January 31, 2008 at 12:31 am #53604
lost about £10,000 though. Panicked because of the current situation. Do you think I made a good decision?
January 31, 2008 at 1:51 am #78185Blue wrote:lost about £10,000 though. Panicked because of the current situation. Do you think I made a good decision?
10000 Pound is nothing as compared to the amount you could have lost by the depreciation.
Now be patient and in 1-2 years you will be able to buy the same property with a 30% discount.
January 31, 2008 at 10:38 am #78191
Well with the exchange rate down around 11% compared to last October, the average 200,000 Euro property is 13,000 GBP more ecpensive. If your property was going to cost 200,000 Euros or more then you have saved some money. Also as ralita stated, you could buy the same property in a year or so for less, though I´m not sure if there will be a 30% price drop.
January 31, 2008 at 10:46 am #78192
Well done sure you have made the right decision,no hurry to purchase . I would say 2-4 years before any improvement is seen.
Beware of agents, developers advising now is the time to buy.
Beware of free???? inspection flights, good advice is to rent for 6 months at least, then think about buying.
January 31, 2008 at 11:57 am #78196
Well done you and yes the best decision for you. As the others say wait.
There are good buys around now but they are rare. Within the next 12-18 months there will be a lot more as well as an overload from the banks as their repo rates increase.
Going to be flat for a good 5 years meethinks – just my personal opinion!
January 31, 2008 at 12:54 pm #78198
About an hour ago, I had a vendor in my office who reduced his property (current bank val 410,182.00 Euro´s.) He will take 280,000 for a quick sale. The price is now down to what it was when he bought it in early 2003 before he spent thousands more on reformations.
I doubt it will go any lower, and I´m certain the market will pick up before the banks were to value the property as low as his new asking price.
But if he wants a sale, he has done all he can to attract a buyer. 12 month´s ago I could have rung 5 or 10 clients who would have jumped at it at 280,000, but right now, I can´t think of anyone to contact as my client database has suddenly become very inactive.
Most of my vendors are prepared to sit out the current market state, some are even using this period to improve their properties ready for the anticipated upturn. But for desperate vendors, they must be prepared to take losses.
I have noticed several developers increasing their commissions to the agents in an effort to bring more clients, they don´t seem to have grasped that, at present, there aren´t any.
There are some bargains, as Inez mentioned above and possibly more bargains than buyers!
January 31, 2008 at 12:57 pm #78199Peter Good wrote:About an hour ago, I had a vendor in my office who reduced his property (current bank val 410,182.00 Euro´s.) He will take 280,000 for a quick sale. The price is now down to what it was when he bought it in early 2003 before he spent thousands more on reformations.
One of the stages in the down markets is the FEAR stage.
During this stage buyers are afraid that tommorow’s price will be lower than the one of today. The 280K of today might be 250K next week for another property on the same street.
January 31, 2008 at 1:14 pm #78200
Yes ralita, in one of your posts, you suggested that prices could drop by 30%, and I showed a little doubt about that.
My example shows my vendor dropping by around 32%. However the bank vals will not drop by this amount for several years and I would expect an upturn in the market before then.
There are going to be vendors who will panick because of their circumstances and these are the real bargains. Anyone purchasing this property could effectively get an easy 100% mortgage to even cover all purchase costs.
It will probably attract a Spanish buyer in the end, they are not so nervous about the markets as the Brits here. The Spanish don´t have a clue about exchange rates with the UK pound and wouldn´t care if they did. We Brits are always talking property prices, in both good times and bad.
I suspect that if a British Estate Agent here in Spain is to survive, they will need to turn their windows and signage over to a very Spanish look, they will need native Spanish staff. There is a large market out there that Brit agents miss-out-on. The local Spanish market could just save our bacon if we take the trouble to attract it.
January 31, 2008 at 1:38 pm #78203
well for my pennies worth I disagree about lack of buyers, Im the other way around, too many buyers but not enough decent stock.
the bank vals are not really cutting it anymore as its now down to what someone is prepared to pay for it – the classic rule of thumb, and especially in a sellers market.
The ‘normal’ buyers arent out there, too little confidence, but I feel some will start towards the end of feb/early march, a more traditional time for them
Right now its the investors out in force but a 32% drop against a bank val that may well falter in the next few months wont cut it, im afraid.
I have now had several vals come back at 10-15% below 1 year old valuations, so the banks are becoming cute.
Just because the bank says its worth something is not really a treu perspective and they will be better using the UK comparative system – I strongly suspect and predict they will move towards this now that true purchase prices are on the deeds at notary.
Same goes for the Spanish – the investors arent sitting back and the ones wanting holiday homes where they can drive a bargain are out looking.
Getting 100% to cover everything is a sticking point as whilst banks are lending to 90% of valuation it is stipulated at 100% of purchase price on the contract, so unless someone issues a false contract, then you cant do this – its technically illegal Im afraid.
Prices are going to go lower than this – its certainly going to be an interesting year!
