Costa Property market crisis

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This topic contains 43 replies, has 16 voices, and was last updated by Profile photo of jacques jacques 7 years ago.

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  • #55313
    Profile photo of katy
    katy
    Spectator

    http://www.diariosur.es/20091125/malaga/crisis-traga-mercado-vivienda-20091125.html

    The exodus of the British and the financial crisis of the spanish has (according to the President of Constructors and Promoters) caused the market to fall by at least 80%.

    Residential tourism has practically disappeared.

    5 times as many houses are on sale than last year.

    Manager of an Estate agents says it is the worst he has known in 40 years.

    There must be an awful number of properties on sale as there were thousands on sale last year.

  • #95233
    Profile photo of Anonymous
    Anonymous
    Participant

    Aren´t these the same people who were telling us in April 2008 that prices could only go up?

    http://news.kyero.com/2008/4/22/spanish-house-prices-rising

  • #95234
    Profile photo of Anonymous
    Anonymous
    Participant

    @katy wrote:

    http://www.diariosur.es/20091125/malaga/crisis-traga-mercado-vivienda-20091125.html

    The exodus of the British and the financial crisis of the spanish has (according to the President of Constructors and Promoters) caused the market to fall by at least 80%.

    Residential tourism has practically disappeared.

    5 times as many houses are on sale than last year.

    Manager of an Estate agents says it is the worst he has known in 40 years.

    There must be an awful number of properties on sale as there were thousands on sale last year.

    Loooking for rentals for July-August 2010, I observed a substantial reduction in rental prices as compared to July-August 2009.

    Good apartments can be had for less than £250/week/high season in all areas between Castellon all the way to border with Portugal (not so in Costa Dorada and Costa Brava).

    And many of the properties have less than 2-3 weeks of rentals during the next 6-9 months.

    If one does not live in a property and cannot rent the property and pays taxes/community fees, then I guess the next step is just dumping the property…

    On the other hand, it really is extremely difficult to decide as a renter, as there are so many cheap rentals in desirable places…

  • #95235
    Profile photo of Anonymous
    Anonymous
    Participant

    Katy, this article must be misguided. Prices are actually rising and we´re all missing wonderful investment opportunities. The ´expert´ cited in Mark´s latest article says so. 😆 😆 😆

    http://www.spanishpropertyinsight.com/buff/2009/11/23/spanish-property-recovery-is-underway-and-prices-will-start-to-rise-by-10pc-per-year-says-expert/#more-3667

  • #95236
    Profile photo of angie
    angie
    Spectator

    It would be interesting to know the percentage fall in those so called luxury homes of 1-20 million.

    For example certain agents who sold say a £3 million property plus costs so £3.4 million approx of which the agent would have taken at least 15% comm. of 450k euros, so in fact the true cost was £2.55 million. I wonder what this would now be worth if it had been bought in the height of the scam, sorry boom! I would think it’s halved at least in value.

    I suppose agents will say differently though, but how many buyers are there now for top end property let alone the run-of-the-mill stuff. 😥

  • #95237
    Profile photo of Paul
    Paul
    Participant

    To Brianc and katy. ❓

    As this is clearly an estate agent led article apparently hyping a crashed property market up in Spain, it beggars the question as to why Mark would even show it on his website. It’s obviously a commercial plug which could deceive people who don’t know better, as has happened for years in Spain.

    😕 😯 🙁

  • #95238
    Profile photo of Anonymous
    Anonymous
    Participant

    Paul, that article is not actually a commercial plug, as you so glibly assert. In my blog I report the news, good or bad, and try to give balanced coverage to all points of view (I mainly get hate mail for negative reporting, so I guess your comments make a refreshing change). The article is a selected transcript of an interview with one of the leading experts on the Spanish property market. It may not conform with your opinions, but that doesn’t make it irrelevant, and it certainly doesn’t make it a commercial plug.

