Spanish Estate Agents Think Prices Will Continue To Drop

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This topic contains 39 replies, has 13 voices, and was last updated by Profile photo of DBMarcos99 DBMarcos99 4 years, 12 months ago.

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  • #56181
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    Anonymous
    Participant

    75% of them according to this translated article.

    http://www.businessinsider.com/spanish-real-estate-execs-think-home-prices-will-continue-to-drop-2011-4

    “Right now, six out of ten executives believe that the decline in housing market has already bottomed out in Spain’s main urban areas, but there are still huge adjustments to come on second homes, especially on the Costa del Sol”

    Read more: http://www.eleconomista.es/vivienda/noticias/2965299/04/11/Los-directivos-inmobiliarios-creen-que-la-vivienda-aun-no-ha-tocado-fondo.html#ixzz1IoqV1p49

    W wonder where the EAs in our community stand on this?

  • #103771
    Profile photo of logan
    logan
    Participant

    I read somewhere recently that Spain was still one of the most overpriced property market in Europe despite the falls of the last 2-3 years. I can’t find that particular link but Forbes magazine rates Madrid as the worlds fourth most expensive city in which to buy. Next to Monaco, Rome and Paris. Here’s a quote:-

    According to the Bank of Spain, rental yields as a percentage of cost here have been reduced by half over the last seven years. This is a good sign of a price bubble developing as the gap between what residents can afford and the price to own become increasingly divorced. When a market reaches this point of price inflation, it is a good candidate to face downward or flattening price pressures

    I realise Madrid is a market on it’s own but you could apply that rationale to the rest of Spain.
    Rents are very cheap on the Costas, buying is still expensive. Further price falls must using their criteria be inevitable.
    In the UK annual rents should normally represent no more than 5% of the gross property value.

  • #103772
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    Anonymous
    Participant
  • #103773
    Profile photo of logan
    logan
    Participant

    Yup, thanks Brian I recall it now. 🙂

  • #103786
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @brianc_li wrote:

    “Right now, six out of ten executives believe that the decline in housing market has already bottomed out in Spain’s main urban areas, but there are still huge adjustments to come on second homes, especially on the Costa del Sol”

    W wonder where the EAs in our community stand on this?

    I do definitely beleive many prices still need to drop along several stretches of the coast.

    BUT according to the figures supplied by the ministerio de vivienda
    of the total amount of non-residents who bought in 2010 approximately 23% but in the province of malaga whereas bot the macrocumindad of madrid and the urban area of barcelona each had less that 3% of the total
    per 100.000 residents Malaga had 1430 sales. Madrid 970 and barcelona 860.

    so why the these urban areas have bottom but the costa del sol has not is not clear to me

    I will point out thought my figures are still are still not a final draft. so some small room for error. And these figure cover residential sales and do not take into account comercial units.

  • #103787
    Profile photo of Chopera
    Chopera
    Participant

    Fuengi – personally I don’t think the Madrid market has bottomed yet, but I think there might be a few things that prop it up more than the costas:

    1 Jobs.

    2 Pisos de Protección – I’m not sure how many there are on the costas, but there are plenty in Madrid and they place a false floor on the market.

    3. As mentioned, flats in Madrid are much more likely to be people’s primary/only residence. I think this makes people less motivated to sell at discounted prices.

  • #103790
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    Hi Chopera,

    you are right about the jobs. The capital of spain will offer more lucrative jobs opportunities.

    2. not as many as madrid. But per 100.000 inhabitants malaga stands at 110 and madrid at 114 sales.

    3. True. But as the mortgage assistance on primary residences has now ended, it will also be more expensive for buyers of primary residence.

  • #103976
    Profile photo of Anonymous
    Anonymous
    Participant

    I tend to have a very simplistic outlook on values. Sometimes you find a location that bucks a national trend, or even a street that values way over average for the city.
    Most people on here will understand what I mean.
    Using my simplistic methods I normally try and evaluate value for money, and in some respects market value, by applying a general rule of thumb of rental price v purchase price.

