Maybe Spain’s future?

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This topic contains 18 replies, has 11 voices, and was last updated by Profile photo of Anonymous Anonymous 7 years, 6 months ago.

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  • #55007
    Profile photo of katy
    katy
    Spectator

    http://www.tampabay.com/news/localgovernment/article1001646.ece

    Could this be the future for the Costas. Absentee owners not paying fees mainly on property built in the boom years.

  • #92271
    Profile photo of Anonymous
    Anonymous
    Participant

    It’s already happening; I’ve just returned from a trip to Almeria and must say it was rather scary. From Malaga capital to Cabo de Gata one completed complex after another in a state of near dereliction. It’s not much better on the way to Sotogrande either; the Manilva area is particularly frightening………….. I guess many owners feel it is no good to spend more money on their “investment”.

    The funny thing is that these are the “urbanizations” and areas pushed by the British chains of estate agents with the best investment potential and the punters where even encouraged to buy a few!!!!!!!!

    Lots of blood and tears !!

  • #92279
    Profile photo of Anonymous
    Anonymous
    Participant

    @UBEDA wrote:

    It’s already happening; I’ve just returned from a trip to Almeria and must say it was rather scary. From Malaga capital to Cabo de Gata one completed complex after another in a state of near dereliction. It’s not much better on the way to Sotogrande either; the Manilva area is particularly frightening………….. I guess many owners feel it is no good to spend more money on their “investment”.

    The funny thing is that these are the “urbanizations” and areas pushed by the British chains of estate agents with the best investment potential and the punters where even encouraged to buy a few!!!!!!!!

    Lots of blood and tears !!

    I guess many owners do not have any money to spend on their “investment”.
    The 100+ Euro/month is an unwelcome expense for something which does not produce anything…

    The main problem is how to chose a holiday letting. I keep my fingers crossed that the places we go over the summer (let from holidaylettings) are not drug areas or derelict…

    I expect many areas to be abandoned, on a larger scale than they were already abandoned 20-30 years ago by people migrating to richer areas of Spain.

  • #92286
    Profile photo of Anonymous
    Anonymous
    Participant

    When things do return to normal (assuming that they do), who is going to want to buy an apartment built five years previously and never used? I think that a lot of these homes lying empty today will never be taken up and will only – eventually – be demolished.

  • #92287
    Profile photo of Anonymous
    Anonymous
    Participant

    @lenox wrote:

    When things do return to normal (assuming that they do), who is going to want to buy an apartment built five years previously and never used? I think that a lot of these homes lying empty today will never be taken up and will only – eventually – be demolished.

    People would buy them, for the right money (about 20% of the current value).

  • #92288
    Profile photo of Anonymous
    Anonymous
    Participant

    This thread makes incredibly depressing reading.

  • #92291
    Profile photo of Anonymous
    Anonymous
    Participant

    It is depressing. I’ve been warning about this for some time. See this article:
    http://www.spanishpropertyinsight.com/doctor/080622.htm

    I fear there are some areas where there are no buyers at any price. After all, owning property costs money, and the economics of some developments/areas now just don’t stack up.

    Mark

  • #92315
    Profile photo of mike
    mike
    Participant

    @flosmichael wrote:

    People would buy them, for the right money (about 20% of the current value).

    Can anyone tell me how the local property spivs are spinning this? My local corredor used to laugh when I asked if he had anything for €50K. Would he have anything available today?

  • #92316
    Profile photo of Anonymous
    Anonymous
    Participant

    @mike wrote:

    Can anyone tell me how the local property spivs are spinning this? My local corredor used to laugh when I asked if he had anything for €50K. Would he have anything available today?

    Ask five different people and you´ll get five different answers.

    There are still quite a lot of EAs out there who will tell you that the market has bottomed, now is the best time to buy, etc, etc. Further the press is full of puff articles, inspired by people with a vested interest in selling property saying the same. Even basic research will tell you that is bull.

    I claim no expertise but have been following the market (as a potential buyer) very closely for the last six months. This is what I have learnt.

    – Prices have fallen by around 30% from their peak in 2006. They are still faling and the rate of that fall is, if anything, increasing.

