Supply and Demand

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This topic contains 21 replies, has 11 voices, and was last updated by Profile photo of mike mike 10 years, 7 months ago.

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  • #51730
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    Anonymous
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    From Fridays news

    Supply and demand out of balance in real estate market
    By h.b.
    Apr 14, 2006, 08:46:00

    According to the Spanish press today, the laws of supply and demand are out of balance in Málaga province when it comes to real estate.

    The latest figures show that 91,000 homes are to be put on sale in the province over the period 2005-2006, when demand is considered to exist for just 78,350.

    The difference in the province is the largest seen in Andalucía according to the report form the AEA, the Andalucian Economic Analysts.

    They also not that homes in the province are now taking 9 months to sell, and they expect that to double in the short term.”

  • #61734
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    Anonymous
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    Mine took almost 18 months, 5 offers and 1000€ wasted legal fee’s and 3 trips to draw up contracts with my lawyer and worst of all apart from all the stress was that it nearly cost me the chance to spend time with my mother as she died unexpectidly 20 days after I moved back to the UK, the Spanish property market is a nightmare 👿

  • #61736
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    Anonymous
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    Flynn, I’m so sorry that you lost your Mother. 😥
    It does not bode well for all the people who hope to sell on completion of their properties. In a way, I’m almost pleased we do not have an apartment now!! I think we will rent when we want to spend 6/9 months in Spain.

  • #61737
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    Anonymous
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    Thankyou Claire, who knows maybe if I hadn’t bought an apartment through OE I’d have sold it quicker 🙁 It’s the first property I’ve EVER had a problem selling 😕
    I’d say renting would be a good option for now, especially while the market is going through such a bad time.
    Good luck with all your problems.

  • #61738
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    Anonymous
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    I found this post on another Spanish property website. It does not make encouraging reading although no doubt there are other opinions and interpretations. Perhaps readers would be prepared to comment.

    A recent report co-written by the University of Barcelona (UB) and Forcadell – a Spanish real estate consultancy – forecasts that Spanish property prices could fall by as much as 20% between the 2007 and 2009. This fall will be triggered by a weaker Spanish economy, too much new property, and falling demand as speculators and investors tap other countries in search of high returns. According to Prof. Gonzalo Bernardos, 2005 will turn out to be a bridge year between the bull and bear market, with 2006 bringing the first signs of falling prices, a trend that will strengthen in 2007 when the Spanish real estate market will suffer a “hard landing”.

    Jaime Caruana – the Governor of the Bank of Spain – has once again warned that Spanish property is over priced by between 24% and 35%. However in the same breath he adds that he does not expect prices to fall, though sustained high levels of property price inflation in Spain does increase the risk of an abrupt price adjustment sometime in the future.

    The European Central Bank (ECB) has also expressed concern on several occasions in recent months that ‘certain’ Euro-zone property markets might be overheating. It is no secret that the Spanish property market is the one that keeps Jean Claude Trichet – Governor of the Bank – awake at night with worry. One feature of the Spanish property market that particularly bothers the economists at the ECB is the fact that over 80% of Spanish mortgages are variable rate mortgages, which turn interest rates increases straight into higher mortgage repayments. This leaves the Spanish property market more exposed to interest rate increases than, say, the German market, where the majority of mortgages have at least a term of fixed interest rates. The ECB believes that Euro-zone property prices could be overvalued by between 15-25%, with Spain at the higher end of the scale. Spain’s annual property inflation is significantly above the EU average of around 7.5%

    The Royal Institute of Chartered Surveyors in Spain (RICS España) also has an opinion on the present level of real estate prices in Spain. Stan Dickens – President of RICS España, was recently quoted in the Spanish press as saying, “Very few people in Spain are prepared to admit that property prices might fall, despite increasingly clear signs to the contrary”

  • #61739
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    Anonymous
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    There are a number of sources inside and outside of Spain drawing attention to a potential downturn in property prices. This is translated into an actual downturn in the 2 bed 2 bath apartment sector where on the CDS particularly supply outstrips demand. All the more important for those who are buying to make a short term profit to study the market trends carefully before jumping in.

    In the current climate – if you are not buying into the market for a longer term investment – best to steer clear for a while.

  • #61761
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    Anonymous
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    Its obvious to most that there is a surplus of property on the CDS and that the property market is in a period of stagnation and is certainly set for a sharp downturn. This situation will get considerably worse when all the new builts are completed in the next two years, strange then that Viva Estates in an article in their latest magazine see no problems and only blue sky ahead.

  • #61766
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    Anonymous
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    They would with a 7.5% commission and a half share in any holding deposits when a sale falls through 😕

  • #61767
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    Anonymous
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    @Flynn wrote:

    a half share in any holding deposits when a sale falls through 😕

    😯 😯 They truly are vultures!!

  • #61768
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    Anonymous
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    Yes apparantly it is to cover there expenses and inconvenience, even though it was me who lost 3 months views 🙄 least my lawyer only took 40% of what was left 😯

  • #61811
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    Paul
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    As gnik and others have said on here, it’s amazing what the same large agents are still publicly saying about the ‘booming’ market when the finance reports and those with knowledge state the opposite, steer well clear of them and wait a couple of years to see what happens. Good luck to those with current property on the market.

  • #61817
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    Anonymous
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    I’d just like to point out that the post that Mike Grant quotes is in fact from one of my latest news bulletins. You can read the full article here:

    http://www.spanishpropertyinsight.com/spanish_property_market_review_2005_forecast_2006.htm

    Anyone with any interest in Spanish property – especially buyers and sellers – should sign up for the bulletin. The feedback I have had is that people find it useful. And, of course, it’s free.

    By the way, commissions may be 7.5% or thereabouts on the Costa del Sol, but up in Almeria, Murcia and the South Costa Blanca, where properties are cheaper, 15% to 25% are common. Depressing, right.

