Property values to decline

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This topic contains 20 replies, has 6 voices, and was last updated by Profile photo of angie angie 3 years, 7 months ago.

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  • #57443
    Profile photo of logan
    logan
    Participant

    Standard and Poors the rating agency have announced they expect Spanish property to decline by 20% in coming 4 years period. They blame poor economic conditions in Spain and over supply of property as the principal cause.

    http://www.murciatoday.com/standard-and-poor%E2%80%99s-say-spanish-property-prices-will-decline-by-20-over-4-years_16391-a.html

  • #83067
    Profile photo of angie
    angie
    Spectator

    Sareb has already put 13,000 toxic properties up for sale at rock bottom prices which are still being managed by Bankia, and this move is considered premature, another 89,000 may be listed for sale this year, but does anyone have figures of how many are actually selling? 🙄 If they don’t sell, average price will fall further! 🙄

    However, there are numerous Banks including La Caixa who themselves have listed another 12,000 this year, and these banks have their own websites and in effect acting as estate agents potentially undermining the market further with like for like properties.

    http://www.closeqrops.com/spanish-property-pri … oxic-bank/

    ‘Oh what a tangled web they weave’ it’s all very confusing, maybe Mercadona etc will start listing them soon 😕

  • #83064
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    Property prices have declined, but I wonder if they will continue to do so in popular resort areas, now that the Russians are increasing in number.

    http://cincodias.com/cincodias/2013/05/02/economia/1367507664_319231.html

    They are vying now as the second biggest group of home-buyers against the French – the Brits are still the biggest foreign buyers of property but with a 16.3% share, down from 23.4%
    Anyone selling property should consider using a Russian speaking estate agent, if they can’t find joy with Brits.

    Los británicos continúan siendo los mayores compradores de casa en España, ya que representan el 16,63% de todas las operaciones, aunque su tendencia es claramente descendente si se compara con el 23,4% de 2010. El segundo y el tercer lugar de la clasificación son los más disputados. A continuación de los británicos se sitúan los franceses, con el 9,96% de las operaciones, casi empatados con los rusos, que en muy poco tiempo se han alzado a la tercera posición, con el 9,62%, desbancando a los otrora todopoderosos alemanes y, lo más importante: subiendo.

  • #83065
    Profile photo of angie
    angie
    Spectator

    I’m sure they will decline further if Sareb and other banks hold large numbers of toxic properties in those popular resort areas which they probably do, and they start listing their 1000’s. Certainly saw enough evidence of prices falling or inviting offers well below current prices on the CDS recently. 🙄

    http://www.bloomberg.com/news/2013-03-12/spanish-bad-bank-plans-2-billion-of-2013-sales-guindos-says.html

  • #83058
    Profile photo of logan
    logan
    Participant

    I agree with S&P in that until the over supply and economic situation improves the market will decline further. Spanish and other people have their backs to the wall economically right now. Banks have no capital for lending and are struggling to meet the Basel 111 rules of required capital ratios.

    Yes a number of foreigners not hit so hard in the recession will buy if they have the cash or take on the debts the banks have in repossessions. Russians are an example of cash buyers with plastic bags full of cash unless they were caught in Cyprus. 🙂

    However that in itself will not really dent the serious fundamental problems Spain has.

    Also consider if over supply is massive now because of existing repossessions you also have to add to that supply chain the zillion properties Brits, Spanish and others are desperate to sell.

    I am hearing tales of owners trying negotiating with lenders to off load their properties all the time. Banks are playing hard ball and will help in certain circumstances but only if the debt is less than the achievable market value and all taxes and charge liabilities are up to date. So fat chance.

    If an when the market turns I suspect many who don’t have property on the market now will attempt to sell for what they can achieve quickly, simply to get out from under, thereby increasing supply even further. It’s a vicious game in a wrecked market.

  • #83057
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    House resale prices remained stable (with a slight increase of .3%) in April

    http://www.idealista.com/news/archivo/2013/05/03/0613349-indice-idealista-com-conoce-cuanto-vario-el-precio-de-la-vivienda-en-abril-en-tu-zona

    The biggest rises were in Valancia and La Rioja (1.1% rise)

    las mayores subidas se produjeron en la comunidad valenciana (1,1%), la rioja (1,1%), castilla la mancha y baleares (0,5% en ambos casos)

  • #83055
    Profile photo of angie
    angie
    Spectator

    Nope, still declining according to Mark’s recent article unless it’s ‘propaganda’, and, UBS, BBVA, & S and P predicting further falls between 8-20%, it’s all so confusing 😕 A 12% fall year on year in Q1 🙄

    http://www.spanishpropertyinsight.com/2013/04/ … ce-update/

  • #83053
    Profile photo of Anonymous
    Anonymous
    Participant

    Based on asking price also yes for one month. It doesn’t mean a thing.

