What event caused Spanish house prices to crash in 2007

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This topic contains 15 replies, has 9 voices, and was last updated by Profile photo of GarySFBCN GarySFBCN 4 years ago.

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  • #57161
    Profile photo of Anonymous
    Anonymous
    Participant

    What was the trigger that caused Spanish house prices to crash in 2007? Was there indeed any trigger or event that caused house prices to crash or did it just happen because the housing boom got so out of control? Did the collapse in the housing market cause a recession or did the recession cause house prices to crash? What caused sentiment in property to change so suddenly and dramatically from being bullish to being bearish in 2007?

    There could have been a soft landing for the economy and housing market but because the boom got so big when the bubble did finally burst it resulted in a hard-landing. The economy just seemed to go off the edge of a cliff and into a steep vertical decent in 2007.

    The only people that are buying property in Spain at the moment are either people who have recently retired and cannot wait for the bottom in house prices to be reached because they are going to kick the bucket soon or they are drug dealers and criminals who are trying to launder money that was made illegally.

    Anybody buying property in Spain to launder money made illegally should realise that they will lose about 20% of their money in buying and selling costs in that they will lose 15% on buying the property and will lose 5% on selling the property in legal fees and taxes. The best way to launder money is rather than buying Spanish property it is to buy property in Britain because the transaction costs are far less.

  • #113665
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    Jake, why not simply keep your post to the first 2 paragraphs, which are reasonable questions/thoughts, and delete the last 2 which is simply inflammatory?

  • #113666
    Profile photo of angie
    angie
    Spectator

    Quite right Fuengi 😉

    2007 was not unique to Spain, generally property prices fell in many other countries including the UK, however Spain suffered most I think simply due to the massive over supply coupled with TV and Press coverage of all sorts of wrongs in the Spanish property system which were exposed.

    The Spanish property market boom was huge and like no other property market worldwide that I can think of, it simply became too big, too soon, lots of corruption, and unstable as a result. 🙄

  • #113667
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    Both the US and Ireland had similar problems.
    Interestingly Lloyds have just announced they are selling their Irish loans book at 10p in the pound.

    http://www.reuters.com/article/2012/11/19/us-lloydsbank-ireland-idUSBRE8AI0SP20121119

  • #113668
    Profile photo of angie
    angie
    Spectator

    Yes US and Ireland had similar problems, Ireland is a smaller market and not subject to the ‘rush to the sun’ as happened in Spain not sure how their transaction costs are there compared to Spain’s, the US seemed to be less of the holiday home market more the general market than Spain’s with the massive sub-prime mortgage mis-selling going on.

    I still think Spain’s was huge and unique to them 🙄

    IMO the Irish loans book at 10p in the pound (euro?) might be a good deal as would Spain’s if sold at similar levels 🙂

  • #113672
    Profile photo of Anonymous
    Anonymous
    Participant

    The Spanish housing crash hit harder than similar disasters in the US and Ireland because of the impact on the market by foreign buyers, and a host of other reasons.

    Currently, for £150K, you can buy a mansion in Florida and a substantial property in Ireland, but in Spain you still won’t get much more than a crumbling town house or an illegal property in Andalucia.

    And then there is that frightening overhang of a million unsold homes soon to be owned by the bad bank.

    Realistically, house prices in Spain are down at least 50% since 2007, and to predict what will happen in future years is impossible. I can sense the demand from UK and other foreign buyers because Spain is such an attractive country to live in, despite the negative media coverage for some years now.

    That demand from foreigners, all of whom will be welcomed in Spain, could easily turn into a tide of newcomers to turn the market round. I see them every day, their noses pressed against the estate agents windows, babbling away in tongues from all over the world.

  • #113673
    Profile photo of Anonymous
    Anonymous
    Participant

    @Rocker wrote:

    …I can sense the demand from UK and other foreign buyers because Spain is such an attractive country to live in, despite the negative media coverage for some years now.

    That demand from foreigners, all of whom will be welcomed in Spain, could easily turn into a tide of newcomers to turn the market round. I see them every day, their noses pressed against the estate agents windows, babbling away in tongues from all over the world.

    Rocker,

    Spain is not such an attractive country to live in anymore. Spain used to be beautiful once before it prostituted itself to mass tourism and the holiday-home market all of which meant that Spain failed to diversify its medieval economy. Much in the same way that oil rich countries are bedeviled by the oil-curse in that it results in corruption and failure to invest in other aspects of economic growth, the Spanish reliance on the second home market and tourism was an easy bonanza to get rich from which has also has resulted in endemic corruption and failure to invest in other aspects of economic development. More people are trying to get out of Spain than are trying to go in which means that things are only going to get a whole lot worse. Spain is not suffering because of the negative media publicity but it is suffering because Spain is itself an economic disaster area that is only going to get even worse in the next few years with stellar high rates of unemployment and appalling levels of poverty comparable to what you find in the Third World.

  • #113674
    Profile photo of Anonymous
    Anonymous
    Participant

    Sub-prime mortgages in the US caused the 2008 recession, nothing else. It had nothing whatsoever to do with Spain.

    You can’t live in the past and bemoan those supposedly happy times before globalisation; in the case of Spain you’re dreaming about living under a dictatorship, not something I subscribe to.

