Spanish property prices:Is 2010 going to be worse than 2009?

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This topic contains 12 replies, has 7 voices, and was last updated by Profile photo of Anonymous Anonymous 6 years, 10 months ago.

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  • #55365
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    Amid a lot of talk of corners turned and “bottoming out” I read this rather dramatically titled piece saying that the Spanish property crash had barely started and that 2010 would be the year when it did as banks start unloading their huge property portfolios in earnest.

    http://www.elliottwave.com/freeupdates/archives/2010/01/07/The-Coming-Housing-Crisis-in-Spain-and-What-It-Means-for-Europe.aspx

  • #95856
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    @Advoco wrote:

    Amid a lot of talk of corners turned and “bottoming out” I read this rather dramatically titled piece saying that the Spanish property crash had barely started and that 2010 would be the year when it did as banks start unloading their huge property portfolios in earnest.

    http://www.elliottwave.com/freeupdates/archives/2010/01/07/The-Coming-Housing-Crisis-in-Spain-and-What-It-Means-for-Europe.aspx

    I do not think that many care anymore about Spanish property prices. It is too cheap to rent.

    Also, it seems that by buying in Spain one gets into a whole lot of trouble at every stage of the process.

    The Spanish property is now mainly for Spanish buyers or for people who buy as a permanent residence, as it should have been in the first place.

  • #95858
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    I don’t think you need to be an economist to appreciate what is going to happen.

    Foreign buyers are limited as recession in their home countries mean that thoughts of holiday homes are far far away. Using their main home as a source of revenue is now dead in the water and will be for many more years. Probably 2 millions unsold properites (new and old), Spain facing 25% unempoment, lots of immigrants going home as no work (Spain also paying them to go) creating even less internal demand for housing!

    The market is only going to be driven by the young working Spanairds, a few investors, and a few holiday home buyers. The latter 2 in the main are in very short supply. Capitulation is looming ever closer! My bet is 2011 for a spectaular bottom.

  • #95859
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    @jp1 wrote:

    The market is only going to be driven by the young working Spanairds, a few investors, and a few holiday home buyers. The latter 2 in the main are in very short supply. Capitulation is looming ever closer! My bet is 2011 for a spectaular bottom.

    One can rent for about £150/week/July-August/ 2 bedroom apt. and £100/week for the rest of the year in many places.

    What is the value of such 2 bedroom apt. when £250/month (average) barely covers for the taxes, community fees and some very modest tear and wear fees?

  • #95866
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    logan
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    Had some recent meetings with bankers in Spain. I can confirm they are starting to off load their huge portfolios at reduced values. Their main clients at the moment are middle class Spanish who have secure employment.
    The main problem is they will not sell below their valuers estimates which are out of date. This is likely to change as more arrive on their books and have values updated.
    It’s a no brainer really. I see selling prices dropping a further 20% before they stabilise in 2011/12.

  • #95869
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    Spanish property prices:Is 2010 going to be worse than 2009?

    IMO – Yes.

  • #95872
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    Interesting article by Mark over on Kyero recently…..

    http://news.kyero.com/2010/1/6/the-real-mccoy-on-spanish-house-prices

  • #95877
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    @logan wrote:

    This is likely to change as more arrive on their books and have values updated.
    It’s a no brainer really. I see selling prices dropping a further 20% before they stabilise in 2011/12.

    Is the further 20% decline going to make Spanish property good investment? I doubt it.
    Maybe in Madrid, Barcelona and other places where there are real jobs.

  • #95888
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    logan
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    From a business prospective, which for me is the only interest the answer is possibly, but identifying where the future demand will come from is key.
    Investment is a tricky profession but if the property market in Spain falls to sensible levels there may just be an outside chance for opportunity.
    A 20% drop in real terms will only bring Spain in line with EU norms. Real terms does not mean the ludicrous values we have seen in the last boom but fair value levels. That means some areas of the coast will need to fall 60% to 70%. That will take a long time to force vendors and banks to face the current realities of the market.
    Banks have huge portfolios of new property mainly taken from the asset base of bankrupt developers most of which are over valued on balance sheets. These have not reached the market yet and are the base of the iceberg. Property currently offered for sale is just the tip.
    Banks do not want to saturate the market for obvious reasons. However they will soon have no choice as they scramble to minimise their own serious losses.

  • #95891
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    One can rent for about £150/week/July-August/ 2 bedroom apt. and £100/week for the rest of the year in many places.

    Not here in Frigiliana but maybe so in some unpleasant ghettos. I get £400 to £420 a week peak for my 2 bedder, £300 shoulder months, and yes, about £400 a month Dec to Feb (plus electrcity).

    As i’ve said before after taxes and all costs it pays all our airport parking, airfares, car hire and groceries for 4 one month trips a year. HAPPY…

    …but then i don’t have a mortgage, no intention of selling for 15 years or so (if ever) and love the location.

    But if i were buying as an investment and not a holiday home i would want prices to reduce somewhat. A 2 bedder seems to be advertised at about €130k in our village. It would need to come down to closer to €90k to make economic sense based on my gross and net rental returns over the last 5 years (oh and by the way last year was our best ever for rent).

    The best thing the Spanish govt could do to boost the market would be to aloow ex pats to claim mortgage interest and other costs against rent, before tax. Then the economic price would rise. For locals that means a further drop of 15% to 20% would make it viable to buy for rental income.

    I just can’t see prices dropping by the 30% that would make me buy another property, but then i’m in no hurry.

  • #95893
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    @ashtondav wrote:

    One can rent for about £150/week/July-August/ 2 bedroom apt. and £100/week for the rest of the year in many places.

    Not here in Frigiliana but maybe so in some unpleasant ghettos. I get £400 to £420 a week peak for my 2 bedder, £300 shoulder months, and yes, about £400 a month Dec to Feb (plus electrcity).
    .

    Maybe your property is special. 😀

    But there are plenty of dirt-cheap rentals (and yes, they are in not so bad areas, including Nerja, Riviera del Sol and Mijas Costa) , it is very hard to decide where to book as the prices are constantly dropping.
    In Frigigliana, on the same rental site as yours there is a property with £165 between November and April and a not so unrteasonable £365 over the July-August. I doubt that such amounts cover the expenses (let alone mortgages…).

    There really is no reason to buy in 2010.

  • #95918
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    I doubt that such amounts cover the expenses (let alone mortgages…).

    Like i said it covers expenses plus all our trips. I am not unusual. What is unusual is the amount of posts on cost/rental income etc from people who are mere spectators.

    Would it cover a mortgage as well. Probably not, but anyone who buys a holiday home (as opposed to an investment) with a mortgage has their brains in their underpants.

  • #95922
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    @ashtondav wrote:

    I doubt that such amounts cover the expenses (let alone mortgages…).

    Like i said it covers expenses plus all our trips. I am not unusual. What is unusual is the amount of posts on cost/rental income etc from people who are mere spectators.

    Would it cover a mortgage as well. Probably not, but anyone who buys a holiday home (as opposed to an investment) with a mortgage has their brains in their underpants.

    Mathematics is still mathematics, even for spectators…

    I do not have any statistics, but I am sure that most of the people who bouhgt in Spain used some form of financing. Very few had 200K Euros under their mattress.
    On the other hand, I agree that normally one should save first and then afford the luxuries…

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