  • #83054
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    @angie wrote:

    Nope, still declining according to Mark’s recent article unless it’s ‘propaganda’, and, UBS, BBVA, & S and P predicting further falls between 8-20%, it’s all so confusing 😕 A 12% fall year on year in Q1 🙄

    http://www.spanishpropertyinsight.com/2013/04/30/spanish-house-price-update/

    You’re quoting historical falls (which no-one is arguing).
    I’m linking to the current April resale figures – and the values stabilised (actually rose a vey small amount).
    Now, we can all make predictions – we may even agree on some – but don’t discard genuine data, as it may be of value to sellers as well as buyers on this board.

  • #83049
    Profile photo of angie
    angie
    Spectator

    La Rioja had a 39.7% decline since 2007, and the region does not have a glut of properties as on the Costas so a miniscule rise may have occurred but better than nothing 🙄

    I’m sure the above posts and Mark’s recent post are also based genuine data or are you suggesting otherwise? 🙄 Most sellers (and buyers) on this site probably don’t come from La Rioja, the majority of both buyers and sellers are no doubt on the Costas and in larger Cities.

    The general consensus appears to be ‘now’ does not look like the bottom of the market.

    From 1st hand recent experience, many sellers are still overpricing simply because their borrowings are higher than the property valuations, they can’t afford to take a loss and have to repay outstanding debt, hence the reason some have been on the market for 7 years or so 🙄

  • #83042
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    @angie wrote:

    The general consensus appears to be ‘now’ does not look like the bottom of the market.

    And according to the April figures, prices held steady, indeed improved in a few areas.
    We can speculate all we like. It may well be that the April figures are a blip, or part of a short-term pause in further falls. But most pundits invariably miss a market when it turns, which is why we should keep a keen eye on actual data, not on “wot I reckon”.

  • #83043
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Maybe it is because I am not an economist nor a real estate expert, but I am confused by this report.

    In markets that are not manipulated, the price-point is set by what people will pay. Even if half of the home buyers are foreigners, it seems to me that prices will have to drop much more than 20% before Spaniards will begin to purchase real estate.

    If banks were forced to pay their bills, to declare truthful asset values, were subject to the same austerity programs that are being forced on the middle class and poor and most importantly if they were forced to sell their nearly worthless real estate holdings, we may true market-based real estate values emerge.

    Until then, the price of real estate in Spain is reflective of market manipulation in order to protect some very wealthy people and their suckling politicians.

  • #83036
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    here’s another figure that may indicate either a sea-change, or (if you prefer) a blip only for April.
    Car sales rose by 11%, after 7 months of falls.
    http://www.eleconomista.es/ecomotor/motor/noticias/4796130/05/13/Las-ventas-de-coches-suben-un-11-en-abril-tras-7-meses-de-caidas-gracias-al-PIVE.html
    Now the article states that people were persuaded to buy thanks to the new PIVE scheme. But nonetheless, they bought. And house resale values rose slightly in the same month. Too early to call a trend – but the next few months may be interesting, don’t you think?

  • #83035
    Profile photo of logan
    logan
    Participant

    Gary – Spanish banks require funding from the ECB and in good times the financial markets to keep them afloat. Borrowing in part is secured by their asset portfolios which are grossly over valued. If they came clean on their balance sheets with the true and actual values of their asset base and none performing loans then the ECB may decline to support them. The market certainly would. They don’t want to make things worse.

    These institutions cannot function by fractional reserve banking alone. That is why on paper at least property values are not declining as they should.

    In investment parlance Spanish property has junk status. There will come a time, if the financial depression continues as looks likely, when the entire EMU system will collapse. Markets know that but in the meantime it continues to survive because no one knows or can predict just when that will be.

