Should you sell your holiday home before the Euro crashes?

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  • #56425
    Profile photo of angie
    angie
    Spectator

    Saturday’s Telegraph article by Emma Simon:

    http://www.telegraph.co.uk/finance/personalfin … perty.html

  • #106736
    Profile photo of katy
    katy
    Spectator

    Some good points there (despite it being another advert churned up as an article) One point they didn’t make is that it is not just a case of should/shouldn’t sell, it is could you sell. I know quite a few people who have reduced significantly and still haven’t sold. Whatever the Agents say there just aren’t any punters. We hacked over two hundred thousand off our property and still took back to the UK considerably more than we took out. We did buy in the 90’s though. Even then I doubt we would have sold except for the sheer luck of a relative getting a post at the CDS hospital and our villa was only a few minutes away.

  • #106737
    Profile photo of logan
    logan
    Participant

    I think the word Katy is ‘advertorial’. πŸ™‚
    In France it’s the same story. Brits desperate to sell, reduced the property to the bone without any interest. French banks have cut lending due to their expose to Greece and other factors. The market is moribund.
    Of course second home owners in Europe should sell if they can, simply to get out of Euros. As the advertorial says if the Euro crashes and Spain reverts to the Peseta your property overnight will be worth at least 20% less.
    In these turbulent times you need to make the cash in your property work for a better return somewhere else. Even 3-4% a year covers inflation.
    Property as an investment has had it’s day, certainly for a decade.

  • #106739
    Profile photo of angie
    angie
    Spectator

    I would be trying to sell now if I owned Euro property just so that I could still convert to sterling at a good rate. The real problem as we all know, is, how to to sell in this market with so many others trying to do the same.

    We’ve some friends on a typical golf development on the CDS, desperate to sell, but they bought there against my advice just over a year ago despite getting a big so called discount. I’ve told them to keep their property price well below those around them, even try house swaps with UK homeowners as there are always loads of Brits still wanting to try ‘a life in the sun’, then 2 years later they wake up. Quite a lot of reductions in property prices going on now in parts of the UK provided it’s not in London, Surrey, Bath etc. Loads of Brits are trying to sell in the UK too so room for a property swap there maybe.

    Are Spanish Banks prepared to remortgage, and up to what level, at these reduced property prices or is this cuckoo land talk of mine? πŸ˜•

  • #106742
    Profile photo of logan
    logan
    Participant

    @angie wrote:

    Are Spanish Banks prepared to remortgage, and up to what level, at these reduced property prices or is this cuckoo land talk of mine? πŸ˜•

    As a general rule Spanish banks are now only lending on repossessed property. Re-mortgaging is off the scale as possible right now almost anywhere. That’s not to say if you paid over the odds someone might be willing to lend but won’t be easy.
    Selling with an existing mortgage you can transfer to the buyer might help shift a property but the costs would have to be factored in to the overall sale price.

  • #106746
    Profile photo of Anonymous
    Anonymous
    Participant

    The time to sell has passed.

    To get a sale today you need to market 20% or more below the lowest prices of similar apartments in a complex. This will put your sale value near or at the bottom of the cycle when it arrives (IMO).

    You can see plenty of sellers reducing advertised prices to 50% of peak values and still they remain unsold. You would need to market below these levels to generate interest.

    So your looking at marketing at 60~70% or more below peak value to have any hope of selling. Your buyer would still try to reduce you further!

    If you use your apartment as a holiday home then ride out the storm. If you bought it as an investment you are screwed regardless of the currency rates

  • #106752
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    Hello, I’m fairly new to this forum, but would like to add my opinion (I’m not a property owner in Spain but am considering becoming one in 2-5 years time). I agree with the previous poster that now is a bad time to sell, which does in fact make it a good time to buy (but only in the long term – anyone buying who may be selling within a year must have their head examined). I think also there are two main scenarios that may happen over the next few months/years. Remember that the incoming govt elect has stated that jobs and debt are their main priority. Therefore we mustn’t rule out scenario1 – Spain decides to leave the Euro and introduce its own currency – this Spanish Euro would be at first at least 10% devalued (and over the short term markets always overcompensate, so there could be a 20% discount for a time). Remember that Spain has already managed an increase in tourist numbers and exports this year. A devaluation in the currency would bring a lot more trade to Spain. My guess is that under this scenario you’d have 6 months of decreasing currency values and gloom, but then a change of sentiment as things got better in many sectors, followed a couple of years later by a long term rise in property values. This happened when the UK left the ERM in the 90s. The second scenario is that Germany or the IMF give Italy, Spain etc a big bale out in exchange for further cuts and financial control. Scenario2 would, I fear lead to a long term stagnation and a long term slump in property prices (probably good for buyers, bad news for sellers). But at least the currency would remain stable.