    An example.
    I own a two bed flat in London, SW1 that I rent out. It’s not in the prime area of SW1, nor is it in the less well-off areas. It’s what you might term middle of the road.
    I receive £36,000 a year for it. I then chop off around 15% in fees and running costs, netting me £31,300. Currently my flat values at £525,000 (next door has recently sold and it’s the same) so my net yield stands at 6.0% before tax. (It’s really more as I paid less, but for a new buyer the numbers work).
    So, given its SW1, rented all year, has high demand (in 5 years it’s been empty for around 5 weeks in total) and the market will move on, I’m happy with the return. I believe its good value for my money.

    Some may argue they require closer to 7% net return, however Central London is perhaps one of those unique markets where prices tend to be slightly in front when compared in this way.

    Now let’s look at the Costa del Sol.
    I’ve been doing a little research, maybe there is a deal to be done or maybe not. Using my same simple guide above I estimate 750euros a month to be a good rental figure on a 2b/2b in Marbella; nearly new construction, close to beach or golf etc etc (Santa Maria is a good example I think).
    That gives me 125,000 to spend.
    However, is my Marbella property going to be fully rented for 5 years and if not how many empty months should I factor in?

    Looking at plenty of sites I can’t find much at these prices that will attract my rental values, they are all at least 200,000euros. So, are properties still 40% overvalued or are rents 40% undervalued?

    It doesn’t matter if I’m buying to live, rather than rent, the maths exercise still stands up. In my mind the question I have is what makes Marbella value at, on the face of it, 40% more than Central London?
    I can’t answer that, and on that basis to coin a well-worn phrase “I’m out”. For me today be it lifestyle or (shock horror) investment the CDS does just not stack up as value for money.

  • #103977
    Profile photo of katy
    katy
    Spectator

    Absolutely agree. Rental market in London and the South East is excellent. Completely different from Spain. Not much demand in the area you quote (Santa Maria) for long term renting. Short term owners will be fortunate to get 6 weeks per year. A friend is renting in Santa Maria, she negotiated down from 900euro to 700.

  • #103978
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    Anonymous
    Participant

    Jameslondon. While I accept your reasoning. I feel in the cae of Spain you need to build in a risk factor of Legislative & court bais towards the tenants. Once this is taken into account the return will be lower than your calculations

    On the other hand comparing London one of the greatest city with CDS is not comparing apple with apples. Of course yeilds do not reflect this.

  • #103981
    Profile photo of logan
    logan
    Participant

    Good post JamesLondon. A 6% annual return on capital investment in UK is excellent at the moment where risk is minimal.
    This risk factor in Marbella is much higher. Risk of asset price falls, 12% buying costs, empty rental months, high maintenance costs and savage taxation.
    You are correct, as an investment nothing stands up. Even so called life style choice makes no financial sense either.

  • #103984
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    Anonymous
    Participant

    Great post James. A good benchmark is always useful.

    As Shakeel and Logan then suggest, if you get a 6pc return ‘risk free’ in London, what kind of a yield would you demand on the Costa del Sol to compensate you for higher costs and risks like title problems, urban planning risks, low occupancy, high transaction costs, high taxes, and severe market illiquidity that means it can be difficult to exit? 10pc? 15pc? For a rational investor it would have to be something like that.

    Also, holiday-lettings have higher maintenance costs (meaning lower yields) as they get trashed much quicker.

  • #103985
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    Anonymous
    Participant

    On the other hand comparing London one of the greatest city with CDS is not comparing apple with apples. Of course yields do not reflect this.

    I do hear what you are saying, which is why I’m always considering external factors. Prime London costs more, rents for more, and yields tend to be around the 6-7%. If you look at other areas of non-prime you would hope to spend less, but you rent for less, however you tend to find that on average yields are around the same.
    (There will of course always be exceptions to the rule, either one off properties, streets or areas.)

    Given the risks in the CDS you would want a higher yield, let’s say closer to 10%. If you run my example numbers again, then to remain “in the market” with your pcm numbers you would have to buy at 75-80,000 euros. That’s even more off current prices!

    Again, let me stress the point.
    I believe valuations on the CDS are very difficult to be firm on. The market does not function like the UK, sellers don’t seem to work in the same way, and official numbers are very unreliable. Given these points you have to asses “value”, and if required “premium” for pricing property. And in the absence of any other reliable indicators you have to start somewhere, or you rely on “what next door sold for”, or “what I paid for it”, or worse “the EA said…”.

