August 20, 2012 at 5:51 pm #57012
Here’s an interesting chart from Savills:
Suggests that Spanish house prices are more in line with national wealth than other countries like the UK and Italy. I guess you also have to take into account income inequality in each country….
August 20, 2012 at 6:05 pm #111645
Very interesting. I think only Ireland have a sustainable ratio of 3.71 (although it may yet come down a notch or so).
If the Spanish ratio is correct (and I suspect as always it’s based on out-of-date data) then it still will need to come down further.
The other countries are definitely overpriced. But the markets can stay irrational for far longer than we can stay solvent (a famous quote I believe). For selfish reasons I’m hoping the UK market can stay overpriced for a few years yet, but we never know what’s around the corner.
August 20, 2012 at 9:14 pm #111652
The low Spanish figure can probably be accounted for by lots of cheap flats in places where nobody wants to live. They show up in the stats but they’re not really part of the market. If you strip those out then the figure for Spain is probably a lot higher.
August 21, 2012 at 10:46 am #111662
The Spanish property boom was a gigantic Ponzi scheme or pyramid selling scam that eventually had to come to an end when people were no longer willing to pay the absurd high property prices to live in a country with an economy almost entirely dependant on the construction sector. The collapse of the Spanish property market now leaves Spain having a huge number of vacant and unsold properties that were built during the boom and this grotesque over supply of property together with people unwilling to buy property in a falling market will ensure that house prices in Spain will continue falling for many more years to come.
Studio flats, one, two, even three bedroom flats will become worthless because so many of them were built in the boom that many owners of such properties cannot find buyers to buy them because there is so much choice and besides people are realising that many properties that were built in Spain during the boom were of shoddy construction and poor build quality using the crappiest materials on Earth and nobody in their right mind will buy these poorly built properties in the future. Many British expats bought shoddily built properties because that was all they could afford only to find that they are now worthless as nobody wants them.
Eventually property prices in Spain will become so cheap that they will end up becoming even cheaper than comparible properties in Albania.
Another thing to consider when comparing the price of property in Spain to other countries is that the build quality of property in Spain is terrible, probably the worst in Europe, using dodgy building materials, poor design, poor drainage and poor workmanship.
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