Euro Zone I/R Up again.

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This topic contains 16 replies, has 10 voices, and was last updated by Profile photo of Anonymous Anonymous 9 years, 6 months ago.

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  • #52930
    Profile photo of Anonymous
    Anonymous
    Participant

    Rates could be as high as 4.5% by Xmas and higher still in 2008. This was widely predicted. It will only serve to help property prices in Ireland and Spain return to ‘values’ base on fundimentals as opposed to funny money lent by one eyed institutions to the blind!

    http://news.bbc.co.uk/1/hi/business/6726477.stm

    I disagree with Mark’s statements that there won’t be a crash in Spain. The signs have been there for a couple of years now and all the data and sentiment coming downstream is bad.

  • #72779
    Profile photo of Anonymous
    Anonymous
    Participant

    @pablo Silver or Lead? wrote:

    I disagree with Mark’s statements that there won’t be a crash in Spain.

    I disagree with Mark too on this point.

  • #72781
    Profile photo of Anonymous
    Anonymous
    Participant

    Sorry but I can’t think of one housing market that has “crashed” (say a decline of 20% or more) without a major recession, and therefore high unemployment, as well as high interest rates. The USA difficulties have been caused by excessive lending to the sub-prime (‘trailor trash’) market. Not such a problem in Europe (though I do not deny its happening.)

    Rising interest rates alone are not enough to cause a “crash” as there are many foreign buyers, especially in Spain, who are buying with cash, not mortgages.

    I would expect modest declines (5% to 10%) or stable prices over the next few years. If there is a European recession, however, i would expect a bloodbath along the lines of the 1990 1994 housing crash in the UK (ie 40% to 50% declines). However, there is no sign at all of recession.

    As I have said before, when i see the number of cranes and dumper trucks declining I will be convinced.

    No signs of that around our way.

    Until then i will wait until someone comes on this board and factually states something like “my neighbour bought for £150,000 in 2005 and has just sold for £90,000”. When someone has such evidence please post. Saying that apartments spend 3 years selling is not the same thing at all.

  • #72782
    Profile photo of Anonymous
    Anonymous
    Participant

    OK, in Costa Blanca I viewed a premises. Constructed in 2004. UK owned since new.
    Price when purchased (checked and confirmed) 224.000 price acceptable at this moment in time after being marketed for 1 year is 165.000
    That’s close to a may not be your 40-50% but at 25% I am glad I am not selling.
    Think it is a mix of the market being flooded and the increase in UK interest rates.

  • #72783
    Profile photo of Anonymous
    Anonymous
    Participant

    @ashtondav wrote:

    as there are many foreign buyers, especially in Spain, who are buying with cash, not mortgages.

    Must be your clients, 95% of our clients need a mortgage, and all my clients are foreigners, being mostly British and Irish. My clients are ordinary working people, not affluent.

    It depends what everyone understands by “crash”. For me it means drops in prices of 20-40%, for you it means more. I believe we will see anual drops of 3-5% initially (this year and perhaps the next) followed by steeper falls over the next years.

    Believe me you will see high unemployment in Spain all having to do with the construction-real estate business over the next years. 18% of our G.D.P. relates to construction/real estate.

    For me signs of a creeping recession are: high unemployment, businesses going bankrupt, soar in mortgage defaults in Spain, lack of consumer confidence, lack of property purchasers, lots of “for sale” signs up for years etc…

    I have already posted it and will post it again. Spain is not undergoing a recession yet, the roadsigns are all there for those of us who have already endured past recessions. We are only in the initial stages of one.

    Perhaps I’m all wrong and everything is ok with Spain’s economy and we are doing just fine.

    Yet somehow I have the sneaky suspicion that I’m right. 😉

  • #72784
    Profile photo of Anonymous
    Anonymous
    Participant

    I have never said that there wont’ be a crash, only that it has not happened yet. For the time being the Spanish economy is roaring along with 4.1% growth, and there is no evidence of what you might call a housing market crash (though plenty of evidence of problems that might turn into something nasty).

    For what it is worth I think there more than a 50% chance of a construction-lead recession in Spain in the next couple of years. That makes me more bearish than most ‘commentators’.

    For more info on why talk of a crash is premature see: http://www.spanishpropertyinsight.com/news.htm

    Mark

  • #72787
    Profile photo of Anonymous
    Anonymous
    Participant

    Spain, together with France, has one of the most restrictive, sclerotic and corrupt economies in the EU. I would not be at all surprised to see 18% unemployment and a recession caused by falling construction of new apartments – in Spain. I some how don’t think the majority of buyers of 2 bed apartments and seaside villas are Spanish, though.

    Will the UK or most of other ‘buying’ economies see anything like that? Don’t think so. Will interest rates of 4, 5 or 6% put people off? Sure. Will it cause a slump? Don’t think so.

    But let us know when one of your clients has sold a villa or apartment for 40% less than they paid.

  • #72788
    Profile photo of Anonymous
    Anonymous
    Participant
    ashtondav wrote:
    As I have said before, when i see the number of cranes and dumper trucks declining I will be convinced.
    quote]

    But isn’t it the over-construction that’s partly to blame ❓ There are already too many empty properties.

