Has the strength of the Spanish Market being Underestimated?

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This topic contains 26 replies, has 12 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 2 months ago.

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  • #55874
    Profile photo of Anonymous
    Anonymous
    Participant

    Well, after discussions with my wife we have decided to sell our last property in Almerimar. To use the parlance of an estate agent, we are not really motivated sellers!! Family live above us, wife’s Parents live in Berja, we use the apartment maybe 4 weeks a year, my parents maybe 4 weeks again. We could simply pitch up for 2 or 3 weeks in the Summer and rent from the hundreds of apartments available, with less costs and less hassle. Although the many advantages of having our own apartment will be lost and my plan to maybe take 6 months out of work and live the dream 😆 will be lost. The reason for wanting to sell is simply to move up the UK market!

    So the advert went onto fotocasa last night!

    Now I did advertise both my Spanish apartments this time 2 years ago (to be exact Nov 2008), with the intention of selling only one and ideally the smaller apartment that we did not use. A bit of marketing strategy (low price) got it sold pretty quickly. However, my main apartment, the one that I am selling now, was also advertised quite low as I was able to do so by taking advanatge of the almost 1:1 exchange rate. I had absolutely no enquires about it, even though it’s a bigger, and far better front line apartment built to a very high standard before the madness of the property bubble.

    Looking back in the archive of posts I can see my old advert and I notice that today I am advertising it for 20,000 Euros more! Even though I am not a “motivated seller” it’s still at the lower end of the prices asked for the few apartments that are for sale in the complex. There are a couple of 3 bedrooms around 40,000 Euros more, but to be fair there is one property 20,000 Euros less, but it’s a slighlly less desirable one than mine, due to location in the complex.

    So what is happening!! 2 years on there hasn’t been much of a fall (Mid 2007-End 2008 probably saw a 25% fall.) Standard 2 bed boxes which have been piled high have fallen, but then again a lot of these also haven’t moved much. Larger falls can be seen where sellers needs to sell and have marketed appropriately, similar to my sale 18 months ago, but in general there hasn’t been a collapse, like I predicted back at the start of the year.

    I am posting to prematurely and the crash will be next year? Or is there severe manipulation by the banks and the EU to prevent a Euro crisis? I am really surprized with 20% unemployment and a huge glut of properties how I can advertise my property for 20,000 Euros more than 2 years ago. Of course it will not sell, but I think my situation of “liking” it to sell rather than “needing” it to sell is rather the exception than the rule!

  • #100926
    Profile photo of Anonymous
    Anonymous
    Participant

    I think my situation of “liking” it to sell rather than “needing” it to sell is rather the exception than the rule

    On the costas I’d say this is the rule rather than the exception. The majority of owners of second properties have no need to sell rather they’d like to. Hence so many properties being on the market for years.

    So what is happening!! 2 years on there hasn’t been much of a fall.

    Also, you seem to be basing this on asking prices, which indeed have hardly fallen. What I get from my research is that these are so out of kilter with the actual prices that are being achieved as to be pretty worthless as far as any analysis goes.

  • #100929
    Profile photo of Anonymous
    Anonymous
    Participant

    There are many reasons for wanting to sell that do not necessarily mean “needing to”. I am in the position where I would like to sell as I would like a bigger house…my bachelor pad doesn’t hack it with the wife! 😆

  • #100821
    Profile photo of Anonymous
    Anonymous
    Participant

    JP1 , I was interested to read your comments, but they don’t support your hypothesis that perhaps the market is stronger than thought. All it shows is that asking prices haven’t fallen enough, so nothing is selling (2 years on and all that….).

    Maybe it also shows that vendors can hang on for longer than we think. But not forever….

    You can ask whatever you want, but as you say yourself, “Of course it will not sell”. What would be really interesting to know is what is happening to transaction prices, not asking prices?

  • #100925
    Profile photo of angie
    angie
    Spectator

    Interesting comparing the Spanish market with the UK’s.

    What we’ve noticed in the UK is there’s a lot of gloomy predictions for property, but prices generally seem to be holding up because vendors don’t have to sell as in previous downturns.

    Also, there is a new breed of UK agent often with made-up or double barrelled names (ala Bullshit and Bounce), no relation whatsoever to those who start their agencies, who are trying to cash in on the ‘higher end of the market’ especially in the South of England hot spots. These have no idea of prices and just overvalue by 20% or more to get the instruction, then reduce the properties later or pass them to their mates in a similar agent and split the commission if they get a sale. That said, they do get lucky quite often with buyers from out of the area who are sometimes getting mugged into paying over the odds, because they don’t know the market. So it looks like the market is rising, when in fact it’s not. There are exceptions like Surrey, Bath and parts of London where property sells faster, although I read this week-end that London prices were now falling too.