    I have used my method for many years now, in different parts of the UK and a few places abroad, and touch wood have not yet dropped too much of a clanger, both in investments and lifestyle purchases.

  • #103986
    Profile photo of logan
    logan
    Participant

    In addition being unable to liquidate any investment asset at a time of your own choosing is a fatal flaw which requires pricing in to any purchase.
    I agree with James’s valuations. I have been saying much the same for some time on here and taken some stick for it. 😆

  • #103989
    Profile photo of Inez
    Inez
    Participant

    Jameslondon – good post. I would think your rental figure for CDS is a bit high – nearer to 600 euros pm would be more realistic. The truth is the figures dont work for a buy to let scenario and it hasnt done for many years. You will hear the odd owner bucking the trend, but that will be mainly villas bought many years ago in good locations that rent well for a lot of the year, repeat and referral business built up over many years.

    The banks allowing such high lending to anyone caused prices to rise too high and the problem is now that the loans outstanding are much higher than the true ‘value’ of the buy to let property has to be in order to be worth taking on.

    The market has to sort itself out, maybe it never will as there is far too much supply, even if they were on the market for 50k each, there are hundreds of thousands of units available, I doubt they will be mopped up that quickly.

    Its why there are no buy to let investors buying, it is purely lifestyle or relocation purchases happening now.

  • #103993
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    Anonymous
    Participant

    I don’t want to get bogged down in BTL issues, thats not really the point of the post.

    Its more to highlight a measure I think thats useful when working out values in a market that has zero reference points.

    I would be very interested in getting the views of the agents on here as to how they arrive at price multiples on property they are selling using my simple guide.

    Example;

    http://www.vivaestates.com/property/apartments/elviria/HOT-A1081-SSC#

    Is this “bargain” at 230,000 rentable for 1350 a month? Or, given previous comments, is its PCM rate closer to 700euro’s therefore making it not such a “bargain”?
    Whilst it may have once upon had the higher PCM value, and one day return to that PCM value, we don’t buy and sell property on previous or future values, we deal at current market values.
    What makes this property, on my valuation tool, worth a rental yield closer to 3% when I can achieve double that in London with, as has been highlighted above, many many more safeguards for my money?

    (I know we are not buying it to rent, but for the sake of this example it makes sense to view the purchase price on the rental yield basis as a reference point. Just because it once was worth X doesn’t make it a bargain at Y automatically.)
    http://www.guardian.co.uk/world/2011/apr/15/ireland-distressed-proerty-sale

  • #103995
    Profile photo of logan
    logan
    Participant

    I agree with you.
    When you assess rental yields you need to take into account the glut of rental property on the market in Spain. I would make an educated guess that at least 85% of the coastal housing stock is available to rent, either holiday or long term.
    That’s a lot of property and keeps rental returns low, now and for the future.
    There is just far too much property built in recent years and unoccupied.
    That fact is yet another indication of how current selling values are far too high. They are high for a variety of reasons.
    Not least of those is negative equity and Spanish law which makes any mortgage holder liable for the entire balance outstanding if he defaults.
    If they sell for less than the entire debt, they then have to continue to make repayments until the balance capital is discharged. At the top of the market the banks were lending up to 100% LTV. Those LTV’s were inflated so outstanding loan capital is high.
    You can safely estimate any property for sale that is too high today represents that entire mortgage as it’s sale price.

  • #103997
    Profile photo of peterhun
    peterhun
    Participant

    “What makes this property, on my valuation tool, worth a rental yield closer to 3%”

    Quite obviously its worth 115K not the advertised 230K

  • #104193
    Profile photo of Inez
    Inez
    Participant

    Unfortunately using the logic of rental yields to buy a property will rule you out of the market here totally as it just doesnt work, for all the reasons Logan states.

    Currently the only reason people are buying are for the lifestyle choices – retirement, an investment for the kids/grandkids, a holiday home to use several people I am dealing with at the moment are looking to buy now, use for holidays and then to live 6 months of the year here and 6 months elsewhere. They see a property, make an offer and buy not looking at rental yields.

    If your question is about how the selling price is realised then thats a different story and agents use different methods.