    – Asking prices are still generally way too high. Where properties are selling it is generally for substantially less than the asking price.

    – Lots of new builds will never be completed. Others that have been have small communities burdened with huge costs. Be very careful before even thinking about such places.

    – The drop in prices still has some way to go. Most people now say it´ll be 1 – 2 years before the bottom is reached.

  • #92317
    Profile photo of mike
    mike
    Participant

    @brianc_li wrote:

    – Lots of new builds will never be completed. Others that have been have small communities burdened with huge costs. Be very careful before even thinking about such places.

    How much is a typical community charge these days?

    @brianc_li wrote:

    – The drop in prices still has some way to go. Most people now say it´ll be 1 – 2 years before the bottom is reached.

    I bet that when the bottom is reached the mortgage repayments will be less than the community charge in a lot of cases. Pull them down now, at least it will keep some people in employment for the next few years.

  • #92318
    Profile photo of Anonymous
    Anonymous
    Participant

    I think it’s important to acknowledge that not all properties and not all areas will suffer an even reduction across the board.

    Desireable areas that I am familiar with in my region have really only fallen about 10-15% at most, some not at all and it is still difficult to find properties in these areas for sale.

    In the less desireable and over-built areas in my region, the average reduction is between 25-35%, there are a few exceptions over that but not many.

    The simple fact is, those without a mortgage don’t have to sucumb to accept low offers and those with high mortgages can only drop 20-30% as they cannot afford sell at a loss and still owe their bank money – their bank would not allow them to comlete at a Notary and walk away with a shortfall.

    Most bank repossessions are too expensive, usually because the owners have re-mortgaged to the hilt to avoid foreclosure.

    The only sizeable price drops I have seen are where the banks have foreclosed on a builder/developer and have written off a portion of the commercial mortgage to attract a sale- in these cases I have seen up to 65% off list prices, which is fine if you are happy to buy 200 apartments in one go, even then the bank need to make the buyers go through hoops to ensure the money is clean.

    In short, there really isn’t much more room for manouvre for the individual buyer at present, unless the banks find the volume so unmanagable that they have to take a the unprecedented step of selling below the outstanding mortgage on the property. They will also be losing about 20% more in legal and repossession costs too.

    As one Vice president of a bank told my collegue, “whilst values are still quite high (artificially he added) – these repossessed properties look better on their balance sheets as an asset than selling them off at a loss”! He intimated they could hold out until an up-turn arrives over the next 2-3 years.

    I personally don’t see any large across-the-board price drops, but from time to time we shall hear of the occasional bargain.

  • #92319
    Profile photo of Anonymous
    Anonymous
    Participant

    @peter Good wrote:

    I think it’s important to acknowledge that not all properties and not all areas will suffer an even reduction across the board.

    Desireable areas that I am familiar with in my region have really only fallen about 10-15% at most, some not at all and it is still difficult to find properties in these areas for sale.

    I personally don’t see any large across-the-board price drops, but from time to time we shall hear of the occasional bargain.

    I guess you mean that the bargains are rare for desirable area properties (which is a very relative concept, as different people like different places…)…

    What about the 1.050.000 properties that Mark write about in

    http://www.spanishpropertyinsight.com/buff/2009/05/glut-of-new-homes-on-market-breaks-1-million-barrier/

    How many of them are in desirable areas?

  • #92329
    Profile photo of Anonymous
    Anonymous
    Participant

    @peter Good wrote:

    I think it’s important to acknowledge that not all properties and not all areas will suffer an even reduction across the board.

    Agreed

    @peter Good wrote:

    Desireable areas that I am familiar with in my region have really only fallen about 10-15% at most, some not at all and it is still difficult to find properties in these areas for sale.

    I´ve seen you post this – or very similar – on here a few times now. Perhaps it is part of the regular spiel you also use with potential purchasers?

    At first I though it was a plausible statement. My experience over the past six months however now leads me to disagree with you. It so happens I have had pretty well exactly the same line from EAs in three separate areas of the CDS. It strikes me that it is now a standard precursor to ´This area is one of the exceptions´.

    The particular area I am interested in has shown hardly any drop in window prices from the peak a few years ago. When you scratch the surface however discounts from the asking price of 30% are not uncommon.