January 31, 2008 at 2:06 pm #78205Peter Good wrote:Yes ralita, in one of your posts, you suggested that prices could drop by 30%, and I showed a little doubt about that.
Well, 30% is indeed an exageration when refering to good places, where prices might not move at all or very little. But the bad places might fall harder than 30%
“well for my pennies worth I disagree about lack of buyers, Im the other way around, too many buyers but not enough decent stock.”
I am sure that the buyers are enough, but they are afraid. The banks are becoming afraid too. In UK they keep of reducing the percentage of Loan-to-value, basically eliminating any First Time Buyer without a hefty deposit.
January 31, 2008 at 2:09 pm #78207
Inez, Some good points, and I´m pleased your problem is “the other way around” 😳
Regarding bank vals, it is impossible to compare UK bank val methodology to the Spanish system. The main difference being, there is only really one market in the UK (London excepted) and that is the local or regional markets for individual buyers.
In Spain, there are 2 clear markets, the local one and the overseas propert buyers market. The latter, during the boom, were prepared to pay more for a property than the locals. However, local banks based their valuations on the local markets, the results being poor valuations for mortgages compared with what the buyer expected to borrow. This resulted in (not as anyone would expect) the buyers finding other ways to finance their purchase. Amazing that in many cases during the boom that UK buyers were not at all suspicious that the bank valued a property at, say 160,000 even though the asking price was say 220,000. The sale would go ahead anyway.
Eventually, around 2006 or so, the Spanish valuation companies seemed to align the valuations just as the overseas buyers began to fall away. I suppose they fell for the agents patter that UK buyers would pay any price provided the banks valued it up to get their 70% mortgage.
The result, that UK market has dried up, and the banks are left with hyped up valuations that can no longer be sustained. Their lending policy has now made them vulnerable, but if the banks begin a drastic move to reduce valuations too much, then they will be left with repossessions in negative equity.
To avert this, the banks will not make any drastic moves, they will very very slowly show a 1.9% or 2.2% decline in valuations per quarter. Any more than this and they would be commiting financial suicide.
Ultimately, the markets will pick up. The longer the market declines, the slower the bank valuations will come down.
January 31, 2008 at 2:27 pm #78208
Hi Peter – sorry if Im seeming brusque, its lack of time but I do enjoy these forums.
With regards to diferentials in vals between countries, I was talking about the actual method – ie in UK and Ireland, vals are based on comparables – actual sales and agents appraisals are more professional and knowledgeable than the ones here and by that I mean the listers that go around takling details and asking owners what they want for their properties!
In Spain its euros per sqmetre, and the vvaluations on this were oaring from before 2000 – I was amazed what they were actually valuing at and in many cases at the price the developer had them on the market for. As black money was so involved, it was impossible to find out the true price form the notaries and yes people were paying even more than the bank was prepared to lend – that then being an over inflated buyers market. Also valuaers do not take into consideration extras that owners put in purely size location age and build quality, so irrigated gardens or external gyms didnt add to valuations.
Locals know the price they should be paying and will pay it when they find what they want. They drive a hard bargain and will argue over the price of a used bed (trust me I know 😥 )
The 70/80% schemes came in around 05 as actual prices against valuations worked in and banks would lend on val only, werent bothered about purchase contracts stating the actual price. I still have banners offering this gem somewhere.
As the BoS tightened up, in the latter lart of last year the regulations always in place became more enforced and now notaries ask for the purcahse contract. Banks will lend a percentage of val or contract depending on the lowest. There are ways around this legally but its tricky and complex.
Some buyers are wary and I reckon that partly due to ignorance and not knowing the situation fully and some down to finances, if they are geared heavily in the UK, then why try to buy somehting that may not rent! Also lots of these forums are informing people, and in any case, there was due to be an end to the flipping going on – too much supply of similar units coupled with the prices all over theplace. No wonder they are wary.
There are brave souls out there who know that to buy the right property at the right time will stand them in good stead and also that they will have to hang onto it of r a good 5 years to realize their capital if thats what they want.
Also the big buyers are around now – cash being king!
Right – gotta get back to work or Ill never finish by the end of the week!
January 31, 2008 at 3:00 pm #78210
Quote ralita “Well, 30% is indeed an exageration when refering to good places, where prices might not move at all or very little. But the bad places might fall harder than 30% “
I am 100% with you there ralita. Quality homes at certain higher price bands will always sell because their natural buyers have more financial stability. But the rubbish as you say could decline by the figures you mentioned if the market decline goes on for more than a couple of years.
Inez, don´t you dare go back to work without sending me some of your lovely buyers 😀
January 31, 2008 at 3:30 pm #78212
I hate work – decided Im gonna set up as an oil broker. Anyone want to buy some oil?
Im not talking the 1 litre bottles either!
Oh dear, woken up now, and yes am back in the hot seat.
Send me what you got Peter.
February 2, 2008 at 5:39 pm #78282
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