Spain, Ireland and threats to the property boom

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This topic contains 35 replies, has 14 voices, and was last updated by Profile photo of Anonymous Anonymous 9 years, 8 months ago.

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  • #52727
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    Anonymous
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    Interesting article.
    IMHO
    I think as far as Spain is concerned it’s a case of sitting back, watching and waiting to see how the dust settles.

  • #70162
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    Anonymous
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    Spanish Banks and the credit crunch. With a quote from Mark to boot.

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aCk.OYMSRtDA&refer=home

  • #70166
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    Anonymous
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    There is a credit crunch coming and along with it a correction of property prices. In the US we are just at the beginning, as all the ‘Exotic’ mortgages lent to sub-prime and stretched specuvestors now reset to much higher payments from the low 1 to 2 year teaser rates. Repos are up, lenders and developers are going bust and consequently prices are falling. In some areas demand has fallen of a cliff, leaving the escape route of selling quickly, cut off.

    In Florida (Orlando and Naples etc) developers are already offering properties at circa 30% below (44% in the lowest I’ve personally witnessed) their autumn 2005 peaks. On many subdivisions favoured by British buyers there are up to 10 years supply at current demand. This along with poor rental demand is really squeezing those that thought the properties would appreciate in value whilst paying for themselves.

    The course is set for Euro zone countries such as Ireland Spain that have seen prices increase to levels not sustainable by fundamentals (wages x prices and costs v yields). I expect Spain to drop 12 to 15% over the next 3 to 4 years. That of course means some areas will drop 25 to 35% and others become virtually unsellable.

    Price increases not underpinned by fundamentals are always at risk of evaporation. When those increases have been driven by speculation fuelled by artificially cheap debt (following global i/r reductions after 9/11) and that supply is then tightened, demand melts away and prices correct.

    Anyone who is in any doubt about the artificial nature of recent low interest rates and lax lending see below

    http://news.sky.com/skynews/article/0,,30400-1256664,00.html/

    Bust like booms fuel themselves as sentiment changes. Bust also generally last at least as long as the booms that precede them. It looks like we all thought we were being smart, well the next two years will tell. Does anyone seriously believe that the UK will remain unaffected by all this? If so why? I think the last two years were a good time to be paying down debt and restructuring borrowing (the 10 yr fixed sub 5% i/r that were available in the UK in 2005 may prove to have been a best buy).

  • #70167
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    Anonymous
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    Good Posting.
    However if you look at every financial newspaper today you will find different views on how well or bad the stock market will perform this year(mostly base on statistics and history).Were they right last year on property or shares ? NOPE? Corrections YES as that’s good in the long term for all investments.
    Spain was due for a correction, my opinion is so is the U.K buts its still going strong, so am I right ?seemingly not by some predictions.
    There only needs to be one or two points that may not have been
    considered and the result of a forecast can be wide off the mark.
    Its takes a remarkable person to be able to see into the future and if we could all do that then as Del Boy says “WE WOULD BE MILLIONAIRES”
    Interesting times YES? DISASTER AS PREDICTED,? then that’s a world recession? surely there are two many factors now to consider in this world economy for anyone to be accurate.
    Interesting posting though if taken in the context that this is opinion
    If this is right then sell shares, sell property, sell everything as cash will be king.
    Mmmm . Don’t think I will for one.?
    Done that two many times in the past,with knee jerk reaction. after reading similar postings years ago and cost me a fortune<
    Think its just time to balance things out and as is said let the dust settles and in particular with regards to Spain.

  • #70173
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    Sentiment in Ireland has definitely changed recently towards foreign property investment markets. I think Spain will recover from the slump long before places like Bulgaria etc. but first we have to have the slump.

    http://www.unison.ie/business/stories.php3?ca=191&si=1797502

  • #70174
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    Anonymous
    Participant

    Interesting posts/articles.
    Going on the old theme of supply and demand – am I right in thinking that the main differences between the future property markets Spain vs. UK is that Spain is wallowing in a massive over-supply at the moment, whereas the UK, according to one report, needs at least 250,000 new houses a year just to keep abreast of demand (about 30% of which is fuelled by imigrant population).
    On that basis, prices of UK stock are kept high in the foreseeable future despite all other economic factors?
    Would be interested to know what you experts think.
    Will shortly have some money to invest and don’t know where to put it!

