Guardian article – Spanish Property Crash

LoadingFavourite

This topic contains 23 replies, has 7 voices, and was last updated by Profile photo of Anonymous Anonymous 5 years, 8 months ago.

  • Author
    Posts
  • #56175
    Profile photo of adiep
    adiep
    Participant

    Does anyone know about the legal obligation mentioned in the quoted Guardian article below?

    “Spanish banks – many of which hold thousands of repossessed homes as assets – are legally obliged to start selling these homes after holding them for two years. As a result, more properties are expected to flood the market for sale this year.”

    http://www.guardian.co.uk/money/2011/apr/02/spain-property-prices-collapse

    P.S Mark gets a mention

    But, writing on his Spanish Property Insight website, Mark Stucklin says: “You have to take these figures with a pinch of salt as far as Spain is concerned.” The problem, he says, is they are based on official figures which “significantly understate the true extent to which prices have fallen. Spanish prices have fallen much further than this index suggests … If you want to know what’s going on in the residential property market, a much more revealing figure is the collapse in planning approvals, down by 90% since 2006”. Rupert Jones

  • #103682
    Profile photo of Chopera
    Chopera
    Participant

    If by “legally obliged to start selling these homes after holding them for two years” they mean “legally obliged to place these homes on the market at 50% above market value” then there’s nothing really new here. I did read something about the banks being fined for holding property for more than 2 years, which my force their hand a bit, but I’m not sure if that ever came into effect.

  • #103683
    Profile photo of adiep
    adiep
    Participant

    Quite… But I did hear that banks such as CAM, were doing all they could in delaying these properties from landing on their books, by stalling legal procedures and anything else they could.

    Even if they put them all up for sale at 20 x market price, the sheer number will have a very detrimental effect on the housing market and equally on investor confidence in these banks.

    So if there is a legal obligation to get them on the market within 2 years, it’d be interesting to know what it is and if its being adhered to.

  • #103698
    Profile photo of logan
    logan
    Participant

    A simple way of discovering the extent of the caja’s problems is to go to their web site property sections. Most of then list large numbers of repossessed property all over the country.
    I accept these are only the tip of the iceberg and represent the lower end of the market but it is a small clue to a very large problem.
    Remember these banks are not heavily capitalised in the way Santander or BBVA are. They are small regional building societies who simply went out of their depth and borrowed on international markets to fund their lending. That debt requires servicing from their own resources and that’s all but dried up.
    As far as I can see very little of this stock is moving even with 50% reductions and a guaranteed mortgage. So what chance has any private seller in this market got?
    I am sure we are going to see some bankruptcies in the banking sector very soon.

  • #103700
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    A simple way of discovering the extent of the caja’s problems is to go to their web site property sections. Most of then list large numbers of repossessed property all over the country.
    I accept these are only the tip of the iceberg and represent the lower end of the market but it is a small clue to a very large problem.
    Remember these banks are not heavily capitalised in the way Santander or BBVA are. They are small regional building societies who simply went out of their depth and borrowed on international markets to fund their lending. That debt requires servicing from their own resources and that’s all but dried up.
    As far as I can see very little of this stock is moving even with 50% reductions and a guaranteed mortgage. So what chance has any private seller in this market got?
    I am sure we are going to see some bankruptcies in the banking sector very soon.

    Most of the stuff that these banks have for sale officially is crap and at overvalued prices. I don’t think they actually want to sell them which in itself is weird. I can’t understand why they even have them for sale at those prices since it just floods the markets with to much properties which hurts everyone. The real bargains gets bought up by friends of the banks etc.

  • #103704
    Profile photo of logan
    logan
    Participant

    I agree most of the bank property is at the lower end of the market. However you might expect that the less well off will likely default on their mortgages first. Here’s but 2 examples.
    http://www.bancajahabitat.es/viviendas/viviendas.aspx
    http://www.oportunidadescam.es
    My point was the sheer scale of the problem for the caja’s.
    Each repossessed property represents a financial burden on the bank that requires servicing. There are pages and pages of the stuff on every site and in every location.
    I don’t believe the banks don’t want to sell them. Every indicator I see reveals they are extremely keen to off load them.
    However it’s going to take many years before the market at this level is normalised or stable. That also has a knock on effect to the upper range of property.
    Anyone thinking of entering this market in the current state needs to consider that.