    Some list a property where the seller tells them what to put it on for, ie I bought it at 200k, I spent 50k on it so I want my money back – put your commission on top. Therefore price is 250k plus agents fees and a bit more for negotiating purposes.

    Others use the euros psqm valuations from the valuers ie Marbella 3000 epsqm internal build, 50% of that for garages 30% for land and open terraces and so on to build the price up.

    Others take a rough comparison of a neighbours place that sold.

    Hence the different prices of similar properties.

    Hope that helps

  • #104020
    Profile photo of Inez
    Inez
    Participant

    Unfortunately using the logic of rental yields to buy a property will rule you out of the market here totally as it just doesnt work, for all the reasons Logan states.

    Currently the only reason people are buying are for the lifestyle choices – retirement, an investment for the kids/grandkids, a holiday home to use several people I am dealing with at the moment are looking to buy now, use for holidays and then to live 6 months of the year here and 6 months elsewhere. They see a property, make an offer and buy not looking at rental yields.

    If your question is about how the selling price is realised then thats a different story and agents use different methods.

    Some list a property where the seller tells them what to put it on for, ie I bought it at 200k, I spent 50k on it so I want my money back – put your commission on top. Therefore price is 250k plus agents fees and a bit more for negotiating purposes.

    Others use the euros psqm valuations from the valuers ie Marbella 3000 epsqm internal build, 50% of that for garages 30% for land and open terraces and so on to build the price up.

    Others take a rough comparison of a neighbours place that sold.

    Hence the different prices of similar properties.

    Hope that helps

  • #104203
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    Anonymous
    Participant

    Buying in Spain on the basis of rental yeild, did not work yesterday,today or dare I say in future. Without going into an individual transaction. The cost of completion 10% +/-, throws the whole basis out.

    The only way one could make money will be on rate of return i.e. on capital and that will be over a long period say 5-8 year and than one has to look at alternative options.( wheter this ones own capital or borrowed i.e. mortgage )

  • #104025
    Profile photo of Anonymous
    Anonymous
    Participant

    Buying in Spain on the basis of rental yeild, did not work yesterday,today or dare I say in future. Without going into an individual transaction. The cost of completion 10% +/-, throws the whole basis out.

    The only way one could make money will be on rate of return i.e. on capital and that will be over a long period say 5-8 year and than one has to look at alternative options.( wheter this ones own capital or borrowed i.e. mortgage )

  • #104205
    Profile photo of Anonymous
    Anonymous
    Participant

    All comments noted.

    Just remember though, I’m not looking to buy and rent. I’m using a tried and tested method of valuing property in my mind to assess if its priced right.

    Apply this rule to property around the globe. Try it please, get on something like Rightmove and see what comes up in other EU states, UK, USA, Aus and NZ. More often than not you are going to be within a few points of the rule.
    Again, let me stress…………this is not with a view of buying to rent…its a valuation method.

    When you do the sums you see that current CDS prices are out of sync. Are we then saying that the market is unique, driven by a retiring buyer or one looking for a lifestyle purchase who is prepared to pay a significant premium to live on the CDS? And these buyers who drive the market are there, or will be there, in significant numbers to take out the current oversupply?

    My point, in a round about way, to to try and evaluate where the market needs to be today, and where it may well be over the next 5 or 10 years by using valuation tools. To try and guess, or say its down so it must go up, or of course it will go up is no process for taking decisions.
    You wouldn’t buy a company based on these word of mouth assumptions, or someones opinion. You want to see the numbers, establish the drivers, determine future revenue streams, all of which are tangiable and can be verified.

    So, what is going to change on the CDS over the next decade to drive the market?
    Will it be buyers from North EU who are retiring?
    Buyers from North EU who can free up funds by borrowing again, or spend savings?
    Industry driving employment in the area?
    Boom in tourisim leading to some of the above?

    If you can’t find the driver to justify the premium, why is there a premium?
    Because its the CDS………..???

  • #104026
    Profile photo of Anonymous
    Anonymous
    Participant

    All comments noted.

    Just remember though, I’m not looking to buy and rent. I’m using a tried and tested method of valuing property in my mind to assess if its priced right.