  • #70175
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    Money to invest put it under the mattress! Cash will soon be king! But what currency or maybe gold? Decisions are soon going to become a lot tougher.

    Apparently something like 3% of all UK housing stock is currently empty. I’m sure the new build city centre Meto lifestyle apartments that are springing up in every town and city are contributing to this. What people really want are 3 and 4 bed family homes near jobs and good school. The market can’t always deliver what is needed.

    In the UK demand for property has been and still is artificially high due to the current low barriers to entry of obtaining lots of debt, and the assumption that it’s wise to take on that debt, due to the current perception where people believe property makes you money as opposed to costs you money (beware when the shoeshine boy/hairdresser starts giving BTL tips!) As prices have risen, rental yields have fallen. People have continued to make discretionary purchases of property (BTL, Fly to let, holiday homes etc) based on the assumption that capital growth and income will out strip operating and borrowing costs.

    Sentiment in the UK regarding property investment has been changing slowly over the last 18 months I think that’s about to accelerate. I have a wide circle of friends and business associates, many of whom own properties abroad and BTL in the UK. Two years ago everyone was bullish but recently people seem increasingly honest/negative about rental cashflow/operating costs and the ability to liquidate overseas investments for a sensible profit. Many came very late to the UK BTL market and (especially in the 2 bed flat market have little if any capital growth over the last few years), cost are going up and rents are pretty static. The fact that many mew’d the deposits out of the ‘equity’ in their family home increses the exposure. It doesn’t take much for sentiment to turn really negative and it doesn’t take a huge increase (above the long term average) of people to become distressed seller to turn the market.

    Apologies if this appears a poorly constructed rant.

    As with the previous post all JMO.

  • #70176
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    katy
    Spectator

    Unfortunately all of us can only guess or we would be very rich if we knew. Charlie is correct about the housing stock in the UK. In Spain there is massive over-supply and despite this new developments are being launched every week.

    It isn’t clear how much (if anything) prices will drop in Spain. Pablo for example states that in Florida prices have dropped by 30% or more, I don’t know about Orlando but know Naples well and they certainly haven’t dropped there (well they hadn’t in Jan) they are taking longer to sell but in a matter of months not like the time it takes to sell here. My money would stay in the UK for the present.

  • #70182
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    Katy

    A lot must have happened since Jan.

    Ref: Naples is an area I know very well, it’s actually one of the hardest areas to be hit by the turn in the Market. Below is a report from a local Real Estate Agent so he has a vested interest of talking things up.

    http://www.naplesinsider.com/CurrentReport.htm?gclid=CIHdjvbq34kCFSKRXgodOnZdHg

    Having invested and lived in Florida (sold up July 2005) I can confirm the following situation regarding Naples. When the Florida market turned in autumn 2005 people said it won’t affect areas like Naples it’s too upmarket, desirable and demand will always be there. Naples having boomed and bubbled more than most sucked in a lot of ‘investor’ that were really speculators.

    In a ‘normal’ Naples market only 5% of the units on any given sub-division/development are up for resale. Currently on many of the most sort after that’s up 400% to 20%. Many properties that would have sold in 2004/5 in a week, have now been on the market for 8 to 12 months, despite being reduced by the vendors, that’s a crash. The investor, speculators and all those that are stretched financially are all heading for the exit before things really get bad, that is set to continue.

    You can buy property on every sub-division of Naples at 20% below the peak, again that’s a crash! I personally would not choose to pay that much as there are better deals to be done. The example I gave of a reduction of 44% was Naples.

    The price rises (2002 to 2005) in Naples like a lot of other areas of Florida was nothing more than a speculative bubble.

    For anyone considering investing in Florida it is important to realise that the costs of buying (not to be confused with the price of the property) is high, the running (maint, tax, management, hoa fees, insurances, utilities etc) are also high, as are the costs of selling. Conversely rental income is always lower than anticipated if you rent it out. In a normal Florida market where the long term average annual increase in property prices is circa 4%, you generally struggle to break even on real estate. It is very cyclical get your timing wrong as many have and it’s a very expensive lesson. I predict (JMO) that prices in Florida will not bottom until late 2008 at the earliest.

