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As you may know my views on the spanish property market are bearish. While I’m not saying that the market is going to crash, I think that it is a plausible scenario, and should not be dismissed as scaremongering.
Living on the Costa del Sol I see tens of thousands of empty unsold apartments, and some areas where every other villa is for sale, and has been for the over 2/3 years.
Building continues at a fast rate, and while interest rates remain low, they have been rising and the consensus in the financial community is that they are likely to rise further.
Also, the British public has become more aware of the scandals and corruption that exist in the spanish market and are looking to other cheaper alternatives.
I would be interested to know if there are any reasons to be optimistic about the spanish housing market in 2007/2008 -is there something I’m missing?
Obviously the white whale scandal highlights the reason why Spain is often refered to as the money laundering capital of Europe, and this inflow of money has helped sustain the market. But surely at some point this flow will dry up and then the market will fall harder.
Any thoughts as to how different sectors and areas will behave differently -do any sectors not appear to be suffering from oversupply?
Can anyone give me a good reason to buy now rather than wait for prices to come down? -
While, I agree fully with your analysis. There may be many properties lying empty but one thing remains constant in all kinds of market that is location and the quality built.
If one has a good property in a good area well built/mantained and in the present climate of with all the paper work in order. These properties will allways hold their value.
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While, I agree fully with your analysis. There may be many properties lying empty but one thing remains constant in all kinds of market that is location and the quality built.
If one has a good property in a good area well built/mantained and in the present climate of with all the paper work in order. These properties will allways hold their value.
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I think everyone agrees things have slowed significantly but it’s so difficult to judge the market here. I know of 2 properties (plus a guesthouse) that have been for sale since at least August 2002 (unless the agent hasn’t taken them off their website) and another villa that sold in under 3 months. There’s no logic or consistency in prices either.
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I think everyone agrees things have slowed significantly but it’s so difficult to judge the market here. I know of 2 properties (plus a guesthouse) that have been for sale since at least August 2002 (unless the agent hasn’t taken them off their website) and another villa that sold in under 3 months. There’s no logic or consistency in prices either.
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In so much as the Spanish property market is much like the British property market – it is regional and indeed very local.
What happens in Madrid does not necessarily have any affect on the CDS and vice versa. Equally so with Murcia and CDLuz.
Having worked through the recession of the early 90’s in the UK (within the property sector) I see many similarities between then and now.
There is no doubt that the CDS is in for a hard 2 years. Oversupply of property and a lack of buyers will mean many properties unsold, many estate agents going bust as well as a few property developers/builders/promotors.
Many vendors will have to adjust to the fact that property prices do fall (and I would have thought many will have experienced the early 90’s) although London and the SE was more severly affected. If you have to sell then get realistic – if you don’t need to sell, wait.
That doesn’t mean for one moment that you should not consider buying (indeed at some stage the prices will become so attractive that the market will start to revive itself naturally) but you should consider buying on a number of factors (probably very different from the majority of British buyers in recent years), these include:
Don’t buy to make money – most people will happily enjoy the next 2/3/10 years living in the sun without needing to see a 20% return on investment.
Buy in the right area, a develoment or type of property that you actually want to live in. Don’t buy new. Don’t buy on the coast (unless you really want to be there)
If you buy for investment, treat the deal as a long term investment (at least 10 years) and the chances are you will make money.
Don’t buy to rent out. It doesn’t work unless you have a particularly unusual or attractive property.
The market is still active inland. Indeed, many people from the coast are looking inland to improve their environment, enjoy a more Spanish life and get better value for money.
In answer to the original question I guess it depends totally on what you want from your purchase – investment return or lifestyle change. If you want a better lifestyle than the UK then it is here and you could pick up a bargain over the next 2 years.
If you want an investment I would wait for a while and see what happens – especially on the CDS.
Where do you buy? Well not on the coast. Too much crap has been built (and still is) whereas inland I feel there is still a chance that things will not be destroyed by the development of southern spain.
At the end of the day, you should buy because you want a place to live – property as an investment is fine if you understand property and the market as a whole. I would never put my money in to the Stock Market because I simply done’t understand enough about it.
Aunty
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In so much as the Spanish property market is much like the British property market – it is regional and indeed very local.
What happens in Madrid does not necessarily have any affect on the CDS and vice versa. Equally so with Murcia and CDLuz.
Having worked through the recession of the early 90’s in the UK (within the property sector) I see many similarities between then and now.
There is no doubt that the CDS is in for a hard 2 years. Oversupply of property and a lack of buyers will mean many properties unsold, many estate agents going bust as well as a few property developers/builders/promotors.
Many vendors will have to adjust to the fact that property prices do fall (and I would have thought many will have experienced the early 90’s) although London and the SE was more severly affected. If you have to sell then get realistic – if you don’t need to sell, wait.