    Some UK agents though appear to be copying the bad practise adopted by agents in Spain and other countries in their booms and just lie through their teeth. 🙄

  • #100931
    Profile photo of Anonymous
    Anonymous
    Participant

    Yes of course we all know that there is a difference between asking price and selling price. Under normal circumstances whether in a falling or rising market that difference may be 10% or much less.

    I bought my second property at the wrong time and for the wrong reasons. You could literally take £1000 put it in a pile in the middle of the room and burn it when my mortgage was revaluated for the next year at 6% weeks before interests rates plummeted and sterling lost 30%. But still today if I owned the property it would be costing in the order of £600-£700 per month. For that is sat there empty, slowly collecting dust. I therefore marketed it at a price to cut my losses as it was obvious the market would continue to fall. If you wanted it to sell today in the timeframe that I sold it within I think you would need to market it at another 20,000~30,000 Euros less than my actual sale price.

    What I find surprising is that you can see a few owners that have marketed their property at substantial reductions to get a sale. But these sellers are few are far between, but even now I can see their adverts have been placed for several months or more indicating that they are still for sale.

    I find it remarkable that after 2 years I can place my advert again and increase the price by 20,000 Euros as others properties in the complex are still priced higher. Maybe I have a more pessimistic view of Spanish household finances, but I know the cost to me of my second property bought at the wrong time and I would imagine more sellers need to offer more realistic prices. That doesn’t seem to be the case. 3 or more years sitting on property bleeding money hurts.

  • #100932
    Profile photo of Anonymous
    Anonymous
    Participant

    3 or more years sitting on property bleeding money hurts.

    Indeed it does but many people just don’t look that far ahead. They refuse to take the cuts they should now in order to sell their properties sooner.

  • #100934
    Profile photo of Anonymous
    Anonymous
    Participant

    To me it seems most of the sellers don´t want to realize/admit that they have lost the game.

    Wrong timing when bought – and now loosing money if they want to go for a sale.

    And who likes to loose ??? :mrgreen:

  • #100940
    Profile photo of katy
    katy
    Spectator

    I don’t see the logic of saying that you are able to advertise your house higher than you could 2 years ago. If nothing is selling there is no guideline 😕 Doesn’t everyone always think their property is better and superior location than others, even though they may be 50 identical ones? I would think it is when sold that any conclusion can be reached.

  • #100957
    Profile photo of peterhun
    peterhun
    Participant

    @katy wrote:

    I don’t see the logic of saying that you are able to advertise your house higher than you could 2 years ago. If nothing is selling there is no guideline 😕 Doesn’t everyone always think their property is better and superior location than others, even though they may be 50 identical ones? I would think it is when sold that any conclusion can be reached.

    Logic? Its not a case of logic, its insanity to think that asking price is an indication of a rise in market values.

    Besides the incredibly obvious fact that value is determined when its sold and not in the imagination of the seller, its been said that 20-25% is the sort of discount from asking price that you should start at.

  • #100959
    Profile photo of Anonymous
    Anonymous
    Participant

    [quote=”peterhun
    Logic? Its not a case of logic, its insanity to think that asking price is an indication of a rise in market values.

    Besides the incredibly obvious fact that value is determined when its sold and not in the imagination of the seller, its been said that 20-25% is the sort of discount from asking price that you should start at.[/quote]

    If a property was bought in 2004 is it 25% off that asking price – for example I purchased in that year for E214,000 – I now have property on market for E170,000 (discount of 20%) – so would you say 25% off the current price?

  • #100960
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Having just spent 4 weeks looking at places to buy in Barcelona, and having been a ‘student’ of Barcelona real estate via Idealista, Fotocasa, etc. for 5 years now, I’d say that the prices are still too high in BCN.

    I didn’t even mention price negotiation to the owner of one piso – but he did: He blurted out that there is no way is he lowering the price because he doesn’t have to sell (he bought in 1985). The place has been listed for about a year. Problem is that it appears that other sellers in the same neighborhood have indexed their asking price to what this man is asking, not to what the recent sale prices have been. The owner of another piso raised the price by 20k (for a total of 370k). The piso was so-so, not something I would buy. But the building’s interior looked as if the exiled gypsies from France had settled there. So these pisos sit, gathering dust.