  • #70183
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    Just like the stock market its a case of where you get on and where you get off.
    Balanced port folio should however bring results in the long term.
    There was a slight correction in the u,k property market a few years back and what it really came down to is those that were asking silly prices had to bring them in line with their neighbours
    Apartment in the block next to mine in Spain 445,000 euros and he would be lucky to get 335,000 at the moment,so the point is at what point will they drop or will it be a correction.
    Charlie?
    You have some cash?,dont suppose I could interest you in a garden apartment in La Reserva de Marbella with no garden.
    Thats the develpment which appears to have lost 10 swimming pools flowing into one another and the walls are damp.
    Well you dont know if you dont ask thats what I say ?
    Well on the other forum I see that someone has had a bank valuation on a penthouse at 350,000 euros on this development so I must be quids in.
    If thats right then he must have been able to get a 125% mortgage

    Regards
    Jim

  • #70184
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    @pablo Silver or Lead? wrote:

    (beware when the shoeshine boy/hairdresser starts giving BTL tips!) .

    This is what Keynes used to say. Only that he spoke about shares. On hearing the shoeshiner recommend him stocks he immediately sold off all his portfolio. That was in September IIRC, September 1929. We all know what happened in October. Funnily enough, in the early twenties Florida was also awash with a real estate frenzy boosted by easy credit from lenders.

    The posts in this thread written by Pablo are some of the best I’ve read lately. People would do good to heed them.

  • #70185
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    @Drakan wrote:

    @pablo Silver or Lead? wrote:
    (beware when the shoeshine boy/hairdresser starts giving BTL tips!) .

    This is what Keynes used to say. Only that he spoke about shares. On hearing the shoeshiner recommend him stocks he immediately sold off all his portfolio. That was in September IIRC, September 1929. We all know what happened in October. Funnily enough, in the early twenties Florida was also awash with a real estate frenzy boosted by easy credit from lenders.
    .

    I think that was Joe Kennedy (JFK’s father).

  • #70186
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    I think old Joe was put in charge of Wall Street (current SEC) which was like putting the fox in charge of the chickens after what he had done.

    It was J.M. Keynes I believe, at least I heard the story from him. Joe made his fortune with alcohol smuggling and insider trading in WS.

  • #70187
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    What a great thread, the title does not really do it justice.

    Well here is my two pennies worth.

    UK vs Spain as a property investment market. No contest. UK wins hands down. Strong demand as demand exceeds current supply. Also, social changes drive demand as more married couples split up. Also, current younger generation more interested in live/enjoy now and sod later, so rental attractive proposition. Also in UK a mortgage market based on sound fundamentals (i.e mortgage cos will only lend what they can easily get back if there is default)

    Location and local knowledge are essential. I have lived in my local town for 50 years, and know and understand my local market. It is booming now, but it is now our turn, I will fill my boots and then retire a rich and happy bunny, but it has taken many years for the boom times to arrive. However, I will not chase the boom times in other towns as I can’t touch and feel them.

    Kevin

  • #70189
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    Anonymous
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    So no-one is recommending investing in a nice little pad near the ‘Kasbah’ in Casablanca then….. 🙁

    What a great read, appreciate all the replies. Kevin, I absolutely agree with you re. needing to know the market you’re buying into via local knowledge. Especially buy-to-lets.

    Gordon Brown makes me nervous re. investing in UK property. If he has his way, we’re going to end up with a window tax like the old days when people started bricking up some of their windows! Apparently you will pay more council tax if you live in a cul-de-sac (nice and quiet, must pay a premium for that), near public transport (you’re priviledged – more tax please), likewise if you have a parking space/garage for your car. God help those with a swimming pool!
    Personally, think the situation in UK has disintegrated to the land of the barking-mad – a school now banning the wearing of school ties as they pose a danger when running in the playground. Clip-ons only as from September! To hell with the fact they’re carrying knives in their pockets – let’s concentrate on the priorities. 😯

    Apologies, that is about as off topic as you can get – would it be stretching it to I say I’m linking it to ‘factors to consider when buying a property in the UK’. ?

    I think after all that – will stick it in my websaver and wait and watch the euphoria (or not) after the UK elections.

  • #70190
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    The Kasbah!!!