    Apply this rule to property around the globe. Try it please, get on something like Rightmove and see what comes up in other EU states, UK, USA, Aus and NZ. More often than not you are going to be within a few points of the rule.
    Again, let me stress…………this is not with a view of buying to rent…its a valuation method.

    When you do the sums you see that current CDS prices are out of sync. Are we then saying that the market is unique, driven by a retiring buyer or one looking for a lifestyle purchase who is prepared to pay a significant premium to live on the CDS? And these buyers who drive the market are there, or will be there, in significant numbers to take out the current oversupply?

    My point, in a round about way, to to try and evaluate where the market needs to be today, and where it may well be over the next 5 or 10 years by using valuation tools. To try and guess, or say its down so it must go up, or of course it will go up is no process for taking decisions.
    You wouldn’t buy a company based on these word of mouth assumptions, or someones opinion. You want to see the numbers, establish the drivers, determine future revenue streams, all of which are tangiable and can be verified.

    So, what is going to change on the CDS over the next decade to drive the market?
    Will it be buyers from North EU who are retiring?
    Buyers from North EU who can free up funds by borrowing again, or spend savings?
    Industry driving employment in the area?
    Boom in tourisim leading to some of the above?

    If you can’t find the driver to justify the premium, why is there a premium?
    Because its the CDS………..???

  • #104207
    Profile photo of Inez
    Inez
    Participant

    Ahhh Jameslondon – you have hit the nail on the head. This place is unique. It is driven and always was traditionally by the lifestyle buyer. Anyone’s parents who bought here, bought for the idea of regular holidays or eventually a place to retire to. The consensus figures for Malaga have shown another raise in the over 65s age group.

    Some people live here as they have a business, thriving or otherwise. Most didnt come to make themselves millionaires but to have a better or different standard of living – better to get up on a sunny day to go to work than a cold rainy traffic laden one.

    Apart from the bubble we have seen this was always the way and type of buyer. From all nationalities and there is no solid bedrock to place your way of working out prices. Btw I agree with your system but it just doesnt work here.

    People in the main buy as they have the money, they want to be part of the place and once they see what they want they buy it only according to if they can afford it and want it, not for any other reason.

    Maybe in Malaga or Sevilla you could use the rental yield theory as its a normal setting not just reliant on tourists or people who have excess money to buy a property with. Barcelona, Madrid and places like that.

    Here there will only ever be the trickle of buyers and yes there will be an excess of units for years to come – unless the government buys them for the homeless!

  • #104027
    Profile photo of Inez
    Inez
    Participant

    Ahhh Jameslondon – you have hit the nail on the head. This place is unique. It is driven and always was traditionally by the lifestyle buyer. Anyone’s parents who bought here, bought for the idea of regular holidays or eventually a place to retire to. The consensus figures for Malaga have shown another raise in the over 65s age group.

    Some people live here as they have a business, thriving or otherwise. Most didnt come to make themselves millionaires but to have a better or different standard of living – better to get up on a sunny day to go to work than a cold rainy traffic laden one.

    Apart from the bubble we have seen this was always the way and type of buyer. From all nationalities and there is no solid bedrock to place your way of working out prices. Btw I agree with your system but it just doesnt work here.

    People in the main buy as they have the money, they want to be part of the place and once they see what they want they buy it only according to if they can afford it and want it, not for any other reason.

    Maybe in Malaga or Sevilla you could use the rental yield theory as its a normal setting not just reliant on tourists or people who have excess money to buy a property with. Barcelona, Madrid and places like that.

    Here there will only ever be the trickle of buyers and yes there will be an excess of units for years to come – unless the government buys them for the homeless!

  • #104209
    Profile photo of Anonymous
    Anonymous
    Participant

    Here there will only ever be the trickle of buyers and yes there will be an excess of units for years to come – unless the government buys them for the homeless!

    And therein lies the problem…………..massive oversupply that can only be cleared with lowers values or time.
    And time, unfortunatly, is not an option for too many.

  • #104028
    Profile photo of Anonymous
    Anonymous
    Participant

    Here there will only ever be the trickle of buyers and yes there will be an excess of units for years to come – unless the government buys them for the homeless!

    And therein lies the problem…………..massive oversupply that can only be cleared with lowers values or time.
    And time, unfortunatly, is not an option for too many.