  • #103705
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    I agree most of the bank property is at the lower end of the market. However you might expect that the less well off will likely default on their mortgages first. Here’s but 2 examples.
    http://www.bancajahabitat.es/viviendas/viviendas.aspx
    http://www.oportunidadescam.es
    My point was the sheer scale of the problem for the caja’s.
    Each repossessed property represents a financial burden on the bank that requires servicing. There are pages and pages of the stuff on every site and in every location.
    I don’t believe the banks don’t want to sell them. Every indicator I see reveals they are extremely keen to off load them.
    However it’s going to take many years before the market at this level is normalised or stable. That also has a knock on effect to the upper range of property.
    Anyone thinking of entering this market in the current state needs to consider that.

    Bancaja Habitat prices are way off in many cases and they will not sell a single one of those resale ones. They have slightly finer properties compared to when looking at the ones CAM has. They are both highly overpriced though for the Alicante area.

  • #103713
    Profile photo of Anonymous
    Anonymous
    Participant

    I don’t like joining in with the professional gloom watchers and would dearly like to post something to rock their dreary lives. I thought this might be a start:

    http://www.elpais.com/articulo/english/Foreign/debt/level/drops/for/first/time/in/years/elpepueng/20110404elpeng_1/Ten

    Some good news about Spain is bound to set them seething, but I’m a fair man with balanced views, and for that reason I need to post another link from the same newspaper, El Pais, the most respected one in Spain, and also bearing today’s date:

    http://www.elpais.com/articulo/english/Nationalization/looms/as/caja/seeks/state/aid/elpepueng/20110401elpeng_5/Ten

    On balance therefore, Spain has stopped their massive foreign borrowing, with is now standing at its lowest levels for ten years, but one of their Cajas, CAM, the big one covering the area where most expats live, the Alicante province, is in deep trouble due to its ridiculous lending to the building sector for at least ten years.

    The two articles are strangely linked, CAM bank has specialised in building up a large foreign customer base, lent tens of millions to the local Spanish construction sector to build houses for the foreigners, and supplied mortgages to the same foreigners to buy vastly over-priced properties.

    The strong stench of corruption pervades the whole spectacle; CAM are still lending to buyers of their over-valued repossessed properties, barely glancing at obviously fake mortgage applications from mostly foreign customers.

    The developers who went into administration under arrangements with CAM that would make a sane head spin, are still out there hoping that the madness will start up again. I fear that it might, whichever body takes up the reigns at CAM will have the agents in their Armani suits knocking at the door again, and from a historical perspective, some of them will swap their Seats for a Mercedes.

  • #103714
    Profile photo of logan
    logan
    Participant

    @Rocker wrote:

    I don’t like joining in with the professional gloom watchers and would dearly like to post something to rock their dreary lives. I thought this might be a start:

    Being bearish on the Spanish economy or investment in Spanish property is not doom watching, merely an attempt at common sense analysis on the wisdom of buying property in Spain in the current climate
    I could be bullish on investment elsewhere in the world such as Australia but what relevance would that have to this forum.
    A 1.2% reduction in Spain’s foreign debt levels is on the face of it good news. Until you understand it still remains at €174 trillion and 164% of GDP down from 167%. Rejoice!
    Suggesting posters have ‘dreary lives’ is simply descending to the behaviour of the playground.

  • #103716
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    @Rocker wrote:
    I don’t like joining in with the professional gloom watchers and would dearly like to post something to rock their dreary lives. I thought this might be a start:

    Being bearish on the Spanish economy or investment in Spanish property is not doom watching, merely an attempt at common sense analysis on the wisdom of buying property in Spain in the current climate
    I could be bullish on investment elsewhere in the world such as Australia but what relevance would that have to this forum.
    A 1.2% reduction in Spain’s foreign debt levels is on the face of it good news. Until you understand it still remains at €174 trillion and 164% of GDP down from 167%. Rejoice!
    Suggesting posters have ‘dreary lives’ is simply descending to the behaviour of the playground.