    Why not get 3 units ‘off plan’ the resale market is so strong and the appreciation so high, you’ll sell one immediately to pay for the other two!!!

    “If you’re not entirely happy with the reputation for honesty of Estate Agents at home here in the UK, wait till you meet some of the ex Transylvanian Donkey rustlers selling unsuspecting Brits holiday homes in Tulcea and Constanta on the Black Sea! Where next? Ski lodges in Nagorno-Karabakh, just 8 days yak ride from Baku international airport. Or Beach Villas on the Aral’s Sea Health Spa, specialising in chemical body scrubs, with all the toxic pollution you can drink. Prices start at 3 million Dram (£15,000), 10% discount if you buy off plan. Legal title guaranteed by The South Caucasus Development Corporation of Kazakhstan. All deposits underwritten by the Bank of Chechnya, as advertised on Channel 4 by the regional goodwill ambassador Borat! Don’t miss this ground floor, investment opportunity of a lifetime.”

    Charlie don’t get me going!!!!!!!

  • #70191
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    katy
    Spectator

    😆 😆 😆 Excellent!

  • #70193
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    Participant

    I gather that’s a ‘No’ then. 🙁

    P.S. Best post of the year, Pablo 😆
    Humour plus sound knowledgable advice. Where have you been hiding yourself all this time?????

    Dare I ask – with good snow becoming unpredictable in Europe – what are your thoughts re. investment in a ski condo in Canada? Spent a year there once and love it.

    (When I was living out there, Mother told all the neighbours I was living in a condom).

  • #70194
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    @Drakan wrote:

    I think old Joe was put in charge of Wall Street (current SEC) which was like putting the fox in charge of the chickens after what he had done.

    It was J.M. Keynes I believe, at least I heard the story from him. Joe made his fortune with alcohol smuggling and insider trading in WS.

    Oh no I becoming a pedant, but it was Joe Kennedy who made the remark about the shoeshine boy giving stock tips Drakan. Something clicked with Kennedy after this encounter and he went short on the market and made millions. A Keynes quote that seems apposite in the current climate of banking turmoil

    A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him”.
    – John Maynard Keynes

    Charlie; Living in a condom 😆 😆

  • #70195
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    Charlie you will find plenty of discussion re investment in Canada and everywhere else on

    http://www.housepricecrash.co.uk

    Pablo is also a poster there.

  • #70196
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    Charlie

    I know very little about Canada/ski properties as a potential investment so could not venture a credible opinion, but buy coincidence my sister is currently in New Brunswick on a four week recce trip. She and my brother in law (+ 2 teenage sons) have sold up in the UK and are emigrating (they just got their visas last month). One of the places they are looking at is 5 bed with outbuildings, 2 streams, 2 lakes and 520 acres halt timber, half meadow. The original price 18 months ago was $400k US, it’s now $250k US and the agent has intimated they could get it for $200k. Is that a good buy? I don’t know because I don’t know the market there. Anyway the investment side is secondary to them, it’s a lifestyle move. Clouds of bighting mossies along with Grizzilies in the summer and ice whole fishing in -50c with your 4×4 frozen to the ground by perma frost in the winter, you can’t beat getting back to nature!

    The UK and especially (as with Kevin) if you know your local market well’ is much safer than venturing abroad. I personally stopped putting money into residential property in B’mouth/Poole over 2 years ago as I’m comfy with my current exposure.

    Dorothy do you contribute to housepricecrash.co.uk ?

    What’s your prognosis for the UK market over the next 3 to 4 years Up 20% down 40% and why?

  • #70197
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    From yesterday’s Irish Indo:

    “Spanish property slump fears grow
    Wednesday March 21st 2007

    IRISH holidaymakers who have invested in the Spanish property market could be in for a shock following concerns that it could face a slump worse than that in the US.

    The fears are based on the loan terms banks are imposing on developers. According to data compiled by Bloomberg, property magnate Fernando Martin, the former Real Madrid soccer chairman, and Barcelona-based Promociones Habitat are paying five times more to borrow than US developers.

    Analysts said that banks are imposing terms on property firms similar to those for defaulted loans.

    Madrid-based RR de Acuna & Associates said that estate agents in Spain are expected to cut the prices of holiday homes by as much as 10pc this year. The company values property for about 40pc of Spanish mortgages.