  • #95244
    Profile photo of Anonymous
    Anonymous
    Participant

    Paul,

    I suspect you may not have interpreted my smilies correctly. As far as I´m concerned this ´expert´ is talking through his backside.

    To be fair to Mark, any time he does publish a story that is ´Publicity´ he clearly flags it as so. This particular one is not that. Rather it is an interview with someone who claims expertise in the Spanish property market. He may be spouting drivel but he is perfectly entitled to do so. Likewise Mark is correct to report it.

  • #95245
    Profile photo of Paul
    Paul
    Participant

    My post was not glib in any way, I did give thought and sincerity to it.

    However I’ve re-read the article and my interpretation is that someone such as the chap interviewed who is directly involved in real estate in Spain has a vested interest in not telling the truth which most on here know is rife in Spain when it comes to property. ‘A leading expert’ he’s called, does that mean all agents are experts? He says the market has bottomed, that the recovery is underway which clearly is not the case according to a huge number of topics on here of late as well as the economists etc.

    It still reads pretty commercially to me IMHO.

    Mark has been very fair over the years with this site, I was one of the very first posters on the site, and as it’s his site he can of course publish whatever he likes.

    Just hope such articles don’t catch naive people into thinking things are now going to be rosy in Spain, the eurozone country with the worst problems I believe, and heavily dependent on it’s tourism and construction industries which have crashed. 🙂

  • #95246
    Profile photo of Paul
    Paul
    Participant

    I forgot to say brianc that I did understand your posts and thought they were very amusing.

    My reply was not intended to offend Mark, it was just my black and white opinion on how I viewed the article.

    Whilst we all know how bad it is in Spain, have you seen the latest problems for Dubai? This oil rich state has asked for another 6 months grace because it can’t start paying interest or capital on an 80 billion debt with possible worldwide repercussions.

    Their recent golf classic won by Westwood shows the course surrounded by 1000’s of unsold villas etc and their property market has apparently bombed 70-80%, The Palm Island is also in trouble. 🙄 ❗

  • #95247
    Profile photo of Anonymous
    Anonymous
    Participant

    Dubai is indeed interesting, although I wouldn´t refer to it as ´oil rich.

    It could well be followed by Greece from what I have been reading.

    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6630117/Greece-tests-the-limit-of-sovereign-debt-as-it-grinds-towards-slump.html

    Next in line after that????

  • #95248
    Profile photo of katy
    katy
    Spectator

    I know which article I believe! The Spaniard from Inmobiliaria riviera in Benalmadena who states it is the worse he has known for 40 years. I think it is time some of these Agents moved on to a new career instead of desperately trying to talk up the market.

    As for Dubai it is finished, has been for a couple of years (I have been there, it’s awful!) just the media hype that kept the illusion going. If you want warm winters and reasonable priced flights choose the Carribean. Don’t all of you choose it though I like it the way it is 😆

  • #95249
    Profile photo of Anonymous
    Anonymous
    Participant

    Paul, Dubai is not oil rich it is Abu Dhabi that is oil rich.

  • #95250
    Profile photo of Anonymous
    Anonymous
    Participant

    …did you know that most people in the middle east don’t watch the flint stones on TV, but those in Abu Dhabi do.

  • #95253
    Profile photo of Anonymous
    Anonymous
    Participant

    Goodstitch44: you are wrong. People in Dubai watches stones & concrete all day long and a mix of sand.

  • #95254
    Profile photo of logan
    logan
    Participant

    Some comparisons can be made with Spain and Dubai.
    Dubai World is a state owned property company with debts of around £36 billion that can no longer service it’s interest payments. Most of it financed incidentally by British banks.
    The comparisons are that both countries relied on construction and tourism for a large percentage of it’s GDP. They both have a climate which attracts tourism, especially expat tourism. They both developed golf resorts as an attraction, since sand and sea are no longer enough.
    When the accountants sit down and calculate their business models the figures seem attractive with the expectation of golfers around the world rushing to play their courses and rent their properties, stay in their shinning new hotels
    They convinced the banks to lend billions with that same idea. They then convinced many expats to mortgage themselves to the hilt to be part of the gravy train. The credit binge was well under way.
    In Spain and Murcia province alone they built 12-15 golf courses in a relatively small area with thousands of properties to match.
    Now the realities are very much alive.
    There are only so many people in the world who actually play golf and can afford to travel to do it. Only so many people who want to live on a golf course, usually in the middle of nowhere and without useful infrastructure.
    The basics of economics were ignored during this binge by almost everyone.
    Spain has the ECB to help it out, Dubai has only the oil rich states to ride to their rescue. There will be a high price to pay by both.