    I’m wary of commentators who quote a tiny part of a previous post and then comment on that tiny part. I believe they are just as selective in most of their writing; your speciality is highlighting any negative news about Spain, consistently, over and over again.

    You obviously stopped reading after finding the two lines you urgently wanted to comment on, had you read on, you would have discovered that I was more than critical of the Spanish banking system, property developers and some other matters frequently discussed on this forum.

    I believe my views to be reasonably balanced, yours aren’t.

  • #103717
    Profile photo of logan
    logan
    Participant

    Please don’t tell me what I read and didn’t read.
    In fact I did read the whole post and the comments on CAM have already been covered on here and added nothing new.

  • #103726
    Profile photo of Chopera
    Chopera
    Participant

    @Ardun wrote:


    Most of the stuff that these banks have for sale officially is crap and at overvalued prices. I don’t think they actually want to sell them which in itself is weird. I can’t understand why they even have them for sale at those prices since it just floods the markets with to much properties which hurts everyone. The real bargains gets bought up by friends of the banks etc.

    The banks won’t reduce the open market prices of their stock because it might show up on their books and expose them as being insolvent. I don’t think these properties have much effect on the market anyway because they’re not really on the market – nobody is interested in buying them at these prices. It is simply an accountancy scam.

  • #103729
    Profile photo of Anonymous
    Anonymous
    Participant

    I had a quick look at the CAM repossession website; the bank cannot be serious in offering those awful properties for sale at those prices. The whole thing reeks of desperation, a lot of the properties are offered for sale with 100% mortgages or a rental option, the mortgage and rental costs being around the same.

    I also noticed many properties need a total ‘reform’, where the repossessed owner has obviously taken out his anger on the property before being evicted. Or perhaps the previous owners of these dreadful properties were not the kind of people to keep their house in order.

    Any prospective purchaser looking at the rubbish on that website will surely use the little red cross at the top right side of his browser to move on. Quickly.

  • #103730
    Profile photo of Anonymous
    Anonymous
    Participant

    @Rocker wrote:

    I had a quick look at the CAM repossession website; the bank cannot be serious in offering those awful properties for sale at those prices. The whole thing reeks of desperation, a lot of the properties are offered for sale with 100% mortgages or a rental option, the mortgage and rental costs being around the same.

    I also noticed many properties need a total ‘reform’, where the repossessed owner has obviously taken out his anger on the property before being evicted. Or perhaps the previous owners of these dreadful properties were not the kind of people to keep their house in order.

    Any prospective purchaser looking at the rubbish on that website will surely use the little red cross at the top right side of his browser to move on. Quickly.

    Or the build quality was very bad in the first place and have just fallen apart around the owners ears

  • #103731
    Profile photo of Anonymous
    Anonymous
    Participant

    Has anybody tried to contact them from the site ??? I had tried ( No. I was not going to buy that crap. I feel even if they are given to me for free I will think twice ) they do not acknowledge the contact. I have tried in English & Spanish with the same result i.e. nada de nada.

  • #103733
    Profile photo of Anonymous
    Anonymous
    Participant

    @shakeel wrote:

    Has anybody tried to contact them from the site ??? I had tried ( No. I was not going to buy that crap. I feel even if they are given to me for free I will think twice ) they do not acknowledge the contact. I have tried in English & Spanish with the same result i.e. nada de nada.

    I had a client that did… he got an answer on the phone a few days later saying that the apartment was reserved by someone else. Stayed that way for about three months until it was removed. It was actually a catch for the person buying it. A studio in bad condition in the centre of torrevieja.. run down building but it only cost 13 000 euros.