    Analysts have also said that a slowdown in Spain may have a “psychological” effect throughout Europe.

    Spanish house prices averaged €276,300 in December – twice as expensive as in 2000 and beating growth rates in Ireland and Britain, according to figures from Irish Life & Permanent and the European Mortgage Federation.

    Irish, British and German holidaymakers fuelled sales of four million homes to foreigners, according to the Vacation Homes Agency, an organisation in Madrid funded by developers.

    Construction made Spain the biggest driver of economic growth in the euro region this decade.

    Property spending by foreigners dropped 11pc during 2006 to €4.9bn, according to Bank of Spain figures released last week. New mortgages sold to Spanish families fell by 10pc.

    The Organisation for Economic Co-operation and Development said earlier this year that house prices in Spain may be overvalued by as much as 30pc.

    A sudden acceleration in interest rates could cause an “abrupt adjustment in which prices would plunge”, the Paris-based OECD added.

    ReMax International, the second-biggest US estate agent, said it cut prices as much as 26pc on more than 5,000 homes in Spain in January. A slump may also hurt Spanish banks. Santander Central Hispano and Banco Bilbao Vizcaya Argentaria lead banks owed €1.3 trillion by developers, builders and mortgage holders. (Additional reporting Bloomberg)

    Ailish O’Hora”

    The danger of mewing the family home to invest in Spain/Florida could come back to bite Irish holiday home buyers over the next few years!!

  • #70198
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    katy
    Spectator

    Think all the statistics and personal opinions agree that the spanish property market is in trouble. It was stated again this week that average selling time is 36 months. There does not seem to be any significant reduction in prices at present though. Do know someone who sold in 3 days recently but I have seen many that have been on sale for over 2 years. Now if someone has been selling for two years and property has been rising (10% or so according to statistics) those houses should ?now be a bargain.

    Was househunting with my Brother Dec/Jan in Naples Florida. One agent had a notice in the window saying “Prices now down to Jan 2005 level” but athough prices have steadied and many developers have offers (free pool etc) the market seemed much more active than in Spain. One seller accepted an offer whilst my brother was thinking about it and on another someone put in a better offer. The majority on sale were newer homes built in the last few years, built in less land and looking franky, ugly.

  • #70199
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    Katy

    It is just my opinion but time is on your brothers side (Naples) if I were you I would keep monitoring the market (this is quite easy to do via the web) and track certain properties and developments. The other thing that obviously needs to be taken into consideration is £/$ exchange rates. Trying to forecast these at the moment is a bit of a mugs game. I have no doubt the i/r in the UK are going to continue rising my feeling is they will probably not go much above 6% in this up cycle but it’s just a feeling. Greenspan has left his successor at the FED with the mother of all dilemmas/problems, put US i/r up = big problems put i/r down = big problems. My gut feeling is US rates won’t change for a while and the next move will come later in the year and it will be down (probably the lesser of the two evils). Under normal conditions the £ should therefore rise against the $. But we are not in normal circumstances and that is why I’m a bull turned bear. So everyone must do what they think is best.

    It does seem very strange that a market e.g. Orlando or Costa del Sol can be so tough but that isn’t yet reflected in the stats. This lag can be explained by, exceptionally low volume of sales in current market conditions, and with many deals that are exchanging/closing today (and therefore feeding current stats) having been sold off plan at the peak for ‘forward pricing’ in say 2005, the headline price of sold property is holding up. Does that make any sense?

    In Spain I think a lot of people have been caught in a double whammy of paying developer new build premium prices (as tends to happen in a rising market) and now with an increase in inventory/drop in demand face at best a static/falling market, making even breakeven difficult for many. If people start to turn from like to/want to sell, into need to/desperate to sell, due to rising euro zone i/r it may be difficult to find a buyer for resale’s as there will be a lot of competition out there. To compound the situation, lending criteria and the cost of borrowing in the US, UK and Spain are all going to go up for the foreseeable future making it less attractive for new ‘discretionary’ buyers to enter the market.

    Again all JMO.

  • #70200
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    @Ponzi wrote:

    Oh no I becoming a pedant, but it was Joe Kennedy who made the remark about the shoeshine boy giving stock tips Drakan. Something clicked with Kennedy after this encounter and he went short on the market and made millions. A Keynes quote that seems apposite in the current climate of banking turmoil

    Not at all. I stand corrected then.

