[Anonymous]

Who of you expected that houseprices are still going down in the Costa del Sol??

I am still looking for a house in the Axarquia, it must be a finca or cortijo, 4 rooms and a swimming pool, and about 150 m2 land.

[Anonymous]

Granny
Probably all of us 😥
We are now supposed to be in the grip of the biggest recession in 60 to 70 years.
You are asking a forum that mainly involve people with severe financial loss and bitter experiences of the legal system where the future lies with regards to property prices.
I think even the most optimistic of us think that further falls are to follow until a value level is found and that will be on an area to area basis.
Many areas had valuations based on developer prices and you will here of massive drops in prices however in reality the price paid was way over the top.
Prices to them may have fallen 50% +
Others bought at better prices in good areas so there losses will be far far less.
If you buying in sterling then forget it however if your canny and buying in Euros and can somehow get in front where the real bargains are then there may be real deals to be had right now.

Regards
Just Frank 8)

[Anonymous]

@Just Frank wrote:

Others bought at better prices in good areas so there losses will be far far less.

Hi Frank 😀

If I may, I would like to take you up on this as it’s something I have seen you post often.
I question that the good areas will be more immune to losses than others. Have been reading a lot recently how for example ski chalets in the best parts of the alps have dropped 25+%, as have the film stars’ (etc.) multi-million pads…..all of course in ‘the best areas’.
I hope for your sake areas like Elviria will suffer less but currently with the way things are going, in the longterm I doubt it ………
so tend to disagree with you. 🙁

hope you’re impressed how politely I put it that I think your statement is rubbish….well it is the season of goodwill and all that 😆

[Anonymous]

There is a ‘floor’ for prices. It is the level where the rental income return, after costs and taxes is greater than the long term cost of borrowing to buy – plus a margin.

I can borrow against property for about 5%. I would be happy with 3% on top of that as i’m not greedy and reckon the market will recover over the next 15 years.

So i’m looking at generating a post cost and tax return of 8%.

I can get £6,000 a year for holiday rentals on a 2 bed unit in my area. Costs and Spanish tax take 50% off that. My net return is therefore £3,000 a year. So, at about £40,000 – fully furnished, a 2 bed unit is a buy and any capital growth is in for ‘free’. In my area i reckon that would mean another 60% decline!!!!

I don’t think prices will come anywhere near that low.

I would probably be tempted in at £60,000 if i was a cash buyer and also using for family holidays (the usual buying scenario). So that would probably be a realistic floor. In my area a 2 bed unit, fully furnished for £60,000.

For someone who evades spanish tax (unlike me but like most UK owners) i would probably push the price to £80,000 – £90,000.

There, for what its worth, is my view of the various ‘floors’ in prices.

If the Spanish government allowed non tax residents’ interest and costs to be deducted before paying tax my ‘floors’ would rise accordingly.

[Anonymous]

Hi Charlie 😆
The point I am trying to make is.( Example only ) 😉
Someone pays 300,000 Euros for a property in say Elviria or El Resario
Someone pays 300,000 Euros for an equal spec property in say Manliva I feel the later may lose the most when we have a level playing field.
Now as we know we have good locations where prices paid for properties on similar developments next to each other varied by 100,000 Euros and more so their based to calculate losses will differ.
I feel that some poor developments in poor locations will prove to be a disaster.
As you say I have pointed this out before and still cant arrive at a common one fits all answer.
Perhaps I am just being thick here(again) 😆 but would welcome any further comments on how there can ever be real accurate calculations on this matter.
We cant rely on the Spanish figures based on rubbish ?SO WHERE ?

Just Frank 8)

[Anonymous]

Like i said, work out the rental yields and you will know the possible ‘floors’ which may apply.

[katy]

I sort of agree with Frank 😯 Taking Elviria as an example. Many of the urbanisations around there are around 80% Spanish residential. (mostly professionals, Doctors Lawyers etc.) I would say there are more Scandinavians and Germans than British. The area is also popular with Irish second homers who whilst may be affected by the economy, not as drastically as the British who have also the crashing exchange rate. I think it will be those over-hyped developments a long way from anything that will suffer most.

Ashtondav, your rentals may be doing ok but I assure you that the market has dived here and surely next year will be worse.

[Anonymous]

Katy, this year will indeed be interesting in terms of rentals. Here is my best shot.