    Incidentally, you may be wondering why I called the new currency the Spanish Euro, and not the peseta. The reason is illustrated by an article I read in the Spanish press last week. If the old conversion factors were used, then a coffee (for example) would cost 255 pesetas. No government could afford this type of bad publicity and confusion (there’ll be enough of both in this eventuality anyway). Besides which there are no doubt people who’ve hoarded old stocks (and counterfeits) of peseta notes, so the government would have to introduce a different currency.

  • #106757
    Profile photo of logan
    logan
    Participant

    JP1 is right the time to sell has effectively passed. It’s better to hold on to an asset if you can only sell it for less than you paid. That’s the scenario most sellers are faced with.
    The trouble is holiday homes are not really like other property investments. In fact I have always advocated that it’s probably the worst investment you can usually make in a lifetime.
    I have never understood why anyone would want to holiday in the same place forever. Lets face it Spain is not nirvana when it comes to other places in the world you can enjoy. However each to their own.
    Holiday homes were a business for me, yet it always baffled me why folks would buy them. There are so many alternatives for the imaginary traveller, a small concrete box in Spain seems little in comparison.
    I think people are waking up finally to that. Being treated like cattle by budget airlines, overpriced tourist traps, being ripped off by the Spanish and huge overheads rising each year just to keep a place in the sun. There is a long list, not least of these is the difficulty in renting it to others.
    The current rush to sell can only exasperate the problem.

  • #106758
    Profile photo of peterhun
    peterhun
    Participant

    @logan wrote:

    Holiday homes were a business for me, yet it always baffled me why folks would buy them. There are so many alternatives for the imaginary traveller, a small concrete box in Spain seems little in comparison.
    .

    You can

    a) Live and Work there
    b) Retire there.

    For me, both are options due to the internet.

  • #106759
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    I think there are loads of reasons why someone would want a holiday home in Spain eg two hour flight from the UK, generally warmer and drier climate, the nightlife, magnificent countryside, the food and wine etc. Equally there are lots of reasons why people would prefer another place eg Italy or Cyprus or even Florida. It’s not just Brits and Irish either – there are German and Scandinavian developments there in Spain too. But isn’t this digressing a bit from the thread, and even the forum (Spanish property!) ? I think the main reason not to sell now is that things are uncertain all over Europe, so where are you going to find your buyer? Maybe, as suggested above you find an internet worker who’s decided to settle in Spain, but there can’t be many of those around. So who would be buying up property at the present time? I can’t say I have an answer to that one!

  • #106764
    Profile photo of logan
    logan
    Participant

    @peterhun wrote:

    You can
    a) Live and Work there
    b) Retire there.
    For me, both are options due to the internet.

    Yes but you don’t need to risk capital to accomplish either of those things. Buying a holiday home abroad is a big risk, your capital usually gets tied up for years, taxes have to be paid, money value depreciates or fluctuates and large annual costs are attached.
    The return does not and never has justified the expense in my opinion. Let someone else carry the strain, rent or stay in a comfortable hotel and enjoy the return on your capital paying for it.
    Have holidays abroad yes of course, many good reasons for that but capital investment in a holiday home abroad can never be justified from a financial perspective. It’s an emotional decision and when money and emotion become mixed up you usually lose.

  • #106772
    Profile photo of peterhun
    peterhun
    Participant

    @logan wrote:

    @peterhun wrote:
    You can
    a) Live and Work there
    b) Retire there.
    For me, both are options due to the internet.

    Yes but you don’t need to risk capital to accomplish either of those things. Buying a holiday home abroad is a big risk, your capital usually gets tied up for years, taxes have to be paid, money value depreciates or fluctuates and large annual costs are attached.
    The return does not and never has justified the expense in my opinion. Let someone else carry the strain, rent or stay in a comfortable hotel and enjoy the return on your capital paying for it.
    Have holidays abroad yes of course, many good reasons for that but capital investment in a holiday home abroad can never be justified from a financial perspective. It’s an emotional decision and when money and emotion become mixed up you usually lose.