  • #70415
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    Anonymous
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    To add to this tread perhaps this ineresting report gives a balanced view.
    From Mark Stucklin Times Newspaper Jan Edition 2007
    Needless to say that the off plan route is well past its sell by date as was observed at a local Spanish exhibition last Sunday
    They may well have got the viewing trips booked but hardly anyone I observed was interested in off plan and thankfully appeared much more clued up.
    Think those agents may just have to start EARNING the commission to get the sale.
    Think the easy pay day has gone and the only advice I could give was to get an independent solicitor and expect a 3 to 5 year return.

    Feature
    Still plenty to gain from a home in Spain
    With tax rates now reduced, a home in Spain makes a shrewd investment, as long as you do your homework

    With tax rates now reduced, a home in Spain makes a shrewd investment, as long as you do your homework

    Who says nothing good ever comes out of Brussels? Britons selling their holiday homes in Spain used to be clobbered with a capital-gains tax (CGT) rate of 35%, while permanent residents (Spaniards and foreigners alike) paid only 15%. Now, under pressure from the European Union, Spain has finally changed the rules. Since the beginning of this year, all EU citizens have been liable for the same rate of 18% Spanish CGT when they sell property there.

    Lower taxes should make Spanish property a better investment for nonresidents, but taxes aren’t the whole story. With stiff competition from cheaper destinations such as Bulgaria, and Spanish property prices looking a bit peaky, is it still worth buying a holiday home in Spain?

    Undoubtedly yes, in my opinion, but only if you are prepared to do your research, develop investment strategies based on local market insight and take a long-term approach. Buying any old property won’t work in a market that has risen by 100% in five years and now shows signs of fatigue. But if you are prepared to make the effort to become a well-informed investor with realistic expectations — rather than basing your decision on investment tips from pushy sales reps during whirlwind inspection trips — then here are some pointers.

    The Gibraltar effect

    With low taxes, minimal regulations and endless sunshine, all just a couple of hours by plane from London, Gibraltar is having no trouble attracting new businesses such as internet gaming and financial services companies (rumour has it that Gib’s ambition is to become the Hong Kong of Europe). This is creating well-paid new jobs, but few of the new residents want to live on the rock, fuelling demand for quality housing over the border in Spain. Sotogrande — arguably Europe’s top residential golf resort — stands to gain the most. At least one internet gaming entrepreneur has been investing in multiple units there to use as housing for his company’s employees.

    That’s not all: a new agreement between the UK, Spain and Gibraltar means that Spanish domestic flights can now land at Gib. This will cut down the journey time from Madrid by a third — a huge improvement. Madrileños are big buyers in this area — a majority of buyers at Sotogrande last year were Spanish — and easier access should boost demand.

    Contrarian investment strategies in Marbella

    Marbella is having a terrible time with corruption scandals, illegal building and mindless development, all of which turn off buyers. Furthermore, a glut of two-bedroom flats is stunting prices because the market cannot digest all the new properties, with the result that prices across the board are either stagnant or falling.

    But Edward Kay, 43, from London, is bullish about Marbella even as the market falls. Kay, formerly an investment banker with Merrill Lynch, is hunting down detached and semidetached beachfront properties, priced to sell, anywhere near Marbella.

    “The glut of apartments is depressing the whole market, and distorting prices for other types of property,” he says. “As a result, you can pick up villas for less than they cost to build. Prices may fall further, but I don’t mind because I’m confident that the properties I’m buying will one day be worth a lot more. Based on fundamentals, this area has a great future.” Fincas in southern Catalonia The price guides produced by Kyero.com, a leading Spanish property portal, show that Tarragona, in southern Catalonia, has emerged as a popular region with buyers. A new airport under construction nearby in the province of Castellon should help fuel demand for property around the Ebro River delta, one of Spain’s most beautiful regions.

    Newly built villas on the coast are often wildly overpriced, but fincas (country properties) with a few hectares of land, not far from a village, still represent good value. “If it’s just land with planning permission, then prices start at about €30,000 [about £20,000],” says Mary Sidman, director of Catalunya Property Services. “Fincas with a habitable house start at about €200,000 [£132,000]. Younger buyers, families with children, are coming here for a change of life, and that demand is not going to disappear.”