    Spain is the natural holiday destination for Northern Europeans, and the country has naturally encouraged such a trade and greatly benefits from it. The building boom was a mistake and the country is suffering because of it. The infrastructure wasn’t ignored, new roads, airports and theme parks were built too.

    But the one event that caused all the current misery was purely the worldwide greed of bankers and their obscene bonuses, until Lehmans went down.

  • #113677
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Spain is not such an attractive country to live in anymore. Spain used to be beautiful once before it prostituted itself to mass tourism and the holiday-home market all of which meant that Spain failed to diversify its medieval economy.

    Well if it isn’t so attractive, why do you bother to post? Regardless, what is any country supposed to do with a sector of the economy that has explosive growth? Shut it down? I didn’t see the Germans, the Brits or anyone screaming that Spain needed to do something during the good times.

    There is more economic diversity now in Spain than there was 15 years ago, before the real estate boom. Spain’s “medieval economy” was in decent shape (government debt anyway) on the eve the the global economic collapse.

    I suggest that you confine your comments to something you actually know, such as the price of tinned pineapple.

  • #113678
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    But the one event that caused all the current misery was purely the worldwide greed of bankers and their obscene bonuses, until Lehmans went down.

    Exactly. And that has not changed at all. They are still greedy. They still have obscene salaries and bonuses. And globally, these institutions are being ‘bailed-out’ with money derived from taxes, with no controls, accountability or sacrifice, and to support this, people are being fired from their jobs, hospitals are being closed and services are being cut.

    It is time for a paradigm shift.

  • #113685
    Profile photo of Anonymous
    Anonymous
    Participant

    @garysfbcn wrote:

    Spain is not such an attractive country to live in anymore. Spain used to be beautiful once before it prostituted itself to mass tourism and the holiday-home market all of which meant that Spain failed to diversify its medieval economy.

    Well if it isn’t so attractive, why do you bother to post? Regardless, what is any country supposed to do with a sector of the economy that has explosive growth? Shut it down? I didn’t see the Germans, the Brits or anyone screaming that Spain needed to do something during the good times.

    There is more economic diversity now in Spain than there was 15 years ago, before the real estate boom. Spain’s “medieval economy” was in decent shape (government debt anyway) on the eve the the global economic collapse.

    I suggest that you confine your comments to something you actually know, such as the price of tinned pineapple.

    Try not to pick up something nasty in those bathhouses in the Castro district of San Francisco, you know, where the funny people hang out. I have many reservations about women but I am still glad that I am straight.

  • #113686
    Profile photo of Igurisu
    Igurisu
    Participant

    @jakesuper wrote:

    Try not to pick up something nasty in those bathhouses in the Castro district of San Francisco, you know, where the funny people hang out. I have many reservations about women but I am still glad that I am straight.

    You would be banned from most public forums for homophobic drivel like this, I’m amazed that you are still posting to be honest.

  • #113688
    Profile photo of Chopera
    Chopera
    Participant

    @igurisu wrote:

    @jakesuper wrote:
    Try not to pick up something nasty in those bathhouses in the Castro district of San Francisco, you know, where the funny people hang out. I have many reservations about women but I am still glad that I am straight.

    You would be banned from most public forums for homophobic drivel like this, I’m amazed that you are still posting to be honest.

    If he is who I think he is, then he has already been banned from most public forums (in fact there was a rumour once that the police investigated him after he threatened to take an AK47 to a pub meet-up being held by another forum)

  • #113692
    Profile photo of Fuengi (Andrew)
    Fuengi (Andrew)
    Participant

    @jakesuper wrote:

    @garysfbcn wrote:
    Spain is not such an attractive country to live in anymore. Spain used to be beautiful once before it prostituted itself to mass tourism and the holiday-home market all of which meant that Spain failed to diversify its medieval economy.

    Well if it isn’t so attractive, why do you bother to post? Regardless, what is any country supposed to do with a sector of the economy that has explosive growth? Shut it down? I didn’t see the Germans, the Brits or anyone screaming that Spain needed to do something during the good times.

    There is more economic diversity now in Spain than there was 15 years ago, before the real estate boom. Spain’s “medieval economy” was in decent shape (government debt anyway) on the eve the the global economic collapse.

    I suggest that you confine your comments to something you actually know, such as the price of tinned pineapple.

    Try not to pick up something nasty in those bathhouses in the Castro district of San Francisco, you know, where the funny people hang out. I have many reservations about women but I am still glad that I am straight.

    don’t think most women would agree with you though

  • #113695
    Profile photo of logan
    logan
    Participant

    @jakesuper wrote:

    Try not to pick up something nasty in those bathhouses in the Castro district of San Francisco, you know, where the funny people hang out. I have many reservations about women but I am still glad that I am straight.

    More than enough reason to remove this idiot from a forum where balance and decent argument from members makes it worth reading.

  • #113705
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Try not to pick up something nasty in those bathhouses in the Castro district of San Francisco, you know, where the funny people hang out. I have many reservations about women but I am still glad that I am straight.

    While it is presumptuous for me to do so, speaking for all gay men in the world, we too are glad that you are straight.

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