Every day or so I read articles in the press about the situation in Spain, in particular the property market drama. I’m going to start linking to them on this thread. Feel free to add a link if I miss something.
This article goes into the human drama behind the crash. Families losing their homes whilst millions of properties stand empty. The situation is crazy.
Spanish property bubble fallout continues with evictions, debt and fear of homelessness
This article is more about the economy, but much of the economic damage was done by the property boom.
Stalled Spanish economy veers towards recession
This is the article I posted the other day, finally found the link. The Valencian Govt. has a lot to answer for.
POISON LINGERS FROM SPAIN’S PROPERTY BINGE
From one of the articles:
“Emanuel, the man facing eviction, bought the apartment in August 2006, when the property bubble in Spain was near its peak. At the time, the flat cost him €234,000, and now is worth only €117,000. In 2009, he lost his job and was unable to continue usual payments. Despite continuing to contribute half of his social benefit and sole source of income every month, the banks issued an eviction notice and embargoed his accounts. “They said I have to leave,” he says. “But I don’t have anywhere else to go.”
Having lost their homes, those evicted must still pay 40 per cent of the debt at the time of purchase, as well as judicial fees of up to €40,000-€60,000.
One man at the PAH meeting, threatened with eviction on the 1st of December, will still owe €130,000 to the bank even after they take his house”
Firstly, the €117,000 apartment will probably be valued at most 40000-50000 at the end up the up-coming second leg of the recession. So Emanuel would be wise to take the losses now.
Then, who lent him €234,000 in the first place? And why?
How is he going to repay the current about €130,000 debt, without even having the apartment?
It just shows that we are in the initial phases of the crisis.
The USA solution was to allow market to de3cide on the prices of undesirable apartment/houses and they took a 90% price hit before they generated some interest. Are Spanish banks ever going to allow this for the million apartments that not many want?