    Same applies to the UK but its a damn sight cheaper to buy than in London. I could buy my London flat but its something like 9k euro/m2. Buying in Spain is peanuts in comparison. I’m not going to do it – its a crap investment

  • #106773
    Profile photo of katy
    katy
    Spectator

    @logan wrote:

    @peterhun wrote:
    You can
    a) Live and Work there
    b) Retire there.
    For me, both are options due to the internet.

    Yes but you don’t need to risk capital to accomplish either of those things. Buying a holiday home abroad is a big risk, your capital usually gets tied up for years, taxes have to be paid, money value depreciates or fluctuates and large annual costs are attached.
    The return does not and never has justified the expense in my opinion. Let someone else carry the strain, rent or stay in a comfortable hotel and enjoy the return on your capital paying for it.
    Have holidays abroad yes of course, many good reasons for that but capital investment in a holiday home abroad can never be justified from a financial perspective. It’s an emotional decision and when money and emotion become mixed up you usually lose.

    I agree, unless you can spend lots of time each year in the property then it is a waste of time. We alway had a second home but fortunately during the good years and we didn’t lose. Since 2000 I do know some who sold. One friend had a penthouse in an upmarket golf complex. He only managed to get out about 4 weeks per year. Expensive community fees, taxes etc. Not just that every time he came out the roof had leaked and he had the hassle of spending time sorting it out. He came out in 2005 to another damp patch and sold fairly quickly. We bought a place in Florida with the intention of spending 6 months per year. Only did it once as with pets and other committments it didn’t work. We were spending around 4 weeks per year. It is now on long term rental and if the day arrives when the rental dries up we shall sell, not worth the overheads. You do get fed up of the same ole year in year out especially when you could be holidaying in smart hotels for less cost, it starts to feel like a life sentence :mrgreen:

  • #106774
    Profile photo of katy
    katy
    Spectator

    @peterhun wrote:

    @logan wrote:
    @peterhun wrote:
    You can
    a) Live and Work there
    b) Retire there.
    For me, both are options due to the internet.

    Yes but you don’t need to risk capital to accomplish either of those things. Buying a holiday home abroad is a big risk, your capital usually gets tied up for years, taxes have to be paid, money value depreciates or fluctuates and large annual costs are attached.
    The return does not and never has justified the expense in my opinion. Let someone else carry the strain, rent or stay in a comfortable hotel and enjoy the return on your capital paying for it.
    Have holidays abroad yes of course, many good reasons for that but capital investment in a holiday home abroad can never be justified from a financial perspective. It’s an emotional decision and when money and emotion become mixed up you usually lose.

    Same applies to the UK but its a damn sight cheaper to buy than in London. I could buy my London flat but its something like 9k euro/m2. Buying in Spain is peanuts in comparison. I’m not going to do it – its a crap investment

    Difference is in a lot of the UK you can actually sell. nephew bought a flat in London in 2001 for Β£97,000, fairly grotty one-bed. He sold earlier this year for Β£325,000. My Daughter put her house on the market a few weeks ago thinking it would take time to sell. The property appeared on the agents website on a Wednesday, by the following Tuesday they accepted an offer well over the asking price as there were 3 bids. They expected to be moving around March due to all the doom and gloom stories but are now having to move 3 days before Xmas.

  • #106775
    Profile photo of logan
    logan
    Participant

    I think the concept of holiday homes started in the UK when property was a one way investment bet. Remember all the hype that bricks and mortar was the worlds safest investment and you couldn’t lose and my house earns more than I do! Well we now know that’s rubbish any investment is a risk.
    Holiday homes in Spain, France and Italy became a must have fashion accessory especially when the UK public were bombarded by TV programmes like ‘A place in the Sun’, and worse ‘I want that house’.
    The inference was you must buy now whilst it’s still affordable. Joe public fell for it big time and people like me, Europe’s governments and local services did well for a decade.
    Now the public know the reality that the ’emperor is in fact naked.’
    Those who can afford to to sit on their properties for the coming decade without the need to sell are principally safe, except for the overheads and value depreciation which make a nonsense of any investment return from renting.
    People who could least afford these properties are the ones hurting the most and the likelihood they will have to sell at considerable loss is obvious. In fact in Spain they will probably just about have to give it away to get rid.
    Residential property is just somewhere to live. Holidays are just that time to experience new things and new places and to have fun not be burdened with property responsibilities.
    I see so many second homers in France come out for a break and end up having to work harder than ever. Gardens become a jungle, properties in France depreciate very quickly if left unoccupied and need constant maintenance.
    Apart from the financial cost the dream eventually becomes just a slog.