  • #95255
    Profile photo of Anonymous
    Anonymous
    Participant

    Hello,

    just my 2cents from a german who will visit CBL at the weekend with the intention to look for a holiday home (again, like for 2 years now).

    Asking Prices have fallen dramaticly over this period and I´m happy that I ´didn´t decide to buy during that period. 8)

    Examples ?
    Asking Price(same properties) last year till summer this year, 395K now 275K, 340 now 199 and so on.

    But the question of course is, decide now or is there still room for “improvement” ?
    Who knows ?

    And it´s right most of the sellers are british and they want to go back to the u.k. 😳

    Sunwind

  • #95256
    Profile photo of Anonymous
    Anonymous
    Participant

    Goodstitch44: you are wrong. People in Dubai watches stones & concrete all day long and a mix of sand.

    Very funny Shakeel! 😆

  • #95257
    Profile photo of Anonymous
    Anonymous
    Participant

    @sunwind wrote:

    But the question of course is, decide now or is there still room for “improvement” ?

    I don’t think it’s the wrong or right time to buy. There is still a tremendous range in asking prices. Some property is now IMHO priced very attractively, a lot is close to being interesting (yet still too high), and there is still a fair amount at crazy prices.

    So, it all depends on what you are looking for, and what price it’s at. IMHO Casa de campo are getting very big reductions, I guess this is because of the difficulty getting mortgages on them.

  • #95258
    Profile photo of Anonymous
    Anonymous
    Participant

    @sunwind wrote:

    But the question of course is, decide now or is there still room for “improvement” ?
    Who knows ?

    Truth is, nobody knows. Most of the independent analysts do however predict more falls to come. Probably for at least two years.

    Many estate agents and those with a vested interest will however tell you that there is never going to be a better time to buy. They have been saying the same thing for the last three years.

  • #95259
    Profile photo of Paul
    Paul
    Participant

    You’re quite right, Dubai is not oil rich as I posted, a slip on my part, however because it’s not oil rich, it probably makes their financial problems far worse than thought. How long would their neighbours wish to bail them out?

    Maybe the Sheik and his family could cash in some of their racing horses and fleets of cars, as well as houses, they have recently gone on a spending spree including to the US and spent tens of millions on horses.

    Dubai looks like a concrete jungle albeit with luxury interiors, and places like The Palm have to be reinforced annually because of underwater erosion. Sand moves constantly, if and when stormy waters hit, there could be a disaster.

  • #95260
    Profile photo of Anonymous
    Anonymous
    Participant

    “How long would their neighbours wish to bail them out? “

    Abu Dhabi has done this in the . As a loose confederation will have to continue in some form or the other as it will affect them as well. To what level we just have to wait and see. Dubai was a classic case of over trading.

    !Maybe the Sheik and his family could cash in some of their racing horses and fleets of cars “,

    They wont be able to sell there cars as they will be less than seven year old so no hand out of £2K

    “they have recently gone on a spending spree including to
    the US and spent tens of millions on horses.”

    It may surprise you that they are expected by the West to spend the money in the West, Why do you think they are referred to as friends in the Political & international relations circle. Who is going to buy their Houses ??? whatever we may say or feel about them they has rescued many old properties in UK, just have to visit Escot, Berkshire & Scotland area to get an idea. These properties were in neglect.