    Flight to quality

    Buying off-plan proved to be an unpleasant experience for many homebuyers and investors alike in recent years, due to the flaky conduct of countless mediocre developers. A difficult market, and risk-averse buyers, should cause a flight to quality, which will benefit developers with good reputations. You will have to do your homework to identify the best developments, and don’t rely on an estate agent for your information.

    So much for what you should buy: what should you avoid? For a start, keep away from two-bed flats in mediocre locations on the Costa del Sol. There is a surplus of these, and prices need to fall further before the market clears.

    Patience is also required. It used to be possible to make a quick killing by “flipping” properties bought off-plan, but this is no longer the case. Spanish property is not a good short-term speculative investment because transaction costs are high, at about 10%, both when you buy and sell.

    Regards
    Jim 😉

  • #70416
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    Anonymous
    Participant

    Jim – Think you should have mentioned the whole article you’ve posted was written by Mark in January, so is His/The Times copyright ❗

  • #70419
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    Anonymous
    Participant

    Who says nothing good ever comes out of Brussels? Britons selling their holiday homes in Spain used to be clobbered with a capital-gains tax (CGT) rate of 35%, while permanent residents (Spaniards and foreigners alike) paid only 15%. Now, under pressure from the European Union, Spain has finally changed the rules. Since the beginning of this year, all EU citizens have been liable for the same rate of 18% Spanish CGT when they sell property there.

    Lower taxes should make Spanish property a better investment for nonresidents, but taxes aren’t the whole story. With stiff competition from cheaper destinations such as Bulgaria, and Spanish property prices looking a bit peaky, is it still worth buying a holiday home in Spain?

    I could be wrong, but my understanding is that you have to pay the difference to that nice Mr Brown between Spanish 18% cgt and UK 40% cgt. In other words, Gordon gets 22%

    Kevin

  • #70422
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    Anonymous
    Participant

    Hi

    Think thats a problem I wouldnt mind having to be honest for obvious reasons.

    Regards
    Jim

  • #70423
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    Anonymous
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    Not obvious. Some think that all CGT is 40% and not their own rate.

  • #70426
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    Anonymous
    Participant

    You are not wrong Kevin. Glassman left off the end of the article when he pasted it here. For the record, this is how the article ends:

    — A final word of warning: as Bill Blevins, of tax specialists Blevins Franks, points out, if you are a UK resident buying in Spain, you are still liable for British CGT — 40% after allowances if you are a higher-rate taxpayer. In other words, you may have to pay less to the Spanish, but will end up paying correspondingly more to Gordon Brown.

    And, be warned, keeping your Spanish property dealings secret from HM Revenue and Customs is becoming more difficult. British and Spanish tax authorities are starting to cooperate, and the taxman is snooping on you like never before. —

    Mark

  • #70429
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    Anonymous
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    You are exactly correct on the CGT front. Not something your typical Estate Agent will mention 🙄

    I’m amazed that people think cutting this non resident tax will make any difference at all, it just means a bigger cheque for Gordon and a smaller one locally.

  • #70430
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    Anonymous
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    ABC says that the Banco Santander is noting “symptoms of unpunctuality” in the payment of mortgages.

    Is this the ball starting to roll……?

  • #70432
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    Anonymous
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    @madeinmarbella wrote:

    I’m amazed that people think cutting this non resident tax will make any difference at all, it just means a bigger cheque for Gordon and a smaller one locally.

    But at least in the UK we get a Capital Gain Tax relief.

  • #70433
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    Anonymous
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    Hi
    Personally I will not be worrying to much on the tax issues as first I have to have a taxible gain. 😆
    When I have I am sure that good advice will ensure that I hopefully do not pay to much

    Regards
    Jim

  • #70522
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    Anonymous
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    Re: I/R in Euroland…..

    http://www.forbes.com/feeds/ap/2007/04/02/ap3572481.html

    “an increase from 3.75 percent to 4 percent likely in May or June.”

    ‘said Unicredit economist Aurelio Maccario.’ “We expect the ECB to hike rates three more times by the end of the year.”

    It looks like Irish eyes will be glinting but not with a smile more likely a tear. It’s going to be tough on the Spanish market as well.

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