  • #104219
    Profile photo of Chopera
    Chopera
    Participant

    Some on here may be able to expand on this, but I believe in Spain land has traditionally been the only way to get rid of cash (be it black money or be it fast depreciating legal money). The Spanish never really went in for funds and shares since land is something tangible and less prone to be taken from you. So the Spanish mentaility has not been so much “how much can I rent this for” but “how can I get rid of this cash”. Before the euro it was a given that nominal land prices would always outperform cash – the government would simply increase the money supply to make sure of it. When I came to Spain 7 years ago I suggested that perhaps that wouldn’t be the case with the euro but I don’t think people here really understood what I was getting at. Anyways my point is that in Spain most people assume there’ll always be a medium term increase in land values, so rental yields don’t figure so prominently in their “investment strategies”.

    There are a few exceptions to this – I know a few Spaniards who chase rental yields here in Madrid, but they consider 6% to be an excellent return. You have to remember that they won’t declare their rental income to Hacienda so it’s basically a tax free income, and it beats what most savings accounts are paying.

  • #104033
    Profile photo of Chopera
    Chopera
    Participant

    Some on here may be able to expand on this, but I believe in Spain land has traditionally been the only way to get rid of cash (be it black money or be it fast depreciating legal money). The Spanish never really went in for funds and shares since land is something tangible and less prone to be taken from you. So the Spanish mentaility has not been so much “how much can I rent this for” but “how can I get rid of this cash”. Before the euro it was a given that nominal land prices would always outperform cash – the government would simply increase the money supply to make sure of it. When I came to Spain 7 years ago I suggested that perhaps that wouldn’t be the case with the euro but I don’t think people here really understood what I was getting at. Anyways my point is that in Spain most people assume there’ll always be a medium term increase in land values, so rental yields don’t figure so prominently in their “investment strategies”.

    There are a few exceptions to this – I know a few Spaniards who chase rental yields here in Madrid, but they consider 6% to be an excellent return. You have to remember that they won’t declare their rental income to Hacienda so it’s basically a tax free income, and it beats what most savings accounts are paying.

  • #104221
    Profile photo of logan
    logan
    Participant

    Most black under the bed money in Pesetas was put into property and land during the run up to the Euro convergence in 1999. I remember the gold rush to beat the deadline. The same was true in Holland and France.
    Property values have now fallen to pre-Euro levels so those who held on during the boom times have lost decent returns.

  • #104034
    Profile photo of logan
    logan
    Participant

    Most black under the bed money in Pesetas was put into property and land during the run up to the Euro convergence in 1999. I remember the gold rush to beat the deadline. The same was true in Holland and France.
    Property values have now fallen to pre-Euro levels so those who held on during the boom times have lost decent returns.

  • #104229
    Profile photo of ozmunky
    ozmunky
    Participant

    @jameslondon wrote:

    Here there will only ever be the trickle of buyers and yes there will be an excess of units for years to come – unless the government buys them for the homeless!

    And therein lies the problem…………..massive oversupply that can only be cleared with lowers values or time.
    And time, unfortunatly, is not an option for too many.

    Anyone buying this toxic asset class for the reasons above is nuts.

    Even “lifestyle” buyers need their head examined. Anyone wanting to spend time here (including me) should rent.

    The reason why I say this is that as Spain is about to go thru an economic crisis that no-one alive in Spain has seen yet.

    Anyone buying will become automatically tax resident and so by implication a target for outrageous taxation policy decisions and enforcement.

    If you need to buy something in Spain for “lifestyle” reasons — buy a boat and sail it somewhere else when things get tricky.

    — Munky

  • #104038
    Profile photo of ozmunky
    ozmunky
    Participant

    @jameslondon wrote:

    Here there will only ever be the trickle of buyers and yes there will be an excess of units for years to come – unless the government buys them for the homeless!

    And therein lies the problem…………..massive oversupply that can only be cleared with lowers values or time.
    And time, unfortunatly, is not an option for too many.

    Anyone buying this toxic asset class for the reasons above is nuts.

    Even “lifestyle” buyers need their head examined. Anyone wanting to spend time here (including me) should rent.