  • #106776
    Profile photo of angie
    angie
    Spectator

    I totally agree that overseas holiday homes are not worth having for the financial and stress implications of owning one, plus the vagueries of the property market. Managing a property that’s so far away if things go wrong, concern over possible break-ins? You can holiday so many times in different locations by using the money instead.

    We know someone who bought an overpriced apartment in Los Monterros, Marbella, His community and other fees are now pretty extortionate, he only uses it a couple of times a year, and he can’t sell even though it’s ‘up-market’.

    But, back to the original question, IMO, sell before the Euro crashes, that’s if you can, or, move in to it maybe and wait πŸ™„

  • #106777
    Profile photo of Anonymous
    Anonymous
    Participant

    @katy wrote:

    Difference is in a lot of the UK you can actually sell. nephew bought a flat in London in 2001 for Β£97,000, fairly grotty one-bed. He sold earlier this year for Β£325,000. My Daughter put her house on the market a few weeks ago thinking it would take time to sell. The property appeared on the agents website on a Wednesday, by the following Tuesday they accepted an offer well over the asking price as there were 3 bids. They expected to be moving around March due to all the doom and gloom stories but are now having to move 3 days before Xmas.

    You are talking about London, not about all UK. Go outside South East UK and the picture is completely different. In the North-West almost nothing sells and people become accidental landlords.

  • #106778
    Profile photo of katy
    katy
    Spectator

    When we lived in Spain a few of our friends were 2nd home owners. They would spend most of their time painting, wandering round the DIY store and sorting out paperwork. Even when we had a holiday home we always had 2 weeks somewhere different…and in a hotel where you don’t have to bother thinking if there is milk for morning etc.

    I do think the TV programmes made buying a home overseas popular as they put such a spin on the benefits. Have to laugh at some of the sweeping statements they made when I see the re-runs…even direct lies sometimes. I can remember the Telegraph too with headlines such as “Buy off-plan and gain 30% before you move in”.

    There will always be some who wants to buy in their favourite spot but it will never reach the numbers it did 10 years ago. Was a bit like the South sea bubble or the tulip bulb bubble πŸ˜†

  • #106779
    Profile photo of katy
    katy
    Spectator

    @flosmichael wrote:

    @katy wrote:

    Difference is in a lot of the UK you can actually sell. nephew bought a flat in London in 2001 for Β£97,000, fairly grotty one-bed. He sold earlier this year for Β£325,000. My Daughter put her house on the market a few weeks ago thinking it would take time to sell. The property appeared on the agents website on a Wednesday, by the following Tuesday they accepted an offer well over the asking price as there were 3 bids. They expected to be moving around March due to all the doom and gloom stories but are now having to move 3 days before Xmas.

    You are talking about London, not about all UK. Go outside South East UK and the picture is completely different. In the North-West almost nothing sells and people become accidental landlords.

    Yes I know but friends in Sheffield sold their house in about 2 months which isn’t bad, in Spain the timescale is infinite.

  • #106780
    Profile photo of Anonymous
    Anonymous
    Participant

    @katy wrote:

    @flosmichael wrote:
    @katy wrote:

    Difference is in a lot of the UK you can actually sell. nephew bought a flat in London in 2001 for Β£97,000, fairly grotty one-bed. He sold earlier this year for Β£325,000. My Daughter put her house on the market a few weeks ago thinking it would take time to sell. The property appeared on the agents website on a Wednesday, by the following Tuesday they accepted an offer well over the asking price as there were 3 bids. They expected to be moving around March due to all the doom and gloom stories but are now having to move 3 days before Xmas.

    You are talking about London, not about all UK. Go outside South East UK and the picture is completely different. In the North-West almost nothing sells and people become accidental landlords.

    Yes I know but friends in Sheffield sold their house in about 2 months which isn’t bad, in Spain the timescale is infinite.

    In Wirral houses stay for years on the market.