    “The Palm have to be reinforced annually because of underwater erosion. Sand moves constantly, if and when stormy waters hit, there could be a disaster”

    It does not surprise me. When you challenge nature you dont win.

  • #95261
    Profile photo of katy
    katy
    Spectator

    And the wine is about £8 a glass 😆

    Those Bankers weren’t very bright were they, lending money to consruct those stupid projects like the World. Million pound villas and you could almost kiss your neighbour! Some post on here that a few pensioners were stupid and left their brains, blah blah……what does it say for the bankers….they bought the lot 😆

  • #95262
    Profile photo of Anonymous
    Anonymous
    Participant

    “Million pound villas and you could almost kiss your neighbour!”

    Love thy neighbour & all that. You just had to make sure that the local Police did not catch you.

    “Some post on here that a few pensioners were stupid and left their brains, blah blah……”

    I am realy worried about the Pensioners, they have so much brains they leave it everywhere & still does not affect them.

  • #95263
    Profile photo of mike
    mike
    Participant

    @brianc_li wrote:

    Most of the independent analysts do however predict more falls to come. Probably for at least two years.

    I think prices falling for just two further years is pretty optimistic. I think that even with a total halt in building the number of empty properties will remain the same with more people deserting their property and few willing to buy or able to get loans. I am pretty certain that a UK bank would scrutinise very carefully someone wanting to lend money against Spanish property for many years to come.

    I think there will be capitulation next year and very large drops in prices as people realise that this market isn’t going to recover any time soon and they become desperate to get anything they can for their property.

  • #95265
    Profile photo of angie
    angie
    Spectator

    There is a saying Mike when it comes to falling property markets:

    Indignation, Resignation, Capitulation.

    Property becomes so personal that vendors are indignant with valuations, after a long while with little interest they reduce the price with resignation, but later on some really need to bail out, so capitulation follows.

    We often see so called experts saying the market has ‘bottomed’ in Spain etc, but there looks like much further to go yet. 🙄

  • #95275
    Profile photo of Anonymous
    Anonymous
    Participant

    @sunwind wrote:

    Hello,

    just my 2cents from a german who will visit CBL at the weekend with the intention to look for a holiday home (again, like for 2 years now).

    Asking Prices have fallen dramaticly over this period and I´m happy that I ´didn´t decide to buy during that period. 8)

    Examples ?
    Asking Price(same properties) last year till summer this year, 395K now 275K, 340 now 199 and so on.

    But the question of course is, decide now or is there still room for “improvement” ?
    Who knows ?

    And it´s right most of the sellers are british and they want to go back to the u.k. 😳

    Sunwind

    sellers maybe british but i think its more a case of having to go back than wanting to,we have seen more of an effect during the downturn than others in the euro zone due to the weak exchange rates

  • #95276
    Profile photo of Anonymous
    Anonymous
    Participant

    Mike, I have to say that I agree with you. Having been following the Spanish market and economy quite closely for the last 18 months or so I also think that ´only´ falling for another two years is overly optimistic. It is however what people such as S&P are predicting.

  • #95277
    Profile photo of logan
    logan
    Participant

    The one factor which is preventing further major property falls in Spain is the amount of debt each individual property carries. The banks lent large amounts during the boom years and these mortgages are still in place at the same level.
    Individual owners would rather give up the property to the bank rather than sell it for less than they owe.
    Banks who own a huge amount of property repossessed from owners will not let them go for less than their outstanding debt.
    The result is a stand off currently in the market. No one will buy because confidence is shot to bits and banks are sleeping.
    Until they wake up and start accepting their losses nothing will change.

  • #95285
    Profile photo of mike
    mike
    Participant

    @brianc_li wrote:

    Mike, I have to say that I agree with you. Having been following the Spanish market and economy quite closely for the last 18 months or so I also think that ´only´ falling for another two years is overly optimistic. It is however what people such as S&P are predicting.