    Knowing the what the median salary is, and seeing the asking prices in Barcelona, unless there is an influx of foreigners with money, or unless there are some types of incentives, I don’t see things getting any better.

    And just as some owners ‘do not have to sell’ I as a buyer do not have to buy. So I’m waiting for reality to hit or possibly the dollar to rise against the euro.

    The only comfort I find is that even though the asking prices are ridiculously high in BCN, they are much lower than the are here in San Francisco.

  • #100962
    Profile photo of logan
    logan
    Participant

    @jp1 wrote:

    Or is there severe manipulation by the banks and the EU to prevent a Euro crisis?

    In one sentence you have your answer. Post when, if and how you sell it. That will be more interesting and relevant to market conditions. Or on the other hand it maybe a one off. 🙂
    The truth about the current state of the Spanish market is either being talked up by politicians, property professionals and banks who are offering crazy terms to off load their own stock to the gullible. Or talked down by professional investors and journalists attempting to communicate the truth.
    You decide who you believe.
    And by the way, come the turn of the year I expect a major Eurozone crisis and so do most economic pundits. Selling now if you can and buy Dollars makes very good sense.

    http://www.guardian.co.uk/business/2010/sep/29/spain-downgrade-expected-moodys
    As and when funding support from the ECB ends what then?
    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8033506/ECB-hawks-spook-debt-markets.html

  • #100969
    Profile photo of peterhun
    peterhun
    Participant

    Moodys down grade Spain as expected.

    http://www.ft.com/cms/s/15ab40fe-cc61-11df-a6c7-00144feab49a,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F15ab40fe-cc61-11df-a6c7-00144feab49a.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fuk

    Moody’s cuts Spain’s credit rating over growth fears

    By Victor Mallet in Madrid

    Published: September 30 2010 08:24 | Last updated: September 30 2010 08:50

    Moody’s, the credit rating agency, downgraded Spain’s government bonds on Thursday, citing weak economic growth, a deterioration of financial strength and higher borrowing needs.

    The downgrade by Moody’s by one notch from its top rating of AAA to Aa1 makes it the last of the three big rating agencies to downgrade Spain as a result of the global economic crisis.

    The downgrade, which was also applied to Spain’s Fund for Orderly Bank Restructuring, known as Frob from its Spanish initials, comes with a stable outlook.

    “Over the next few years, the Spanish economy is likely to grow by only about 1 per cent on average,” Kathrin Muehlbronner, a Moody’s vice-president and lead analyst for Spain, said in a statement issued by the agency.

    Although the downgrade was anticipated in the financial markets, it will disappoint Elena Salgado, Spanish finance minister, who had hoped that Moody’s would diverge from Standard & Poor’s and Fitch and leave Spain in the top tier of creditworthy nations.

    Apart from sluggish growth prospects, Moody’s cited Spain’s challenges in reducing its annual budget deficits, which the government has said it will cut from 11.1 per cent of gross domestic product in 2009 to 6 per cent of GDP next year, and 3 per cent in 2013.

  • #100974
    Profile photo of katy
    katy
    Spectator

    I saw an interesting discussion on TV today. Mainly about the Irish bank situation but two experts said they thought that Spains lack of transparency as to the true state of it’s economy has helped the country to “limp” along better than Ireland which has been totally open as to the banking problems.

  • #100977
    Profile photo of Anonymous
    Anonymous
    Participant

    @katy wrote:

    I saw an interesting discussion on TV today. Mainly about the Irish bank situation but two experts said they thought that Spains lack of transparency as to the true state of it’s economy has helped the country to “limp” along better than Ireland which has been totally open as to the banking problems.

    If only the banks were as open about what they were doing during the boom years – it is unbelievable what they got away with and the regulator turned a blind eye. Now we are the only country in Europe to rise rates in that last year. The banks here now are treating the tax payers with contempt i.e. screwing them for higher interest rates to make a profit and the Government can’t do anything to stop them. 👿

  • #100979
    Profile photo of Anonymous
    Anonymous
    Participant

    Lack of transparency should have negative reflection as a higher risk.

  • #100980
    Profile photo of logan
    logan
    Participant

    Irish Banks and the Ireland economy is a basket case but yes at least they admit it and accept the consequences of the bail outs. Spain pretends all is well. The markets will soon be the judge of that.