    Yes there will always be a few exceptions but you are dealing with a fundamental of market economics here. Pretty well ALL prices are coming down. The rate of decline is, if anything, increasing and pretty well all the indicators suggest the drop has quite some way to go.[/quote]

    @peter Good wrote:

    The only sizeable price drops I have seen are where the banks have foreclosed on a builder/developer

    This statement surprises me somewhat. Where I have seen the best opportunity for purchasers is distressed sales. e.g. Someone who is about to have their property reposessed or who needs to go home for medical/family reasons. The number of these is increasing as the downturn deepens. They are bound to drag the rest of the market down.

    @peter Good wrote:

    In short, there really isn’t much more room for manouvre for the individual buyer at present.

    Disagree fundamentally. Buyers are in a very strong position. Do your research, understand the market, forget about asking prices, bid what you think a property is worth.

    @peter Good wrote:

    As one Vice president of a bank told my collegue, “whilst values are still quite high (artificially he added) – these repossessed properties look better on their balance sheets as an asset than selling them off at a loss”! He intimated they could hold out until an up-turn arrives over the next 2-3 years.

    There won´t be an upturn in anything like 2-3 years. If history is anything to go by the market will bottom in 1-2 years then bounce along there for another 3-4. Personally I think Spain will face a serious banking crisis before too long.

    @peter Good wrote:

    I personally don’t see any large across-the-board price drops, but from time to time we shall hear of the occasional bargain.

    Very few do. The asking prices (particularly on CDS) are still ridiculously high.

  • #92331
    Profile photo of Anonymous
    Anonymous
    Participant

    brianc_li

    sounds like the agents are terrified of an open price war. If the ‘real’ prices are kept behind the counter, then I guess they consider the overblown shop window prices are a good high starting point for negotiation, rather than starting negotiation from real current prices?

  • #92332
    Profile photo of Inez
    Inez
    Participant

    Thats one angle on it Goodstitch. If you have an owner who finally agrees his price has to come down, he will have a bottom line, unless he bought cash and just wants to get out, as he will have finance etc. But, all buyers offer from the asking price.

    A year or so ago you could state that a price was the price and no less, now the buyer will go elsewhere and even pay slightly more but believe he has a bargain as he managed to barter the price down.

    So, for someone to stay in business, its wise to keep the price a touch north of the basic the owner will accept. This allows both parties to feel happy at the end.

  • #92333
    Profile photo of Anonymous
    Anonymous
    Participant

    Goodstitch,

    Funnily enough I don´t think most of the blame for inflated asking prices rests with the EAs. Vendors, particularly those who bought in the middle of this decade, have inflated expectations. Granted this isn´t helped by the fact that when they look at comparable properties in EAs windows they see ridiculously high prices.

    I have little doubt that in the end market forces will prevail and we will see more realistic asking prices. The only question in my mind is how long this will take.

  • #92339
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    Anonymous
    Participant

    brianc_li

    good points from you an Inez. It really does depend which side of the fence you sit as buyer or seller as to what is the right way to go. I also think market forces will prevail sooner or later. The huge over supply must mean huge amounts of money tied up in dead stock. The waiting for price increase and increased demand game must be adding to debt a huge amount and I would have thought something must give soon?

  • #92340
    Profile photo of mike
    mike
    Participant

    @peter Good wrote:

    The only sizeable price drops I have seen are where the banks have foreclosed on a builder/developer and have written off a portion of the commercial mortgage to attract a sale-

    Then I can only imagine that those who bought a number of properties off plan with a view to sell before completion have yet to bring their properties to the market.

  • #92342
    Profile photo of Anonymous
    Anonymous
    Participant

    @inez wrote:

    A year or so ago you could state that a price was the price and no less, now the buyer will go elsewhere and even pay slightly more but believe he has a bargain as he managed to barter the price down.

    Serious buyers have a good idea about the current values, they cannot be deceived by some games that sellers might play… Serious buyers won’t “believe” they get a good price, they will know they got a good price…

    About bargaining, would anyone buy now in Spain without demanding a
    reduction (whatever the asking price is)?

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