    Mark

  • #61827
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    Anonymous
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    From The Sur in English

    After seven year long real estate boom with prices reaching exorbitant levels, sales are starting to slow down. Some owners, tired of seeing the “For Sale” sign outside their home for months on end, are finding themselves selling for sums way below what they had originally hoped for, and sometimes even less than the amount quoted on the official valuation.
    Professionals claim that one of the main causes of this present situation is that much of the demand has already been satisfied while other potential buyers have been priced out of the market. The threat of rising interest rates has helped to slow down sales along with the fact that “it would have been impossible to keep up the recent rate of evolution of the market for much longer”, explains the national director of the MC estate agency, Juan Felipe Muñoz. Now it is taking an average of 32 months to sell a property.

    While experts are avoiding using the word “crisis”, they admit that those people who bought properties in order to sell them on again are now finding it hard to turn the bricks back into cash. Owners can no longer use the amount fetched by a neighbouring property as a guideline as this “often leads to disappointment”, pointed out the president of the School of Real Estate Agents, Cayetano Rengel. “The time when studios fetched 250,000 euros could not go on forever”, he added.

    “Now an owner in a hurry to sell has no choice but to lower the price. Someone asking 300,000 at first might easily drop the price to 230,000 after several months have gone by without finding a buyer”, point out sources from Unicasa.

    Similarly Juan Carlos Cuevas, the manager of a Tecnocasa franchise, said that he is seeing “brutal cuts” in prices. “It’s quite normal for an owner to drop between 18,000 and 30,000 after less than three months”.

    Not contented with the usual classified advertising, owners are also seeking new ways of finding a buyer. Over recently months we have seen an increase in advertisements appearing everywhere, from car windscreens to lampposts and letter boxes.

    Meanwhile the Association of Madrid Property Developers and international financial analysts predict that the slump in the market could reduce employment in Spain by two per cent by the middle of 2007 and reduce the Gross Domestic Product by 1.3 per cent.

  • #61835
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    Paul
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    A sign of the times because every week in the S. Times there are people trying to sell homes on the C. del Sol privately for quick deals ‘below’ market apraisal, even some selling for much less than they paid, and of course to try and avoid the large agents’ exhorbitant commissions.

  • #61846
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    I am an estate agent in the area north of Valencia city and can confirm that market has stalled over the past four months – more so for British buyers than Spanish buyers. Our volume of sales has dropped from the same period last year and we have more instructions awaiting sale than ever before. Nevertheless, we – and our competitors – continue to sell properties and I have not yet seen any evidence of prices being significantly reduced.

    Evidence that the market has generally slowed is provided by the banks. Hardly a week passes when one or more of the high street banks does not phone and invite us over for a presentation on various new mortgage products. Six months ago they didn’t have to phone around in an attempt to generate business.

  • #61973
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    The latest quarterly figures from the Spanish government show that average Spanish property prices rose by 12% over 12 months to the end of March. Prices rose all over Spain, but especially on Spain’s Mediterranean coast.
    How can the above be possible when there are so many thousands of unsold properties for sale on the CDS. According to the experts every year property increases by approx 12% and yet we read its now taking 3years on average to sell a property, something called supply and demand obviously does not apply to Spain.

  • #61976
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    Because there are two distinct markets:

    1. We spaniards buy property to live in and no matter how much the prices rise or the interest rates soar we need it. This happens inland: Madrid, Seville, all the large spanish cities.

    2. Foreigners buy properties mainly on the costas, close to the beach or to some golf resort. The are buying a second property mostly as an investment. When things turn ugly they stop buying or put there properties up for sale.

    So in the first case the prices are still going up although only at 8-12%, whereas in th second case, the non-residents, are selling-off now massively and are pulling down prices all along the spanish costas.

    The official figure takes into account both markets. Only a year ago it was at 17-18% IRRC. Still, it will follow a diminishing trend because now even us spaniards are being priced off the market.

  • #61978
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    It has been reported that properties are taking 32 months to sell with owners dropping prices by up 30,000 Euros after just three months on the market. However is there any evidence that off plan developers are similarly dropping their prices on new builds? When I was in Northern Almeria in early February I asked an agent if developers would accept offers. He stated that because demand was high on the properties his firm were marketing they would not.

  • #61979
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    That’s probably because he was looking at a drop in his commission and not hitting his sales targets!!!

  • #61980
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    I can’t say I’ve seen much reduction in off plan prices, although I’ve seen lots of off plan resales at significantly reduced prices (lower than they first paid) mainly due to people believing the huge sales hype and lies of agents 👿
    I also have a Spanish friend who has been trying to sell his property (main residence) in Malaga for 2 years 😯 he has reduced the price and most of his viewers are Spanish with no joy. So I can’t see any truth in the statistics, it’s not just foreigners who are suffering it’s everyone.

  • #61981
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    If we had our 120,000euros back from the developer 😈 we could probably snap up a bargain now!!! 😉

  • #61982
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    @gnik wrote:

    The latest quarterly figures from the Spanish government show that average Spanish property prices rose by 12% over 12 months to the end of March. Prices rose all over Spain, but especially on Spain’s Mediterranean coast.
    How can the above be possible when there are so many thousands of unsold properties for sale on the CDS. According to the experts every year property increases by approx 12% and yet we read its now taking 3years on average to sell a property, something called supply and demand obviously does not apply to Spain.

    We’d need to know how the figures are calculated. For example, in the UK the office of the deputy prime minister has statistics on house prices but these are 3 months behind the current trend because they only get figures when all the paperwork has been done and that takes time. I seem to remember that 1 year ago prices still seemed rather buoyant and the collapse was rather rapid so maybe the figures will be dramatically different in the next report.

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