Luxury Homes Also Falling in Spain, U.S., and U.K.

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This topic contains 29 replies, has 12 voices, and was last updated by Profile photo of Anonymous Anonymous 8 years, 2 months ago.

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  • #54128
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    Paul
    Participant

    Latest news suggests that high end properties are not immune from a property crash.

    eg. P. Banus a villa valued 7 days ago (allegedly) by Deutche Bank at 4.7 mill. euros can be bought for 2.5 mill euros. Many more luxury homes on the market along the Costa del Sol with as much as 30-40% off (if this can be believed) in the Press etc. LPA’s luxury end of the market.
    Spanish property still thought to be at least 30% overpriced generally.

    In the U.K. London luxury homes fall for 2nd month in a row.
    Docklands also stalling now (much like the early 90’s)
    U.K. property dropping most for 16 years (year on year with economists predicting 30-35% falls during a 3 year period)
    30 Billion fixed rate Stg. mortgages ending this month alone in U.K.

    U.S. luxury homes in places like L.A. and New York now falling fast too, some of which are owned by the Stars.

    French property stagnating as well as places like Cyprus and Ireland.

    Even safe as houses Denmark enters recession today according to Bloomberg TV.

    Not a good time to buy anywhere for maybe a couple of years or so.

  • #84952
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    Anonymous
    Participant

    @paul wrote:

    30 Billion fixed rate Stg. mortgages ending this month alone in U.K.

    Surely this is one area where banks/building societies do have it in their power to ‘leave well alone’ interest rate-wise when these fixed rate mortgages come to an end.
    The reposessions that could follow any interest rate increases, with families struggling already, doesn’t bear thinking about.

    It seems madness to me that the Bank of England lowers interest rates to help the current crisis, but the ever-greedy banks/building societies are allowed to simply increase their rates as and when they want.

    Or have I got the wrong handle on things?
    (Am no expert on mortgage matters as I thank goodness don’t have one).

  • #84953
    Profile photo of katy
    katy
    Spectator

    I am not sure who to believe anymore 😕 Guess the truth is somewhere in-between.

    I heard on TV this morning that the falls in the UK are only in certain regions/areas, and some areas have actually increased. Highest falls, Ireland and in England they named 3 Cities including Manchester and Sheffield as having the highest falls. Scotland property has increased. The man also said that property prices are still higher than 2 years ago.

    My Brother-in-law has just bought a bank foreclosure in Florida for $115,000 which I think is a snip. 3/3 nice pool and largish garden. Would have been around $320,000 a couple of years ago. The bank wasn’t bothered as the owners had only a small mortgage. Needs appliances and a re-paint though and the location is a bit soul-less (like all recent new-builds.) The bank only had 3 foreclosures on their books though!

    The Spanish falls are hard to calculate, many of those houses were never worth that anyway. They are still unrealistic although I am sure they will one day. I think we are getting back to a time when people bought property for pleasure (or lifestyle in Agent speak!) which is as it should be.

  • #84954
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    Paul
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    I think U.K. prices are still higher katy than a couple of years ago but if the falls continue at pace then property will be worth less and negative equity rears itself which it is now already where many obtained 110% mortgages etc Falls are also more pronounced in some regions than others but this is likely to spread especially if London prices fall, they are already down 15-20% in parts of Wales and West Country. Florida sounds good value but will we be able to afford flights soon, and the Yanks won’t let us stay more than 90 days without greencards so I wouldn’t buy in the States for that reason?

    Charlie, you’re right about the greedy Banks. I’m having a ding dong with my Bank because whilst they want our money deposited and certainly need savers’ money because of huge writedowns, they cut savings rates by more than the B.O.E. did, twice recently, so that they could start making fantastic new mortgage deals for loads of new customers. Their policy now is to ‘concentrate on mortgages at the expense of savers’ this is from the horse’s mouth, thereby starting the whole cycle of irresponsible lending all over again, however this time savers might just rebel en masse.

    I look at Spanish property now and just don’t see value anymore especially with the general poor build quality too.

  • #84958
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    katy
    Spectator

    I look at Spanish property now and just don’t see value anymore especially with the general poor build quality too.[/quote]

    Paul, I have noticed this. We have been looking in the UK for something. One I liked was a pretty chocolate box place in Dorset. 3 beds, only one bathroom though but central heated and a superb kitchen. The garden was fantastic…320,000GBP. Compare in Spain at the present exchange rate around 400,000 euros. Include the 10% oncosts of buying here (at least) equals 440,000 to buy here. You wouldn’t get the same comfort and quality her for that price, infact where I live it wouldn’t even buy you a detached let alone a garden! Spain has just priced itself out of the (buyers) market.

  • #84961
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    Anonymous
    Participant

    i agree with katy, spanish property has been overpriced for several years now. On top of that you have the additional concerns over build legality and the general poor reputation that the spanish property industry has justly earned itself. Poor build quality in some areas, overcrowding, sewers that flood cos they were under-specified etc. Dodgy agents. Thousands of decent brits that have lost money. Mayors in jail. Corruption. Every day it gets worse and worse. And the fools brought it all on themselves, tainting spanish property for a generation and condemning people to a generation of stagnation for the spanish property market.

