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Picking up from the gauntlet that was thrown down in the other thread I´ll throw in my tuppence worth. I claim no particular expertise other than that I have been following both the Spanish market and economy very closely for the last year or so.
To my mind we are still some way off the bottom. I don´t see a crash per se as there will always be a level of demand from those residents still in work and those wishing to make lifestyle purchases in the sun. The only caveat I would add to this is that if the banks get overwhelmed with bad debts a crash may indeed be on the cards.
Rather I believe the decline will continue in the same way it has for the last two years. Probably in the region of 8-10% per year until somewhere in 2012 after which it will simply be flat. I simply can´t see any recovery on the horizon.
My call is that in five years time the market will be at around 50% off its Dec 2007 peak. If we work on the basis that current prices are 25%-30% off peak we are therefore only half way through the decline.
There will of course be regional variations. Here I agree with Chris Mc C. Well presented properties in popular areas will see much smaller drops. The badly build bunkers that have been thrown up next to the motorway, etc. If they are occupied at all, will only sell for a fraction of their original asking prices.
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@brianc_li wrote:
Picking up from the gauntlet that was thrown down in the other thread I´ll throw in my tuppence worth. I claim no particular expertise other than that I have been following both the Spanish market and economy very closely for the last year or so.
To my mind we are still some way off the bottom. I don´t see a crash per se as there will always be a level of demand from those residents still in work and those wishing to make lifestyle purchases in the sun. The only caveat I would add to this is that if the banks get overwhelmed with bad debts a crash may indeed be on the cards.
Rather I believe the decline will continue in the same way it has for the last two years. Probably in the region of 8-10% per year until somewhere in 2012 after which it will simply be flat. I simply can´t see any recovery on the horizon.
My call is that in five years time the market will be at around 50% off its Dec 2007 peak. If we work on the basis that current prices are 25%-30% off peak we are therefore only half way through the decline.
There will of course be regional variations. Here I agree with Chris Mc C. Well presented properties in popular areas will see much smaller drops. The badly build bunkers that have been thrown up next to the motorway, etc. If they are occupied at all, will only sell for a fraction of their original asking prices.
It really is almost impossible to make a 5 year prediction.
The main question: will the Western world have a deflation or a rampant inflation in the next 5 years? Will they print enough money to avoid deflation or will they print too much money to create hyperinflation?
If the deflation is predominant, the prices of assets will fall like rocks. If the hyperinflation is prominent, the assets will stay at constant prices but the value of money is going to be thrashed.
When this is decided, then we can start talking about future house prices, etc.
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5 year prediction for Spanish property: if we could time travel forward to 2014 I don’t think you would see a huge difference in the market ie. we are in for a long period of flatlining, struggling on, getting by – whatever you like to call it. A sharp rebound in property prices, of the kind we have seen after every other recession in my lifetime, is looking unlikely principally because of the empty / unsold property glut but also because of the overall national picture:
– unemployment will stay high even if headline GDP grows
– govt cutbacks and tax increases to restore fiscal stability will further dampen things
– banks will continue to put their heads in the sand with govt connivance and this will create Japan-type stagnation
– Euro strait-jacket will rule out export led recovery
On the other hand I don’t see a second, worse crash – not with monetary conditions likely to remain so lax.My full views are here:
http://hubpages.com/hub/10-reasons-why-Spanish-Property-Prices-are-not-about-to-riseAnyone else sticking their neck out? How will the UK differ?
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Part of the challenge of the thread is to make a call on the inflation – deflation debate and it is a different call for different countries. Spain is not in charge of its own currency so will not be able to print its currency into oblivion like the US and UK, hence my call that deflation will prevail. This doesn’t necessarily mean a further plunge in prices from where we are now (25-30% now) but stagnation like Japan.
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When considering the future economic prospects of Europe you need to look at China and India. Currently enjoining over 8% annual growth. That’s because they make things we want to buy at a price we can afford. Simple. Not complicated.
Europe used to be like that but no longer. Why? Simple answer is we have and continue to pay ourselves too much which makes the goods we used to make too expensive.
Why? So we can afford second homes in the sun which cost too much. Holidays in the same place which cost too much. The list is endless. In short wage and price inflation along with the inevitable speculation which follows has destroyed western economies and stunted growth.
In trying to predict the future you need to ask will China/India continue to out perform the west and in particular Europe.
In my view the answer is Yes. At least for the coming 20 years. That means in simple terms we in Europe will not enjoy economic growth of any great extent during the same period unless we can innovate new technologies. Currently I see little evidence of that.
Without substantial economic growth in Europe property prices will continue to stagnate along with other commodities. Global investment will move East to fuel the continuing boom. Europe will be left to flounder and decline.
The party is over folks, get used to it. -
Will anyone want to buy spanish property anyway whatever the prices. Tourism down 14.2% (again) in September. Marbella by night is looking like Bournemouth in November. Whatever financial equations presented if people aren’t interested in spending a week or two on the Costas they won’t be buying. Not the recession either, long haul flights are healthily booked.
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katy
yes, will the the situation will be much different in 5 years if those who could make changes to at least make people feel confident that the faults are at least being recognised, do nothing to inspire that confidence?
Unless changes in regulation/corruption/planning /justice, are addressed and shouted to the world, what will change current opinion?
logan
I’m sure you are right about why Europe isn’t competative, but who would want to compete with countries with such appalling human rights issues/workers rights issues?. The UK was no doubt at it’s most powerful when working people were treated very badly by an elite who had little respect for the working man. I feel the measure of real wealth is how humane a country treats its people.
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