    Well, S&P should know their stuff but I’d love to know why they think it will bottom in two years, unless the falls inbetween are so great that they can’t go any lower. Will a significant number want to take advantage of the opportunity to own their holiday home in the sun? How many more of this type are there out there given the number that did so over the past few years? Is it an unlimited supply? And what about Italy, Croatia, Turkey, France, Bulgaria and Morocco? Are they going to recover too? Or is it just Spain?

    I reckon that in two years, with the worst yet to come and all the negative publicity that will come with it, that most people will not want to touch property abroad with a bargepole regardless of how cheap it is.

  • #95286
    Profile photo of Anonymous
    Anonymous
    Participant

    @mike wrote:

    @brianc_li wrote:
    Mike, I have to say that I agree with you. Having been following the Spanish market and economy quite closely for the last 18 months or so I also think that ´only´ falling for another two years is overly optimistic. It is however what people such as S&P are predicting.

    Well, S&P should know their stuff but I’d love to know why they think it will bottom in two years, unless the falls inbetween are so great that they can’t go any lower. Will a significant number want to take advantage of the opportunity to own their holiday home in the sun? How many more of this type are there out there given the number that did so over the past few years? Is it an unlimited supply? And what about Italy, Croatia, Turkey, France, Bulgaria and Morocco? Are they going to recover too? Or is it just Spain?

    I reckon that in two years, with the worst yet to come and all the negative publicity that will come with it, that most people will not want to touch property abroad with a bargepole regardless of how cheap it is.

    It is going to be like the timeshare story, a big liability. As long as holiday rentals are dirt cheap, there is no reason to buy.

    As a permanent location, it might still become OK to buy but as holiday home…

  • #95306
    Profile photo of angie
    angie
    Spectator

    Again, I tend to agree with Mike about Brits not wanting to touch property abroad with a bargepole. It’s been done to death for years now.

    These markets have been so overhyped, and saturated with too many bog standard lookalikes that are generally poorly built, the property scams abroad have been exposed for all to see, the exchange rate for Brits in eurozone makes it too expensive, little or useless regulation and court procedures, little Gov’t action, air fares seem to be getting more expensive etc and who wants to buy in countries where there are more ‘for sale’ and ‘for rent’ signs than there are residents?

  • #95309
    Profile photo of katy
    katy
    Spectator

    Yes I agreed with Mikes’s post. Some good points.

    Buying a second home was a trend, a bubble. In future it will only be the very few who buy in the next decade. A second home which you may only use 6 weeks or so per year, impossible to rent, costly taxes and community fees makes for expensive holidays (add on falling prices for the investment)and then you are stuck with going to the same ole place every time. Do the math!

  • #95313
    Profile photo of Anonymous
    Anonymous
    Participant

    katy

    yes, the overheads are the final nail I think for those wanting a holiday home. How many can or want to afford the cost of maintaining a place for a few weeks every year without the old promise of rent potential should it be needed. They are then tied to that destination that’s probably not that relaxing to be in due to the current situation and ongoing upkeep issues? What on earth will happen to 1.5 million unsold dwellings or the incredible sums owed on them though?

    As we all know, for lifestyle reasons, people will always love Spain’s location, climate, slower pace of life etc, but how many can afford it now?

  • #95320
    Profile photo of angie
    angie
    Spectator

    When buying abroad was in it’s hey day, a huge proportion of Brits and possibly those in Europe, were remortgaging their main home to raise funds to either buy outright abroad or put a hefty deposit down. Another group were those who had plenty of cash reserves whether black money or not.

    I doubt there are many Brits now in a position to do either and with tighter regulation on mortgages and lending, plus it’s harder to sell now in the UK etc, those boom days will never return.

    The only hope of a return to a less frantic market will be when sterling reverts back to 1.50-1.60 against the euro (if at all), but generally I believe those boom days are gone for good. As others say on here, it’s less risky to rent for the Winter somewhere sunnier than buy.

  • #95322
    Profile photo of Anonymous
    Anonymous
    Participant

    “What on earth will happen to 1.5 million unsold dwellings”

    Goodstich44, Come on did you not know that sun only shines in Spain. That is why they have been giving their Umbrellas away.