  • #106782
    Profile photo of Anonymous
    Anonymous
    Participant

    :where is Wirral ?????????? πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† ❓ sounds like Spain might be better ???? 😳

  • #106783
    Profile photo of Chris McCarthy
    Chris McCarthy
    Participant

    @UBEDA wrote:

    :where is Wirral ?????????? πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† ❓ sounds like Spain might be better ???? 😳

    Oi… you leave the Wirral alone..!

    I spent my earliest years up to nine years old being brought up in Greasby on the Wirral. Wish we had never moved!!

  • #106785
    Profile photo of Anonymous
    Anonymous
    Participant

    @UBEDA wrote:

    :where is Wirral ?????????? πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† πŸ˜† ❓ sounds like Spain might be better ???? 😳

    Well, Spanish wishes to have schools as good as the ones in the West Wirral. And it has some nice beaches too. Otherwise, there are better places in the world…

  • #106839
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    I remember the 90s in Nottingham. In particular I remember a woman who’d waited 6 years to sell her house. It wasn’t in a bad area, and wasn’t particularly expensive (around 36k iirc) but properties just weren’t selling. I missed a chance at that point, as prices rocketed for a while after 2000. Of course I suspect the situation has gone back to how it was previously, and I don’t see a boom around the corner. Could be famous last words of course.

  • #106857
    Profile photo of Anonymous
    Anonymous
    Participant

    What to do?

    We paid a deposit in 2002 on a three year build. By the time we completed in 2005 the predictions of a 30% profit had disappeared. We were going to sell before completion but we kept the apartment which we then learned in 2006 was illegal. This has now been sorted out.
    Our problem is in 2002 the apartment was sold to us for 199,000e.
    We have now started to pay the repayment mortgage even though we tried to get an extension of the interest only until we sold our UK property next year with the effect of paying off the Spanish mortgage and going to live in Spain until the property prices recovered.

    I am now becoming very worried if we do that and since the situation with the European Community is in such a mess that our planned time out of 2-3 years will see us selling at a price which will give us little choice of what we can buy in the UK to get us back or worse scenario not enough to get a decent place.

    We could try and sell the Spanish apartment now and have looked at three selling prices all very much below the selling price. We would then have 16 months to clear the outstanding mortgage on our UK property which in the long run will see its value recover much quickly than Spain.

    Is it better to shell out 2,000e in mortgage repayments or save the eqivelant in British pounds to clear our UK mortgage. I suppose what I am really asking is what hope has Spain
    in the market recovery. We do not have 10 years, we are near retirement, but have until 2013 to still have an income.

    I know none of us have a crystal ball, but I have followed this site for years and I can see there are experts who contribute. My daughter has been telling us for years to cut our losses and get out and is adamant we should hold on to the UK property.
    We never foresaw how bad things were going to get.

    Not that it matters but the apartment is end of bloque large terrace and garden overlooking the pool and gardens 15 minutes from Marbella.

    Any advice would be appreciated.

    Thank you.

  • #106861
    Profile photo of peterhun
    peterhun
    Participant

    our UK property which in the long run will see its value recover much quickly than Spain.

    That is by no means certain. The UK is going to have the sharpest cuts ever until 2016 which could see prices falling due to the suppression of the economy. It could go on even longer with a ‘Japanese Style Lost Decade’.

    If Spain crashes out of the Euro/It collapses/Germany leaves there will be a depreciation in Spain of an unknown amount (20-50%??) and an on going fall in the exchange rate which is tradition for Spain.

    The only real solution is to get out of Spain and get out of property investment altogether, its all going down for a long time just for demographical reasons never mind taxes and the Depression.

  • #106864
    Profile photo of logan
    logan
    Participant

    Peter is right Holly my best advice is shed all your property holdings at whatever best price you can get and pay off debt. Then retire to Spain if you want to and rent long term.
    If you default on the mortgage repayments on the Spanish property you will remain liable for any outstanding balance plus interest.
    The Spanish property sector will not recover in my opinion for at least 5-6 years. It may then stabilise at very low levels which will not help your dilemma.

  • #106875
    Profile photo of Anonymous
    Anonymous
    Participant

    Thank you all your advice I think it is what I suspected and I just hope we can sell it to draw even, then to address UK costs.
    Very sad, we love being there and could see ourselves there for a few years until prices recovered enougth to buy something down south near our daughter, but this is not going to happen soon enough for us.

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