- This topic has 16 replies, 15 voices, and was last updated 16 years, 11 months ago by
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Strong stuff!
Sales by Spain’s 7 biggest quoted developers are down 73.5% compared to last year, according to latest published accounts.
http://www.spanishpropertyinsight.com/buff/?p=59
Mark
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“These results might help explain why Spanish developers are screaming for a public bailout”.
They have to be kidding. 🙄How about a public bailout (let’s call it compensation) for all the purchasers who collectively are out of pocket by millions of euros.
Am sure we could raise a scream or two if it helps. -
No, one related directly or indirectly to Spanish construction Industry should be bailed out. If they had ethical business practises, trained & accountable staff and not a product with shoddy finish. In the current cycle serious buyers would have been lining up to buy from them.
The Developers have to realise that risk taking is not a one way bet. Any bail out will not let them grow up.
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73.5% !
This is a massive figure – no builder is going to survive such a plunge in demand. The Spanish Government wl need to take a long & hard look at how they’ve got themselves into this mess and what corrective action(s) are necessary to restore confidence.
The first thing they should do is draw a line under all the illegal builds. Legalise them all and let owners sleep soundly with the knowledge that they won’t get demolished and that the properties can be sold. Then they should introduce Regulatory Bodies with teeth to prevent the situation ever happening again. If Lawyers were under threat of losing their Professional Membership and right to practice, they would be less sloppy and complacent with other’s money.
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@charlie wrote:
“These results might help explain why Spanish developers are screaming for a public bailout”.
They have to be kidding. 🙄How about a public bailout (let’s call it compensation) for all the purchasers who collectively are out of pocket by millions of euros.
Am sure we could raise a scream or two if it helps.The bailout, or in other words the privatisation of gain and the socialisation of risk. How quick former exponents of the merits of the free market are to cast their principles away when the fan and the unmentionable are introduced to each other. 😕
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IMHO, the guilty parties are agents, developers, speculators and of course the authorities that approved such unrealistic building plans. FWIW, I would be happy to see them suffer. I truly hope that they get there just deserts.
I would really angry to think that they got some bail out from our taxes.However, there will be many innocent people who get “burned” by the ongoing situation. These people have my sympathy and maybe some should get some help.
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It´s easy to forget that there are hundreds of thousands of innocent everyday workers who will lose their jobs, many with families to feed, and most likely, both partners being hit by the downturn in sales.
I have little sympathy for the greedy directors, but I know many decent Spanish families who went about their work for many years and now find themselves in an awful situation. Yes if the government are going to throw tax-payers money into a pot, lets hope it goes to the innocent families involved.
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Which of course it wouldn’t. It never does. A disproportionate share of any bailout would end up in the wrong pockets, as always.
It will be hard on workers, but what’s the alternative? Use public money to keep churning out surplus property? That would be a gross waste of scarce resources, not to mention an environmental and economic disaster in the long term. The government should never have allowed construction to take over so much of the economy, at the expense of other, more productive activities. Once the damage is done, the only way out is a painful adjustment, and the day of reckoning can’t be put off for ever. The finance minister Pedro Solbes seems to understand this, to his great credit.
I’ve been reading a lot of comments by Spaniards in blogs and forums on this issue. There is a lot of rage directed towards the property sector in general, especially the developers who made so much money in the boom now calling for a public bailout.
One comment really struck me. Someone pointed out that for some years now, at least until the crisis struck, construction workers have been earning significantly more than highly educated university grads. Last year even my wife, a company director with an MBA from one of the world’s leading business schools, was earning less than brickies doing some work at the company offices. A sure sign that something is badly wrong with the economy.
So even the ‘workers’ in the property business had it pretty good for a while.
Mark
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“It´s easy to forget that there are hundreds of thousands of innocent everyday workers who will lose their jobs, many with families to feed, and most likely, both partners being hit by the downturn in sales.”
There is a shortage of 300K+ construction and services workers in Romania.
There are are at least 500K+ Romanian construction and services workers in Spain.If half lose their jobs, they can go home and find a job there (of course the salary is much lower but they won’t starve).
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@mark wrote:
One comment really struck me. Someone pointed out that for some years now, at least until the crisis struck, construction workers have been earning significantly more than highly educated university grads.Mark
I remember a conversaton with two construction workers, after asking me if the British were crazy for paying the prices they did for property I asked them what they would do when it all stops. They shrugged their shoulders but they knew it was coming.
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they should bail out the developer. If these businesses go under, the knock on effect ill be horrendous.
BUT this should not simply be to throw money at them, the gov. should buy these developments of them at cost and simply resell them as VPOs.
I know from certain people that even when developers build VPOs there are healthy profit margins and the selling prices are around 120.000 and they are good quality with pool, gardens, garages, etc…
Its not our problem these developers were too greedy.
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The smart developers will be the ones that stop ALL new developments immediately. With 1-2 million surplus homes ALREADY on the market it is not obvious how the property market can recover at all in the medium term.
In the US there have been similar well publicised issues in the property market causing some to suggest that all excess properties should be declared derelict and bulldozed. Whilst that might sound stupid it would remove the property surplus, which in turn would remove the ‘killer’ problem of surplus inventory which stifles sales.
Of course it sounds ridiculous that people would bullldoze good buildings, but the fact that they are suggesting it shows how crazy the housing market can become without any form of regulation. We let young estate agent kids go round in their BMW’s talking up the market for years and then we moan that we have to deal with the aftermath. Developers can collude with local planning officers and leave the customer holding the bill for an illegal build. A justice system that is unable to deal with the situation. It goes on and on. In truth the situation for Spain is worse than many imagine. So long as there are 1-2 million surplus homes in the system I struggle to imagine how prices can do anything other than decline significantly in the next few years. If you are not planning to sell then you have nothing to worry about. If you are planning to sell then you may need a strong constitution if you can get ahead of the market with a bigger price decrease than your neighbour. But maybe that idea isn’t a crazy as it sounds.
Of greatest disappointment to me personally is the delusion of the estate agents who personally told me that prices would NEVER decrease in Spain and that I should buy NOW to avoid getting left behind.
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