  • #103734
    Profile photo of adiep
    adiep
    Participant

    @shakeel wrote:

    Has anybody tried to contact them from the site ??? I had tried ( No. I was not going to buy that crap. I feel even if they are given to me for free I will think twice ) they do not acknowledge the contact. I have tried in English & Spanish with the same result i.e. nada de nada.

    same, same..

  • #103736
    Profile photo of logan
    logan
    Participant

    I think you should consider for a moment when you refer to these properties as ‘crap’ that they were once the homes of ordinary Spanish people hit hard by the recession. The fact that there are so many indicates the impact of the crisis on working Spanish people.
    These are not urbanisations inhabited by prosperous second home owners they are properties in which people lived and spend their lives.
    The impact of the financial crisis in Spain is set to get worse and the suffering of the people will increase. The fact that no one is buying these properties is a symptom of that.

  • #103737
    Profile photo of Anonymous
    Anonymous
    Participant

    Logan, You are indeed correct that some of the homes are for ordinary people. My use of the word
    “crap ” was not with the intention of insulting or being arrogant or looking down on them. If that how it came accross I sincerely apologise. It was a broad term for the stock they have on their site.

    However, it remains the case that they do not respond. Which tells us many things & could be subject to our view points on how we see the role of banks, the stock they are holding, who they are selling to.

    As you say that those houses are for the local market & as expected the situation will get worse. I fear those houses will be on the market for a very looooooooooooong time

  • #103739
    Profile photo of logan
    logan
    Participant

    In broad terms contacting any business organisation in Spain is difficult unless you use their 902 call centre numbers which cost a fortune. You still get absolutely nowhere.
    If you are serious about contacting CAM I have a private number/e mail of a director involved in the property department. PM me and I will pass it on to you.
    I accept your intentions were sincere. I just wanted to make the point of the severe impact the crisis is having on the Spanish people. Each one of these repossessed bank properties represents a life and family without a home of their own.

  • #103750
    Profile photo of Chopera
    Chopera
    Participant

    “Each one of these repossessed bank properties represents a life and family without a home of their own.”

    Down my way (Madrid) most repossessed properties never belonged to anybody but a dodgy developer, but I take your point. Maybe it’s the saddest thing about this situation – a country with an oversupply of homes estimated at around 1 million (AFAICR) and still nobody can afford one.

  • #103754
    Profile photo of logan
    logan
    Participant

    It’s a simple matter on these bank sites to filter out the dodgy developer stuff from the homes of ordinary people.
    I will simply make this point from an investors point of view.
    When this economic turmoil is over and Spain gets back on it’s feet, (whenever that will be) the property which will sell quickest will be to Spanish people not foreigners.
    The Spanish prefer to be owner occupiers and live and work in their own communities. They do not want to live in foreign owned ghettos. Holidays are fine but living is something else.

  • #103757
    Profile photo of Anonymous
    Anonymous
    Participant

    Logan I sort of agree with you. The problem is though that the spaniards will have it rough for quite some time but it will only really turn around when they start buying again. Can you even imagine that 25% of the grown population is unemployed. 40% if you look at the group below 40 years of age. Had it not been that I have spanish friends I would never been able to grasp how huge this problem is for them. By not having control over their monetary system it will drag on even further. Even the spaniards that historically have loved owning property might be severly burned by this and we don’t know if they will do it to same extent again. Instead of diversifying they put all their eggs in the same basket. A normal spanish family owned one to three properties except the one they lived in. The thing now is that there are so many other nations that have problems with few exceptions that not even the foreigners can buy anything.

  • #103761
    Profile photo of Anonymous
    Anonymous
    Participant

    Ardun, You also have to see that ones who are employed probebly half of them are on temporary contracts. Little chance that any Bank will lend them money to buy a house, car etc.

    The situation has persisted as long I have been involved with Spain. The construction boom was a god send opportunity. Lack of wisdom, foresight on the part of the politicians, business leaders has resulted in the mess.

    I even feel in the current situation a serious jolt to the system in bringing changes can deliver long terms benefits whilst the politicians can blame the crises, IMF, EU, Germany etc, etc. basically everybody accept themselves.

You must be logged in to reply to this topic.