    Negative deposit rates are coming soon to a market place near you. 🙁
    http://go.bloomberg.com/euro-crisis/2013-05-03/draghi-deposit-rate-u-turn-gets-negative-review/

  • #83034
    Profile photo of angie
    angie
    Spectator

    ‘Wot I reckon’ is that idealista.com quotes itself as being the leading Real Estate website in Spain, a R.E. Portal where you can ‘find and advertise real estate’ according to it’s founder Jesus Encinar, hm so no bias I suppose? 🙄

    Quote ‘most pundits invariably miss a market when it turns’, this has been quoted for years now by same people, so far wrong, one day it might come right, but you fail to mention 2 million unsold homes in Spain although true statistics are impossible to find so quite likely higher and don’t let’s forget to factor in 11% transaction costs to buy, and 5%+ to sell, never again would I buy anywhere abroad with such high transaction costs, these need to fall to tempt people back 🙄

    I’ll stick to most non real estate analysts, economists and my own CDS findings, not forgetting Mark’s recent post, Logan’s, MG’s, katy’s and others who have experience, can’t speak for the Costa Blanca or less over-supplied areas of Spain other than ‘wot I read’ 😀

  • #83032
    Profile photo of Anonymous
    Anonymous
    Participant

    I’m neither buying or selling, but I walk around with my eyes open, and I know propaganda when I see it. The Banco Malo have given themselves 15 years to clear up the mess, and they won’t be in a hurry to throw too many properties on the market, and nor will the proper banks whose borrowing from the money markets depend on the value of their property portfolios.

    But on what I regard as the bright side, the largest local estate agents (with a terrible reputation among expats) have again started using their buses to ferry prospective buyers around, an activity that ceased five years ago.

    And the figures quoted by Marcos, albeit for one month only, can’t be ignored. I would suggest that when the market bottom is reached, very few experts will be aware of it.

  • #83029
    Profile photo of logan
    logan
    Participant

    From a market investors perspective waiting or searching around for the market price bottom is a waste of time. By inference it suggests people are sitting around with cash in their pockets ready to pounce when the time is exactly right to buy.

    That’s a silly scenario albeit painted by myself. Investors have their money elsewhere and doing nicely thank you otherwise they would shift it to where it would perform.

    Investors will only return to this particular market when proven returns are manifest or risk reward is calculated positive.

    This market then is dependent for it’s recovery from second homers in Europe or Spain who possess the confidence to spend their hard earned money on something they don’t really need. In addition to support the high annual overhead costs for the same on the belief renting will produce a return.

    In an austerity ridden world with all it’s uncertainty ask how likely is that?

  • #83025
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    From a market investors perspective waiting or searching around for the market price bottom is a waste of time. By inference it suggests people are sitting around with cash in their pockets ready to pounce when the time is exactly right to buy.

    That’s a silly scenario albeit painted by myself. Investors have their money elsewhere and doing nicely thank you otherwise they would shift it to where it would perform.

    Investors will only return to this particular market when proven returns are manifest or risk reward is calculated positive.

    This market then is dependent for it’s recovery from second homers in Europe or Spain who possess the confidence to spend their hard earned money on something they don’t really need. In addition to support the high annual overhead costs for the same on the belief renting will produce a return.

    In an austerity ridden world with all it’s uncertainty ask how likely is that?

    I appreciate what you’re saying, but you’re a ‘one -off’, a speculator for the sake of it, not that there’s anything wrong with it, but the rest of us live in a different world.

    We buy homes to live in, or to have holidays in: we may well follow the property markets, but only marginally, the football results on a Saturday night are more important to us, or even the recent scandals on Eastenders.

    Because of my personal circumstances, I’m a currency market addict. I’ve studied it in depth for years, and am I any the wiser?

    No.

  • #83024
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    Rocker touches on a subject that could change everything overnight. Germany leaves the Euro, or kicks the Med countries out…

    Looking less likely than a year ago, but things may change after the German elections in September.

  • #83009
    Profile photo of logan
    logan
    Participant

    Rocker – You would be surprised to learn given your comments that many investors/speculators made a decent living from property and some still do in other parts of the world. I have now retired largely because of the recession and the fact the world has completely changed. However I still try to keep up to date and in touch with market conditions.

    Another current major factor in the ever declining Spanish market is it’s impossible to see the exit routes. In a normal market investors need the confidence if they buy property it can be turned over in a reasonable time span.

    Until that confidence returns investment from speculators will stay away. Perhaps you believe that’s no bad thing but any market needs diverse activity otherwise it becomes seriously dysfunctional. Spain’s market is just that. Holiday homers alone will not cut it.

    Market speculators in any sector are blamed for so many ills but in reality they are an essential part of the system of capitalism.

  • #82881
    Profile photo of Anonymous
    Anonymous
    Participant

    Logan I completely agree there. They get blamed for the normal business cycles booms and busts that is built into the system as we have it.

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