    The times will come again, like the flairs , beehives & the platform shoes but not in our life time.

  • #95324
    Profile photo of logan
    logan
    Participant

    I very much agree with these posts describing very relevant factors for the property crash in Spain.
    I would add that the prospect of capital growth and low taxation was always a strong incentive for foreigners to buy in Spain. At certain periods in the last 25 years growth certainly happened along with other EU countries. The reasons behind that have gone, mainly easy cheap credit which the EU are determined to prevent through regulation. The new Finance minister for the EU is French and will enforce French banking standards throughout the EU in future. That means credit will be very difficult to obtain.
    Although property will likely rise in line with modest inflation annually in UK and other states in Spain it almost certainly will deflate further.
    In addition factors are at work in the Spanish economy which will make it difficult for the Spanish to buy and service debts on second homes. Unemployment and industrial stagnation has arrived.
    The outlook is very bleak indeed.

  • #95328
    Profile photo of Anonymous
    Anonymous
    Participant
    goodstich44 wrote:
    katy

    yes, the overheads are the final nail I think for those wanting a holiday home. How many can or want to afford the cost of maintaining a place for a few weeks every year without the old promise of rent potential should it be needed. They are then tied to that destination that’s probably not that relaxing to be in due to the current situation and ongoing upkeep issues? What on earth will happen to 1.5 million unsold dwellings or the incredible sums owed on them though?

    As we all know, for lifestyle reasons, people will always love Spain’s location, climate, slower pace of life etc, but how many can afford it now?

    I have lots of friends who own a property come out for a holiday they find so
    many problems are facing them, mistakes by the banks in non payment of bills, repairs, painting jobs etc, that they need another holiday to recover from their Spanish one.

  • #95332
    Profile photo of katy
    katy
    Spectator

    That is so true 😆 We have nearly always had a second home but our “main” holiday was always taken somewhere different…and in a Hotel.
    Our first task was food shopping and the second down to the DIY shop!

    One friend who had a penthouse had continual problems with water coming through the ceiling. He only came out about 3 times per year but everytime he was faced with the damp ceiling and the mess. It did not cost him anything as the community insurance covered it but it was the sheer hassle in what should have been a time to relax. He sold it and now rents in the same place when he needs a holiday in Spain.

  • #95334
    Profile photo of Anonymous
    Anonymous
    Participant

    The water on the Spanish coast is very hard. Unless you install a water softener (almost nobody has one) you pipes and machines give up sooner or later. Then you have flooding, headaches, costs….I should know. We’ve got that very problem right now.

    In many ways owning property is just one never-ending chore.

    Mark

  • #95366
    Profile photo of angie
    angie
    Spectator

    Presumably you bought to own Mark, but had you known more at the time about problems with water and more, and had you known a crash was imminent, with hindsight would you have rented?

    Would you advise anyone wishing to relocate to Spain to rent for at least 6 months first, then if buying, to go in hard with at least a 30% discount especially from an agent selling and the current exchange rate for Brits?

  • #95374
    Profile photo of logan
    logan
    Participant

    @mark wrote:

    In many ways owning property is just one never-ending chore.
    Mark

    Absolutely, and now with the added risk of losing a great deal of money it’s totally pointless.
    We are returning to the days when a property is a home to live in, nothing more. Investments need to be found elsewhere.

  • #95375
    Profile photo of katy
    katy
    Spectator

    Just as it should be and any gain a bonus.

  • #95376
    Profile photo of jacques
    jacques
    Participant

    We are indeed reverting to the situation that existed up to 15 /20 years ago when only the seriously rich could afford a holiday home which invariably was mortgage free and where the owners had no need for rental income to help pay for the maintenace thereof (used by family and friends only)

    For a period of time middle England (with the help of honest and not so honest facilitators,increased mortgages on main homes and rental income) joined the ranks of the privileged and had a wonderful time at home and abroad.

    Alas for me and many others, back to square one!

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