97623
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    Anonymous
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    @brianc_li wrote:

    @flosmichael wrote:
    At (almost) 0% interest rate, banks don’t lose much by holding onto the properties.
    It might be a long stand-off.

    Indeed it could be but on the other side of the argument, with the banks being asked to increase their bad debt provisions and an increasing number of bad loans on their books they may well be forced to shift a greater number of properties. That is what, to me, makes jp1’s first post on this thread so interesting. Are we starting to see the cracks appear?

    In my opinion, there is no reason to believe that the Spanish prices won’t eventually fall to the level of the ones encountered in regions with over-supply in USA like Florida, Las Vegas, Arizona or parts of California.

    The only possibility for this not to not happen is if banks are allowed to hold millions of properties on their books for years and years. Which of course can happen.

  • #97625
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    Anonymous
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  • #97628
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    Anonymous
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    From Mark’s article:

    One has to assume that even they know they are wasting time. It’s obvious to everyone else.”

    Great line Mark. So true! 😀

  • #97629
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    Makes you wonder if they should still be referred to as developers, if they don’t actually develop anything.

    personally I thought this was quite a valid point. Many companies that made their money from developments are not really developers anymore or at least are not solely reliant a developments anyway.
    As an example, repsol is (i beleive) 30% owned by one of the largest developers. If they have diversified enough, they may be able keep their heads above water

  • #97637
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    Anonymous
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    The smart ones used their boom windfall to diversify into other sectors.

  • #97638
    Profile photo of katy
    katy
    Spectator

    Including the media. That’s why many fo the newspapers and Tv news kept quiet for so long about property scandals.

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