    ‘Declining cranes’ for a while would surely be a good positive sign, not a bad one symbolising recession.

  • #72790
    Profile photo of Anonymous
    Anonymous
    Participant

    “But let us know when one of your clients has sold a villa or apartment for 40% less than they paid.”
    Add to the drop in the CV (25%) the loss of interest, running and maintenance costs, etc., not far off 40% I gues. Or would you wish that we play around with the stats., and facts to make it look not too bad?

  • #72791
    Profile photo of Anonymous
    Anonymous
    Participant

    Sorry mg i didn’t see your post. Fair enough, there’s a crash going on. At least in some areas.

    So when do the damn cranes come down in response? I still don’t get it. Prices down, demand down, selling times up – but the cranes don’t come down. Maybe all the developers are selling plots at 30% less than in 2004?

  • #72792
    Profile photo of Anonymous
    Anonymous
    Participant

    I’m not saying there is a crash, but times are getting much better for purchasing.
    In CB, many, many cranes, but many not working.
    Doesn’t help the developer to sell the off-plan, if the viewers seen the machinery removed from the site, so I guess they just leave them on stop.

  • #72805
    Profile photo of Anonymous
    Anonymous
    Participant

    Having just completed a 4 week stint of exhibitions I decided to use the exposure to prospective buyers to conduct a survey.

    I put a questionaire in front of 300 different visitors to my stand at 3 venues.

    It seems that most prospective buyers are not aware of any sort of Spanish property crash.

    In answer to question 1 – Do you think the recent negative publicity regarding the spanish property market will a) deter a purchase b) not affect your purchase c) what negative publicity?

    67% of the completed forms where answer C).

    The remaining 33% were – 56% answer a) and 44% answer b).

    The general verbal opinion of people was that the media always blow things out of proportion and did not beleive any or most of what is said.

    It seems people will always decide for themselves what is right or wrong.

  • #72806
    Profile photo of Anonymous
    Anonymous
    Participant

    looks like they’ll learn the hard way then. If they have either not seen or disregarded the reports of troubles, whats the chances they will do appropriate due dilligence and buy wisely with their eyes fully open?

  • #72810
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    Anonymous
    Participant

    Following a dire Easter season when I think many potential buyers were influenced by the unseasonally warm weather in the UK (and perhaps the unseasonally bad weather in Spain). I and several other agents that I speak to on a regular basis are finding that enquiry levels are very high (relativeley of course). The first question when enquiring about a specific property however is “how much will they take”. Time will tell but perhaps buyers think now is a good time to strike a good deal.

  • #72816
    Profile photo of mike
    mike
    Participant

    @Paddy wrote:

    In answer to question 1 – Do you think the recent negative publicity regarding the spanish property market will a) deter a purchase b) not affect your purchase c) what negative publicity?

    67% of the completed forms where answer C).

    The remaining 33% were – 56% answer a) and 44% answer b).

    Would any of those answering C consider themselves investors expecting rental return or capital appreciation?

    @Paddy wrote:

    The general verbal opinion of people was that the media always blow things out of proportion and did not beleive any or most of what is said.

    It seems people will always decide for themselves what is right or wrong.

    Well, I agree with them about the media to some extent and I am glad that they are making their own decisions. I would say that any market that attracts such a strong minded and resolute participants is a healthy one.

  • #72820
    Profile photo of katy
    katy
    Spectator

    I agree with Mark, the crash may happen but there is no sign of falling prices around here (marbella). I think agents are now using falling prices as an inducement to buyers when they haven’t actually fallen. Take the example of the auctions on the TV programme the prices were actually…pricey 🙄

    What is true is that property is NOT selling, many Properties have been on sale for months/years (they don’t seem to be renting either). Many around here would withdraw the property than reduce much. the ones who are mortgaged to the hilt have no incentive to reduce, they may as well wait for foreclosure. There may be a few bargains around but I suspect they will be snapped up quickly. I think it will get worse but not until next year.

  • #72835
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    Anonymous
    Participant

    True Katy, there seems to be a general concensus among agents that things will get a little worse before an expected upturn in maybe 18 months to 2 years, though even then the market won´t improve unless there is a good reason too. So far I don´t see a good reason! Maybe interest rates will lower over that time both in the UK and Spain.

    However there is a positive theory that assuming there is a natural culling of property agents by the predicted 30%, then those left should be able to pick up the extra business.

    I suspect the agents who sell mostly resales will be the first to go as they cannot subsidise their turnover by receiving payments from developers for sales made 1-2 years prior.

    My business has income for the next 2 + years to come, which may or may not keep me afloat during this recession. It depends on how general sales go.

    I could for example close my doors and just receive my developers commissions without incurring overheads. I think there will be many agents out there who will consider this. It may be more beneficial for them to do so as rents are not going down in my area, in fact they are going up.

    If there is a visable upturn in a couple of years then it is easy enough to start up again.

    So maybe the predicted 30% REA closures will happen because they will go bust, but, a further percentage say maybe 20% may simply close for the reasons above and re-open in a few years.

    So as I say, this could be very lucrative for those agents that remain open.

    Just my view, but as I know many agents and how they think, it is certainly a possibility.

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