November 25, 2007 at 9:11 am #53483
Day by day worse news about the spanish property market.
Today we can see in the first page on the printed paper this new:
SU PISO VA A PERDER VALOR (YOUR FLAT WILL LOSE VALUE)
In this article we can read that the more conservative media is recognicing the fact that prices will fall. In fact I think it are falling right now.
Also we can read a shamed like that FADESA has a 40% of margin in beneficts in their developments so they can drop prices in that margin. So you know were are going your savings of your entire life. To the pocket of a shameless who admits that he has a 40% of margin gains.
November 25, 2007 at 10:41 am #76286
You do love your newspaper reports 😉
Same as the U,k and many other countries because in case you havent noticed there is a worldwide credit problem and any hint of bad news true or not sells newspapers.
As well we know in Spain many properties are vastly overpriced and those over inflated need correcting so that reality can and confidence can return and reflect then in real value of the property sector.
When you have apartments on the same developments with selling prices 100,000 euros apart then the sooner this is sorted the better.
We will then here of 30% falls but the simple fact is that the overpriced properties will have been bought into line with a market value. 😉
However thanks to forums like this that developer will like others be exposed for this sick marketing ploy ,however again this is a worlwide problem and and not just Spains.
Just Frank 8)
November 25, 2007 at 11:38 am #76288
There is a difference between aspirational asking prices and ‘effective market prices’.
An aspirational asking price is one that the vendor (be they a developer, sales agent or individual owner) prices a property at, in many cases ahead of the ‘effective market price’. Some times the market catches up, sometimes the price is reduced, but the ‘effective market price’ is the one that the property can be sold for at any given time!
IMO across the Spanish costas prices will fall (‘effective market price’ at the peak to ‘effective market price at the bottom’ by 25 to 35% maybe a lot more).
e.g. property that today has an effective market price of E400k but the vendor is marketing it at say E500k and not getting any interest, may be sold in 2009 for E280k…
Now that is only a 30% drop (effective peak price to effective bottom price assuming for the sake of this example that is the bottom).
However the vendor or outside observers may view it as a drop of 44% because they are making the calculation from the ‘aspirational asking price to the actual selling price.
Anyone who seriously thinks that prices on the costas will not fall (as opposed to just the over priced ones being re-priced correctly) substantially over the next 3 to 4 years is living in cloud cuckoo land. Good properties on good developments will fall 25 to 30%, average properties on average developments will fall more and many of the disasters will be un mortgageable / unselable and therefore be effectively worthless. Spain is one of the markets that is least able to withstand the coming stresses that the Global bad debt/credit crunch will bring over the coming years. For the avoidance of doubt the credit crunch has only just begun.
November 25, 2007 at 11:55 am #76289
I can’t wait till 2009 can you find me one now please.
November 25, 2007 at 1:32 pm #76290
Me to. 290,000 for a 500,000 property on a good development in 2009 sounds a banker,
The simple fact you are forgetting is that the market has not risen since 2002.(thats living in cuckoo land)
Many paid to much for their property and it may take 5 to 10 years to get a return.
It will always be a case of not what you sell for but what you paid for it and its location.
Then it will be a case of if your selling or if your buying,if your selling at an inflated price because you paid to much and your looking to get a return then that is cuckoo land and far different than my intended posting meant to suggest.
Just Frank 8)
November 25, 2007 at 1:43 pm #76291
Also we have to have in mind that luxury properties are the less likely to drop. I think the more severe falls will be in the sector aimed and medium-low class.
So a coastal property of 500.000 like a beautiull villa with views to the coast is not very likely to fall.
November 25, 2007 at 2:47 pm #76292Pablo Silver or Lead? wrote:Good properties on good developments will fall 25 to 30%, average properties on average developments will fall more and many of the disasters will be un mortgageable / unselable and therefore be effectively worthless.
Where are the average developments and the disaster ones? Are the
disaster ones spread all over the Costas or they are more concentrated in one area?
November 25, 2007 at 8:00 pm #76296
The problem appears that accurate information on prices values and sales volume appears almost impossible to obtain.
In some areas we also have properties that are either illegal or pending an L.F.O.
Normally it may be taken that once a property is legalised it would increase its value but on the other hand it could be that a rush of properties hit the market at the same time so being a prime buying time.
It may be that in good areas many may wish to hold and not sell under the mortgage on the property and then if you want to buy in that area the prices may just stabilize at a true market value.
It does appear that the smaller properties i,e under 80 sq m2 and one bedrooms that may not be a perminent residence in less popular areas may suffer considerably.
Still cant get around the fact regarding these sweeping statements of 30 to 40% drops from the high of 2002.
Is that in an area
Is that across Spain.
Is it just isolated to Spain its self as many would have you believe.
Is this a particular development which was bought at an inflated price by some that thought prices would continue to rise ie 500,000 would be worth 100,000 more in the next year.
Is it for the ones that bought in a better area at a sensible price.
If someone bought a 2 bed in a resonable area on say the Costa del Sol at say 200,00 euros in 2002 and is going to have to complete now it will be worth 140,000 euros in 2009 at a 30% drop is perhaps a crystal ball mal-function.
Just perhaps there are alot of cleverer people that can see the future and the effects of a credit crunch better than me.
Just Frank 8)
November 25, 2007 at 8:36 pm #76298
Just Frank I’m curious to know, are you an estate agent or are you affiliated in some way with the business? As your posts are usually always upbeat regardless of the surrounding mess. 🙂
As Pablo points out, all the forces are stacking up to make things a lot worse in the future and I think that’s very clearly evident from wherever you choose to stand.
November 25, 2007 at 8:46 pm #76300
The ones to bear the brunt will be the bog standard 2bed/2bath. Most of them are not built for family living. Also many have been built in undesirable locations, pools too small for the amount of occupants, badly run communities etc. Most of the construction over the past few years have been this type. Location still counts, plus a bit of quality. Fact is 2bed/2bath apartments are on overload.
November 25, 2007 at 9:39 pm #76301
Yep thats the ones I agree will be hardest hit.
Mr Ben ?
Read my postings and cant see much positives in them with at best values in the right areas being at the same as 2002 if you didnt pay over the top in the first place that is. 😕
One beds will be very difficult to move as will smaller apartments in less popular areas and as Katy pointed out there are many poor quality developments that may just prove difficult or impossible to sell at a profit for many years to come 😕
If you think I am the sort that posts to please or just agree with only the negatives then thats not me I am afraid. 😈
If a posting suggests that in good areas the value will fall by 30 to 40% from the 2002 high and if many paid a reasonable price then this I feel is over the top then why not make that point.
You dont have to agree but this is what forums are for. 😉
If you want to think I am an estate agent then go ahead. 😕
Just Frank 8)
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