    The reason why I say this is that as Spain is about to go thru an economic crisis that no-one alive in Spain has seen yet.

    Anyone buying will become automatically tax resident and so by implication a target for outrageous taxation policy decisions and enforcement.

    If you need to buy something in Spain for “lifestyle” reasons — buy a boat and sail it somewhere else when things get tricky.

    — Munky

  • #104231
    Profile photo of Anonymous
    Anonymous
    Participant

    James of London. You can compare, calulate, draw paralells. One thing you should remember ” Spain is different ” and this hold true today as it did yesterday.

    Chopra. In most underdeveloped countires people always bought Land & gold as a hedge, for a rainy day, inheritance, black etc. Spain was & is no different. There was no other sound reliable vechile for investment. The market was & is underdeveloped, poor regulations etc.

    I recall people would neively say that they were getting 15% Bank interest rate & when Ii told them the inflation was 17 or 20% & there capital was being erroded they could not understand. Besides, Spain had and still has some very large landowners.

  • #104039
    Profile photo of Anonymous
    Anonymous
    Participant

    James of London. You can compare, calulate, draw paralells. One thing you should remember ” Spain is different ” and this hold true today as it did yesterday.

    Chopra. In most underdeveloped countires people always bought Land & gold as a hedge, for a rainy day, inheritance, black etc. Spain was & is no different. There was no other sound reliable vechile for investment. The market was & is underdeveloped, poor regulations etc.

    I recall people would neively say that they were getting 15% Bank interest rate & when Ii told them the inflation was 17 or 20% & there capital was being erroded they could not understand. Besides, Spain had and still has some very large landowners.

  • #106872
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    DBMarcos99
    Participant

    @chopera wrote:

    Fuengi – personally I don’t think the Madrid market has bottomed yet, but I think there might be a few things that prop it up more than the costas:

    1 Jobs.

    2 Pisos de Protección – I’m not sure how many there are on the costas, but there are plenty in Madrid and they place a false floor on the market.

    3. As mentioned, flats in Madrid are much more likely to be people’s primary/only residence. I think this makes people less motivated to sell at discounted prices.

    Interesting reading all this stuff. I think the jobs thing (and remember that Madrid is a rich province with a per capita income higher than some parts of the UK) is the main factor. In the latest unemployment figures, which were bad for most of Spain, Madrid was the only region to record a fall in the figures. I don’t expect to be able to buy property there (I’m looking more at a cheaper place in somewhere like Murcia or Almeria, where I’m sure bargains will be had for the next few years – well, only if a project I’ve got takes off). But, as mentioned elsewhere, the best returns for property recently have been central London – only problem is you need millions to be able to afford a place there.

  • #106874
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    logan
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  • #106909
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    Anonymous
    Participant

    My friend lives near Barcelona and is paying 850 euros a month in rent. The owner was trying to sell the property for 320,000 euros. That’s over 30 years rental.

    I think Spain was different, while prices were continually rising, however I think that people are now beginning to realise that there’s no point buying if it costs you 30 years rent to do it. I originally intended to buy a property for use in retirement, until it all went horribly wrong. Now I will only consider renting at these ratios and the risks involved, even if I have to leave the place empty for months when I’m in the UK.

    Mind you, with the way things are going here I’ll probably never be retiring any way!

  • #106911
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    DBMarcos99
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    @Snowbird wrote:

    My friend lives near Barcelona and is paying 850 euros a month in rent. The owner was trying to sell the property for 320,000 euros. That’s over 30 years rental.

    I think Spain was different, while prices were continually rising, however I think that people are now beginning to realise that there’s no point buying if it costs you 30 years rent to do it. I originally intended to buy a property for use in retirement, until it all went horribly wrong. Now I will only consider renting at these ratios and the risks involved, even if I have to leave the place empty for months when I’m in the UK.

    Mind you, with the way things are going here I’ll probably never be retiring any way!

    You raise a very important point. Maybe the years of being able to expect 5 – 15 years retirement, are soon going to be over, and we may revert to working until we drop. Which would really affect the retirement homes market. However I can’t see this. For one, companies rarely set on over 50s (or even over 40s in the IT sector). And secondly there see to be a lot of folk around who make their fortune from the internet game, and so can retire earlier than the average.

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