    The big issue with the spanish property market valuations is the 2 million surplus properties that we now have (and that no-one wants to talk about). Rumour has it that there are 50% more hotel rooms available than will ever be needed so the next issue is figuring out what to do with this surplus hotel problem (converting them to apartments or offices just compounds the surplus problem. Knocking down the hotels is politically unacceptable even if they are illegal builds)

    Anyone who buys in spain right now is a mug. Rent first. Whatever property you are thinking about buying, it will be 50% cheaper is 4 years.

  • #84974
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    Anonymous
    Participant

    The argument that the top end of the market will hold it’s own while the rest of the property market crumbles, is often expounded on this forum. It’s just sales talk and it’s bull.
    Think about what it is implying -rich people are stupid.
    In my opinion the top end of the housing market is more vulnerable than the lower end. Areas where people have paid a premium for snob value, on top of the inflated prices of the last few years have much further to fall.

  • #84977
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    Anonymous
    Participant

    Absolutely right — I’m not a realtor but as an attorney here in the US I am watching my clients trying to sell their homes pursuant to divorce, and the higher priced the home, the slower it is to sell. One client initially listed last summer at $699,000, a really gorgeous view home, and had to settle this spring for about $525,000. Other clients simply can’t get rid of their homes, and those too are higher end. On the other hand, the modest homes in city limits here are doing OK. So from what I see here, the “top end does great” theory is kaput. So much for grasping for the brass ring!

  • #84988
    Profile photo of katy
    katy
    Spectator

    Yes, there many properties here over the 3 million figure that have not sold in two years or more. Many have never been lived in and were built for speculation.

    Times are bad. Even Mark Thatcher is 3 months behind with his rent in the luxury area of El Madriñal 😆

  • #85016
    Profile photo of Paul
    Paul
    Participant

    Have pm’d you katy.

    Welcome Sherry from Seattle, you’ve confirmed what I’ve read recently. I think it was thought that the top end properties were fairly immune from a crash, but it does seem to be happening in the States and the point of the post was that Spain, UK, and other countries could well mirror the US.

    I think some agents in Spain who deal more with luxury homes are not happy with negative comments as now their own business is feeling the slowdown too, so they are trying to say it’s not happening.

    Imagine how expensive a mistake someone could make if paying millions once all the fees are added on too, may never see their money back.

  • #85020
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    Anonymous
    Participant

    A house in London has recently been reduced from £3.2 million to £1.9 million.

    http://www.dailymail.co.uk/news/article-1029259/The-bedroom-home-market-1-9m-worth-3-2m-months-ago.html

  • #85021
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    Paul
    Participant

    Very interesting charlie, it seems to bear out the topic of the post.

    Incidentally the agent Faron Sutaria is one of those along with Foxtons who are known to overprice properties in London but as the article says, even after reducing, most will still be sitting on a good profit, but this is a huge decrease nonetheless.

    http://www.housepricecrash.co.uk is an interesting site, the chap who runs it said on tv the other day that he was thought of as loony when he predicted a crash 18 months ago, he also says prices will fall a further 30% in the UK over the next 2-3 years. Next to him sat Melanie Blien from Savills (estate agent) who of course see a different picture, well they would anyway, a bit like agents selling luxury homes etc in Spain, she thought only 10% decrease.

    The thing is, economists with no real vested interest tend to see the real picture, who is it better to believe?

  • #85104
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    Anonymous
    Participant

    @paul wrote:

    Latest news suggests that high end properties are not immune from a property crash.

    It’s beginning to look more and more that way Paul.

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/09/cncredit109.xml

  • #85114
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    Anonymous
    Participant

    Surely against the current run of things

    http://uk.biz.yahoo.com/080709/214/i2yt8.html

  • #85115
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    Anonymous
    Participant

    Well mortgage refusals are as high as they have been in recent history, and over 1/3rd of the applications are for refinancing.
    So it would be a mistake to take these figures at face value.

  • #85154
    Profile photo of Paul
    Paul
    Participant

    Up to date info from a leading economist journal with stark warnings about falling house prices in UK and abroad.

    http://www.thisismoney.co.uk/houseprices

    Now, if some of the leading economists such as Roger Bootle, Justin Urquhart-Stewart etc are right, rather than face 30-40% falls in the next 2-3 years, surely it’s better to reduce now say 15% or more to get ahead of the game and bank the capital/equity at say 6% gross, rent for a couple of years or so, it could save tens of thousands of pounds/euros etc for the early bird. At least savings will grow the 6%ish rather than see the property’s value drop so much.

    If applied to a property for example valued at 400k (selling for 340k) it would save losing maybe another 60k later whilst making another 40k in interest.

  • #85386
    Profile photo of angie
    angie
    Spectator

    They didn’t think it could happen, but luxury homes in the Hamptons New York are now falling by large amounts, it’s been reported to that some luxury homes in London are also falling as well as those on the Costa del Sol.

    It seems no property market will be totally imune to a major price correction.

    Listen to the economists, not the agents who will say ‘now is a good time to buy’, wait a couple of years.