The top end of the market will see a reduction in bookings as people scale back on high price discretionary items.

The middle end of the market may well see maintained or increased bookings as people trade down. They may also see less two week bookings and more one week bookings.

In all cases i would expect to see more last minute bookings and more haggling from those making last minute bookings. In my first year of renting most of my bookings came in January and february. Now its more like april and May.

[Anonymous]

I call it the Knightsbridge effect. This means that an area which affected the last, with least & recovers the first.

Area’s like the above are not affected by yields etc.

[Anonymous]

So I’m betting against you all then. I just think this crisis is different and all price ranges/areas are going to get hit massively, regardless.

…..think I may have just possibly hanged myself.

As I said before, do hope not and that I’m proved wrong.

“How can there ever be real accurate calculations on this matter” ??
There are none Frank – we’re all in unchartered waters with this one.

Ashtondav – I don’t think there will be many like you bringing in 6000 euros rental on a 2-bed in 2009.

[katy]

@charlie wrote:

So I’m betting against you all then. I just think this crisis is different and all price ranges/areas are going to get hit massively, regardless.

I also agree with you charlie, not that I am hedging my bets 8)

[Anonymous]

Charlie 😀
You posted
!How can there ever be real accurate calculations on this matter” ??
There are none Frank – we’re all in unchartered waters with this one. “

Agree so how can we calculate percentage losses with any accuracy.
Oh Yep. 😥 Think we all agree one that one and losses will be across the board.
Ashtondav. Thanks for that.Makes grim reading for property almost everywhere. 🙁
My simple way of looking at this in these unchartered waters is.
Position 1. Some paid 240,000 Euros for a 56 sq m2, total build 74 sq m2 poor quality apartment in again Manilva with masses of land available to build and little further investment to bring in promised infrastructure.
Now lets move back up the coast to.
Position 2. 295.000 Euros paid for a 125 sq ms,total build 195 sq m2 much higher quality property in a far better area in every possible way you can think of with no build licences being given.
Now postion 2 is bad however position 1 is a complete nightmare as alone you could live in the later the first being a holiday home with lots less taking holidays.
To confuse matters further some paid over 100.000 Euros more for similar smaller property as position 2 in the same area.
This is unchartered waters alright and the boat hasnt even got a damn rudder 😯

Just Frank 8)

[Anonymous]

charlie

i think you might well be proved right. I think many predictions on prices and rent yields are based on wishful/positive thinking. The worst ongoing problems in the Spanish property market, overbuilds/corruption/rough justice/poor quality etc, are being masked somewhat by the recession and haven’t gone away.

[Anonymous]

“The worst ongoing problems in the Spanish property market, overbuilds/corruption/rough justice/poor quality etc, are being masked somewhat by the recession and haven’t gone away”

They are not masked away. They are irrelevant in a market where no one is buying. They will become an issue as and when the £ and the housing market improves. Once they are focusing on buying they will start buying in France & Italy at the expense of Spain.

[mike]

@ashtondav wrote:

So, at about £40,000 – fully furnished, a 2 bed unit is a buy and any capital growth is in for ‘free’. In my area i reckon that would mean another 60% decline!!!!

I don’t think prices will come anywhere near that low.

I think they will have to. They’ve built enough apartments for an army of investors and they just aren’t there. Any new prospective investors are now busy paying off their UK mortgage or saving as much as they can in case they get made redundant and I don’t think there are too many cash buyers. So, if it doesn’t make financial sense then I don’t think it will sell.

I know it sounds crazy because we have never seen such falls so quickly but prepare to be astounded. I’m in equal disbelief about property near me. Property that would make sense at £60K was selling for £140K a year ago but is falling rapidly. I think it will undershoot and there maybe some bargains at £40K in a year or so.

I think then will be a time to be greedy because everyone else seems to have over-gorged themselves and their appetite has gone.

Best of luck

[Anonymous]

shakeel

yes, we are saying much the same thing. I think the ‘this is Spain, so put up with the crap’ attitude, will not be tolerated by the next wave of better informed buyers. Hopefully, more will demand the basic level of trust from government offices, developers, lawyers and the justice system that we take for granted here in the UK when buying property. If people can’t expect common sense in those issues, then i think people will not buy in anything like the numbers in future without a further huge drop in prices to make the now known and reported quite possible problems ‘worth a gamble’.

[Author]

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