  • #100983
    Profile photo of peterhun
    peterhun
    Participant

    @angela wrote:

    The banks here now are treating the tax payers with contempt i.e. screwing them for higher interest rates to make a profit and the Government can’t do anything to stop them. 👿

    The Governments (all of them, not just Ireland) allow the banks to extract profit back from their customers as an alternative to tax payers paying. They WANT the banks to screw their customers, who else to pay for the mess than those who bought property through mortgages? Totally unfair on savers though, rates are crap but at least you can take your money out and put it somewhere else.

    Spain pretends all is well. The markets will soon be the judge of that.

    Indeed they will. The story of the fabrication of Spanish statistics is spreading, its in the FT now.

  • #100984
    Profile photo of logan
    logan
    Participant

    Prof Fernández Fernández of the Madrid Business School speaking on CNBC this afternoon from the Bolsa de Madrid. Quote:-
    In my opinion property prices in Spain have still a long way to fall. Stabilisation is long way off, and there is a lot more pain for ordinary people for many years. It’s just a question of how much of it they will stand”. Unquote 🙁

  • #100985
    Profile photo of Anonymous
    Anonymous
    Participant

    [quote=”peterhunThe Governments (all of them, not just Ireland) allow the banks to extract profit back from their customers as an alternative to tax payers paying. They WANT the banks to screw their customers, who else to pay for the mess than those who bought property through mortgages? Totally unfair on savers though, rates are crap but at least you can take your money out and put it somewhere else.[/quote]

    So what are you trying to saying peterhun – just because you have a mortgage you have to pay for the mistakes of bankers. You obvioulsy are not aware of what Sean Fitzpatrick and his colleagues did at Anglo Irish Bank and what went on at Irish Nationwide – they used the bank for their own personal use and embezzled millions! Because of this – if you pay tax in this country you are paying for these mistakes through higher taxes and income levies – if you are a mortgage holder on a variable rate you are paying for these mistakes 3 interest rates hikes in one year – no other country in Europe has raised interest rates when wages are falling and unemployment rising.

  • #100989
    Profile photo of peterhun
    peterhun
    Participant

    Angela, no it not fair, but is more fair that property investors be heavier charged than tax payers. Most tax payers aren’t property speculators, but all property owners are.

  • #100992
    Profile photo of Anonymous
    Anonymous
    Participant

    @peterhun wrote:

    Angela, no it not fair, but is more fair that property investors be heavier charged than tax payers. Most tax payers aren’t property speculators, but all property owners are.

    I don’t agree all property owners are speculators – property investors are speculators – that is buying property for investment to get a return – wanting to own your house rather than rent it to me is not speculating. To me a speculator is someone who does short term buying and selling – this does not equate to owning a house longterm. Anyway not good news for taxpayers here in Ireland or those unfortunate enough to have mortgages.

  • #100993
    Profile photo of peterhun
    peterhun
    Participant

    Maybe Speculator isn’t the right term.
    Anyone who purchase property via debt should be more liable for the debts of the banks than Taxpayers. Taxpayers are liable as well, via the inherent guarantee provided to them by the government. Government know this liability exists but are happy to keep quiet about when it provides an economic boom as it tends to get them re-elected.

    The point is, its the governments fault for allowing banks to behave like they do. They control the banks and its its the same in every country.

  • #100994
    Profile photo of logan
    logan
    Participant

    Peter is correct. All governments and central banks, including the USA failed to regulate the financial markets and are directly responsible for the state we are in. Banks are just businesses and will chase the bottom line without morality or responsibility. The only obligation they have is to their shareholders.
    Its the job of government through regulators to control the instincts and excesses of us all. If they fail we all pay. That’s just they way it is and always has been.

  • #100996
    Profile photo of Anonymous
    Anonymous
    Participant

    I agree with Peterhun. A citizen pays, in the over all scheme of things, what does it matter if it is low rates on deposit/higher rates on borrowing or tax.

  • #100997
    Profile photo of Anonymous
    Anonymous
    Participant

    Well I agree everybody has to pay taxes and off course mortgage rates rise and fall also – and off course during the boom banks lent money to anything with a pulse. However Ireland was slightly different in the sense of Anglo Irish and Irish Nationwide. Anglo Irish cooked the books but also Sean Fitzpatrick and David Drumm took directors loans both for huge amounts of money – one example of Irish Nationwide is that Mr. Fingleton who ran the bank at the time gave a loan of 2.5 million to a lady friend to purchase a property and never asked for income details – this is only one example. It is not just a case of the banks like many other countries over lending – this guys will never see prison.

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