  • #85390
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    Anonymous
    Participant

    If you see what you want and it is at a price which you think is value for money, then buy it now. What you want may not be available in two years time, and who knows for certain when the market will bottom out? who knows for certain if it has not already. If anyone knows the answer to these questions I doubt they will be posting on here, they will be too busy counting their money.

  • #85395
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    Anonymous
    Participant

    i’ve seen a few ‘sold’ signs on my commute in to Northampton recently. Mostly smallish houses though, but shows thing are still moving a bit. Bigger places seem to be on the market for ages.

  • #86209
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    Anonymous
    Participant

    “Luxury country homes have been hit by worst price fall in 13 years”.

    Returning to the subject of luxury homes, they are the latest to be hit by the dramatic fall in house prices, figures revealed yesterday (according to the Daily Mail……and apologies to Mike 🙁 ). The value of prime rural properties – those currently valued between £450,000 and £5 million – have plunged by four per cent during the last three months – the most severe drop since 1995.

    Andrew Shirley, head of estate agent Knight Frank’s rural property research, said: “Vendors were slower to cut guide prices in this sector of the market, hoping the credit crunch would not affect them. “But they have now realised they are not immune to the downturn and are agreeing to lower their expectations. The same figures show that the average cost of cottages, farmhouses and expensive country mansions has fallen 7.9 per cent during the last year.

    It comes as the most expensive country house to be put on the market this year goes on sale in two weeks. Encombe House, which lies in a secluded valley in Purbeck, Dorset, has gone on sale only five times in its 1,100-year history. The £25 million price tag is being seen as a testing ground for the market value of exclusive rural properties.
    The grade-II listed country house was bought by American merchant banker Charles McVeigh in 2002 from the Scott family, who had owned the estate since 1807, when it was on offer for £15 million.

    Hasn’t anyone informed Mr. McVeigh that trying to make a £10 million profit in six years in a falling market is pushing it and just plain greedy?
    A greedy banker…..what’s new!

  • #86227
    Profile photo of Anonymous
    Anonymous
    Participant

    A greedy banker…..what’s new!

    What about ‘A greedy unemployed banker………’

  • #86228
    Profile photo of Anonymous
    Anonymous
    Participant

    😆

    A case of what goes around comes around……to bite you in the bum.

    Must admit feel sorry for the ones who were employed just to push a pen.
    The others, well they have to take the rough with the smooth, but if they were wise they probably have plenty stashed away for this ‘very rainy day’….. unless they invested in Spanish off-plans.

  • #86229
    Profile photo of Anonymous
    Anonymous
    Participant

    Too true Charlie……..

    I did hear that some staff took their bonuses for the last few years as Lehmann shares.

    Whoops…….. 😕

  • #86230
    Profile photo of Anonymous
    Anonymous
    Participant

    Sounds like their decision equalled those who decided to invest in the Spanish property market in the last few years then. 🙁

  • #86231
    Profile photo of Anonymous
    Anonymous
    Participant

    I remember Justin Urquhart-Stewart, with his red braces, sitting on the breakfast BBC sofa expounding the virtues of BT and not to just think of it a a phone company providing a phone in the home. He was talking up the company. About 1 week later the share value had halved!

  • #86232
    Profile photo of katy
    katy
    Spectator

    http://www.dailymail.co.uk/news/article-1056800/Spivs-sharks-champagne-corks-popping-Meltdown-Monday.html

    Interesting article in the Daily Mail (I make no apologies for reading it 😉 )

    Whatever happens it always seems to be us, the general public who suffers most. We can smirk when the USA is feeling the pinch but look at the consequences for the rest of the world. Likewise a stockmarket crash is even worse for the small investor or anyone who has a pension fund.

  • #86286
    Profile photo of angie
    angie
    Spectator

    A BBC programme the other night shows angry protesters outside Foxtons offices, Foxtons along with other agents were clearly blamed for seriously overpricing homes in London and suburbs and other upmarket locations in the UK, as well as a lot of other dirty tricks.

    Foxtons’ agents individually get 10% of the Company’s high commission, it all sounds reminiscent of the not so nice larger Spanish agents.

    Savills are guilty too of overpricing but are now saying the market will fall in the UK by 25% by Dec 2009, and they would be expected to show caution, whereas the economists are saying falls could now be as much as 40% in some areas.

  • #86299
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    Anonymous
    Participant

    There is no such thing as overpricing if you are able to sell. Something is only overpriced if you are unable to sell.

  • #86313
    Profile photo of angie
    angie
    Spectator

    Well, there is certainly a lot of Overpriced property right now in the UK and Spain, because very little is selling, so there is such a thing as Overpricing!

    Yesterday’s Bricks and Mortar in the Times interviews 8 estate agents in UK, most are now blaming the vendors for not reducing although they priced the properties originally, like one being marketed at £750k which was worth £500k in reality.

    His comment that there are 3 stages of mood in selling in a depressed market, ‘Indignation, Resignation, and Capitulation’. As for the UK he says we are only just entering ‘Resignation’.

  • #86315
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    Anonymous
    Participant

    As I said it is only overpriced if you are unable to sell.

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