- August 28, 2008 at 6:54 am #54270
I think I asked a similar question a while ago, but probably now people have a clearer view on the crisis than before.
I ask again: I have read in this forum about people who lived the real estate crisis in the UK in the 90s. Could you compare it with the current crisis in Spain? Do you think it will be worse, better or roughly equal?
I read it lasted for 4 years. This one looks to last longer, because it involves not only a glut on property, but also a global financial crisis that I think was not present in the 90s.
- August 28, 2008 at 8:35 am #85878
I had property in both countries during the last crash and the one in Spain was the worst. I think the Spanish market was in crisis for about 5 to 7 years. They are still starting new developments is some areas (strange 😕 )
- August 28, 2008 at 3:45 pm #85884
There are some similarities with the previous crisis.
Personally, I think property is still seriously overvalued in both the UK and Spain possibly by as much as 30% even though prices have fallen somewhat.
Savills are now saying UK prices will likely fall a further 25% over the next 2 years which if so, will still give owners a good profit if they bought over 3 years ago should they sell. Spain’s prices are likely to fall much further too as there is so much of the same everywhere and the pound is weakening too so investors all but gone.
In both countries, a lot of bog standard property now looks so overpriced, perception alters quickly and property doesn’t look value for money anymore.
A shake out is good for the market though, and allows 1st timers a chance to get on the ladder, but a point has been proven, that is property does not always rise in value, it’s sometimes best to take profits when you can.
The US seems to be gradually coming out of it’s recession and property crisis and people are now investing there and in the dollar whilst dumping the pound and the euro, everything is cyclical, but Spain and the UK could be down for several years to come, some say as much as 10 years.
- August 28, 2008 at 4:56 pm #85885
A shake out is good for the market though, and allows 1st timers a chance to get on the ladder, .
I read yesterday that 1st time buyers need an average of £40,000 as a deposit + the mortgage arrangement fee. These days, most 1st timers need help from parents, not always financially but to stand as guarantors for their mortgage. How many parents are going to be able to do either of these now, when we are seeing prices for utilities rising almost daily and seeing their own property devaluing?
I do not think anyone can compare Spain with the UK in this down turn. The UK has a larger GDP than Spain and a more diversified economy.
- August 28, 2008 at 5:26 pm #85886
I agree Claire that 1st timers now generally need parental help which is a great problem along with the rising utility and other costs in the UK.
I’m not comparing the two countries GDP etc as I think Spain is in an extremely bad situation with it’s economy dependent largely on construction and tourism both of which have been seriously hit.
IMO, the comparison lies with the price of property in both countries as with the US too, it just seems so overvalued and many economists appear to be endorsing this. The main difference is that Spain has clearly overbuilt and will not have the demand, whereas the UK actually needs more property, but at sensible prices to help 1st timers etc.
As is happening in both Spain and the UK, a major clear out of estate agents is taking place which must be good if the bad ones go. A surprising similarity in the appearance of agents in London and suburbs with many in Spain, eg Foxtons, Lauristons, Harte etc mainly spiky haired chaps who look like those at Ocean and other Spanish agents, personally I wouldn’t trust them based on appearances but my opinion only.
- August 28, 2008 at 6:04 pm #85887
From experience, there are not many EA’s that I would trust…anywhere! 😉 But would you trust a car salesperson…or any other sal;es person? Too many people are commission driven these days. . They are paid a rubbish salary, and it’s all about “on target earnings” JMO. You can’t blame them for trying to pull the rabbit out of the hat. People are just prey to be devoured at any cost…as we know.
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