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There is a list with property increases.
If one computes a normal (and generous) price increase of 6%/year (house prices historically have outpaced inflation by 1%, not more and the inflation was very tame during the last 10 years), one get a generous 82% increase in 10 years.
Now, Andalucia has had a 215% increase. Murcia a 211% increase,
Barcelona a 164%, etc.So a 50% reduction in Barcelona, 70% reduction in Malaga and
60% reduction in Murcia will only bring things to the normal. In a recession/depression the situation can become more dramatic.I am not sure why Michael Moon thinks that prices have already undershot.
There are two possible explanations:
1) his intuition is incorrect.
2) the actual selling prices are already 50% lower and the goovernment figures are wrong. -
Mean revision!
In property boom-bust cycles, when the bust come (and it always does) prices always over correct. As has been suggested from the figures quoted this boom was unpresidented, which suggests that the bust will be equally so. I have no problem in believing that prices will fall (peak to trough) by the percentages quoted. How long will this take 3, 5, 8 years?
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The average UK bear market in house prices last about 4 years. Thats about right if you think about it:
One year of denial, then:
One year of seller’s “strikes”, waiting for higher prices,
Two years of rising unemployment and finally and subsequently “forced sellers” due to job moves, mortgage problems etc.Bottom fishing end this year, early next year seems logical.
As I have pointed out before, unlike the UK market buying to let for a non resident in Spain makes no sense – if one pays Spanish tax. The fact that Spain allows no deductions against tax means the landlord ends up with only 50% of gross rent, after other costs and 25% tax.
To be a “strictlt” commercial proposition in my area (Frigiliana) i would have to be able to buy a fully furnished, ready to let 2 bed apartment for £60,000.
‘spose it may happen….
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@ashtondav wrote:
To be a “strictlt” commercial proposition in my area (Frigiliana) i would have to be able to buy a fully furnished, ready to let 2 bed apartment for £60,000.
Well, it is getting close:
http://www.kyero.com/property/828015-apartment-for-sale-frigiliana?
i.e. about £81000 asking price at today’s exchange rate.Do you see £60K as a minimum? How much were these apartments in 1998-1999?
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I think you are all along the right lines, but it may take longer for prices to bottom out than we think. If anything, I think the 1 year of ‘denial’ could stretch longer than that and that the sellers may be deluded for longer than we think. There are still plenty of idiot estate agents living in la-la land.
Remember too that the developers are allegedly sitting on an inventory of 1-2 million unsold properties , that makes this property downturn significantly different to past ones. I give an outside chance that the slump in property could REALLY be much deeper and longer than the concensus. There are plenty of brits that have seen the plunge in the pound affect their buying power in spain and will simply sit in their cash until prices seem to be much lower than they already are. One final comment is that this recession may start showing similarities with the 1930’s depression if equity prices continue to get hammered along with the banks and the unemployment levels. Again, this isn’t certain to happen, but if this recession does go deeper and longer than the last one then we will see a property slump that could re-define the word ‘slump’.
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The fist denial stage has been ongoing for about 5 years now. Finally people are starting to realize but dont want to beleive it, only the ones with their backs up against the wall are accepting very low offers.
Another year to really start to flush out the ones holding on to hope.
Long long time to scrape along the bottom, another 5 years maybe longer, then it will start to rise, with realistic increases and only in the good locations. Proper relationship between area prices, no more Marbella prices in Calahonda fro example!
Michael Moon has been in Spain for many many years, is a good operator and is based just outside of Puerto Banus opposite Dreamers.
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@Inez wrote:
Michael Moon has been in Spain for many many years, is a good operator and is based just outside of Puerto Banus opposite Dreamers.
Which properties does he think that already undershot? “Undershooting” means that their
value will only increase in the near/medium future?Are there spots on Costa del Sol whcih are already at the bottom of the trough?
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We had a discussion on another forum as one of the pop-ups had an ad for a 2/2 apartment in Calahonda for 99,000 euro. Now Calahonda is not my idea of paradise but it is popular. Sounds a bargain but it is still there!
Websites are unreliable tool for any survey, Agents steal properties from other sites. A year after we sold our last property it was still appearing on some sites, at different prices. We had not instructed many of these agents to sell the property!
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@katy wrote:
We had a discussion on another forum as one of the pop-ups had an ad for a 2/2 apartment in Calahonda for 99,000 euro. Now Calahonda is not my idea of paradise but it is popular. Sounds a bargain but it is still there!
I do not know the prices in that area. Did 2/2 apartment in Calahonda cost more than 55K Euros 10 years ago? If yes, the 99,000 euro could start to seem like an acceptable price.
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Well, it is getting close:
http://www.kyero.com/property/828015-apartment-for-sale-frigiliana?
i.e. about £81000 asking price at today’s exchange rate.Now call me old fashioned but i would want room for 2 beds in the second bedroom. Oh, and i don’t think renters like sleeping next to a washing machine.
I wouldn’t buy that place unless it was about £20,000.
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we were running one of those ads for a 2 bed in Calahonda for 99,000 euros. We keep on running the advert until title deeds. So if its ours you have to bear with it for another week or so.
Although the price made it very interesting, you are looking at spending some money to bring it up to ‘modern’ standards. So I don’t think it was a bargain, just properly priced.
You can get far more modern/up to date, properties in places like calahonda on sale for 120/130,000 euros.
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@ashtondav wrote:
Well, it is getting close:
http://www.kyero.com/property/828015-apartment-for-sale-frigiliana?
i.e. about £81000 asking price at today’s exchange rate.Now call me old fashioned but i would want room for 2 beds in the second bedroom. Oh, and i don’t think renters like sleeping next to a washing machine.
I wouldn’t buy that place unless it was about £20,000.
It was just an example, I did not check the details. I am sure on fotocasa one can find better deals now and much better deals in 6 months from now.
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