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Interesting article by marketwatch website.
“That’s the view that some economists take on news that Spain’s house prices fell 7.8% in the third quarter, compared with the year-earlier quarter. These observers say the market isn’t close to the bottom, since the country is vice-gripped in recession.”
http://www.marketwatch.com/story/spanish-house-prices-tumble-78-in-third-quarter-2009-10-15
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I reckon we (Europe) are in for 10 years of mini booms/busts as Governments keep trying to re-inflate the balloon. Over this period there will be a steady decline in house prices, resulting in a 50 % decline in Spain and 30% in the UK – just my hunch. Currencies will get devalued. How long the Euro can hold up is anyone’s guess – but the cost of living for Brits in Spain is now out-of-balance. £3.50 for a small beer, £3.00 for a loaf of bread, eating out for two – £100 plus (for rubbish food!) – doesn’t make sense. I would put the exchange rate at E1.50 / £.
The British cannot afford to buy there and so are out of the market. The Irish are in deep economic trouble and cannot borrow or take the risk. Perhaps the demand will come from Germany? I doubt it though. The French aren’t interested.
This lack of demand can only mean falling prices. Also, the banks will start off-loading properties soon. , as their policy of retaining repossessions cannot go on for ever. The whole thing may crash spectacularly!
One thing I’ve come to realise recently – there are some desperate English people out in Spain who just want to ‘sell and get out’. Some are racking up debts daily as their income is less than their expenditure.
So, why use agents at all? They won’t push the cheap properties. If you want to find a bargain, get out there and ask around.
This sounds harsh as someone is sitting on a loss, but if you don’t buy at the right price, you are simply transferring the vendors problems onto yourself.
So, in answer to your question – 50%.
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The subject of guessing the Spanish House prices is realy turning into a big yawn. No one has access to the information that one can prepare model for the future.
The absence of information i.e. accurate Spanish data on all front its own economy, demographics, Taxation, world economy, EU economy, Lisbon treaty, confidence in the Spanish Legal system, rampant corruption.etc
I feel its very dangerous to have a discussion on a subject which can financially affect people very profoundly .
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Unemployment in Spain is currently at 19.3%. Interest rates/Euribor are at an historical low. People’s mortgage repayments are falling. Spain is in recession. Banks are repossessing properties and hoarding them in their own property companies.
Unemployment will continue to rise. France and Germany are out of recession therefore there will be a need to increase interest rates in the medium term to control inflation. Mortgage repayments will rise. Spain will continue in recession in the medium term. Banks will be forced by the Banco de España to offload property.
Prices can only continue to fall.
Prices are not set by ‘how much someone is willing to sell for’, but by distressed sellers that are forced to sell.
It is important to bear in mind however that there is no such thing as a Spanish property market. There are lots of property markets and these react differently to these factors. The ‘foriegn buyer market’ may well bottom out as other counties come out of recession.
‘For sale’ prices here in Valencia city (not foriegn buyer market) have fallen significantly but none of the official statistics show this because the number of transactions have fallen off a cliff.
The continuing fall in prices will be directly proportional to the increase in repossessions.
Shakeel is correct in saying that no one has access to the information, however for me it isn’t a big yawm – maybe I’m sad!!!
Maximus – the problem with the data is that they don’t exist and those that do are often innacurrate because they don’t take into account the black economy.
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