That doesn’t mean for one moment that you should not consider buying (indeed at some stage the prices will become so attractive that the market will start to revive itself naturally) but you should consider buying on a number of factors (probably very different from the majority of British buyers in recent years), these include:
Don’t buy to make money – most people will happily enjoy the next 2/3/10 years living in the sun without needing to see a 20% return on investment.
Buy in the right area, a develoment or type of property that you actually want to live in. Don’t buy new. Don’t buy on the coast (unless you really want to be there)
If you buy for investment, treat the deal as a long term investment (at least 10 years) and the chances are you will make money.
Don’t buy to rent out. It doesn’t work unless you have a particularly unusual or attractive property.
The market is still active inland. Indeed, many people from the coast are looking inland to improve their environment, enjoy a more Spanish life and get better value for money.
In answer to the original question I guess it depends totally on what you want from your purchase – investment return or lifestyle change. If you want a better lifestyle than the UK then it is here and you could pick up a bargain over the next 2 years.
If you want an investment I would wait for a while and see what happens – especially on the CDS.
Where do you buy? Well not on the coast. Too much crap has been built (and still is) whereas inland I feel there is still a chance that things will not be destroyed by the development of southern spain.
At the end of the day, you should buy because you want a place to live – property as an investment is fine if you understand property and the market as a whole. I would never put my money in to the Stock Market because I simply done’t understand enough about it.
Aunty
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I agree with most of what you posted Aunty Val..except the point about looking inland. Almost every small pueblo has either started developments or has projects in the pipeline. I think a lot of buy-to-let investors have returned to the stock market as its been a healthy year and confidence is returning.
In theory there should be lots of bargains around, many properties have been on sale for a year or two, subtracting the increases that are supposed to have happened, these should be a snip. What will happen is the ones who really must sell will reduce and the rest will not bother selling until the market is busier.
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I agree with most of what you posted Aunty Val..except the point about looking inland. Almost every small pueblo has either started developments or has projects in the pipeline. I think a lot of buy-to-let investors have returned to the stock market as its been a healthy year and confidence is returning.
In theory there should be lots of bargains around, many properties have been on sale for a year or two, subtracting the increases that are supposed to have happened, these should be a snip. What will happen is the ones who really must sell will reduce and the rest will not bother selling until the market is busier.
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Property, no matter where, only declines where 3 conditions are met out of the 4 below:
1. A recession, forcing lower wages (or increases in wages) AND large increases in unemployment, causing very poor consumer confidence.
2. Property bought with very high proportion of mortgage debt. (95% – 100%+)
3. In tandem with the above rapidly rising interest rates to very high levels
4. Massive oversupply of property.
In the USA at the moment (where property is declining) 2, 3 and 4 are in place.
In the UK (slow, stable growth) 2 is in place.
In Spain only 4 is in place. For a dramatic decline to take place I reckon interest rates would have to hit 7%, AND a recession would have to emerge across most of europe.
For prices to fall a certain proportion of owners have to be ‘forced’ to sell because of unemployment and/or unaffordability of the mortgage.
I would say the conditions are nowhere near bad enough to cause a decline. After all, all those cranes are there because people have paid deposits and stage payments.
CDS should expect changes in prices of between -10% and +10% over the next year or so. Some of the cr@ppy places may fall by 20%. Some of the lovely places may rise by 20%.
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Property, no matter where, only declines where 3 conditions are met out of the 4 below:
1. A recession, forcing lower wages (or increases in wages) AND large increases in unemployment, causing very poor consumer confidence.
2. Property bought with very high proportion of mortgage debt. (95% – 100%+)
3. In tandem with the above rapidly rising interest rates to very high levels
4. Massive oversupply of property.
In the USA at the moment (where property is declining) 2, 3 and 4 are in place.
In the UK (slow, stable growth) 2 is in place.
In Spain only 4 is in place. For a dramatic decline to take place I reckon interest rates would have to hit 7%, AND a recession would have to emerge across most of europe.
For prices to fall a certain proportion of owners have to be ‘forced’ to sell because of unemployment and/or unaffordability of the mortgage.
I would say the conditions are nowhere near bad enough to cause a decline. After all, all those cranes are there because people have paid deposits and stage payments.
CDS should expect changes in prices of between -10% and +10% over the next year or so. Some of the cr@ppy places may fall by 20%. Some of the lovely places may rise by 20%.
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The decline in demand for overseas property is not unique to Spain, using the Google trends link attached http://www.google.com/trends?q=spanish+property it can be seen that the lack of searches is not just a Spanish phenomenon. You can compare different counties by separating each search by a “comma” e.g. Spanish property,Bulgaria property,Cyprus property the results clearly show that the search trends are almost identical.
I accept that Spain’s reputation and in particular the CDS has been damaged by corruption and over development and would expect this to take 1-2 years before some equilibrium is restored.
The area of the market that will continue to suffer is off plan as potential investors realise there is not a quick buck to be made, for this reason we see that attention is now focusing on sensibly priced, well presented resale’s in good locations, with buyers whose prime interest is not ROI and yields.
Jim
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The decline in demand for overseas property is not unique to Spain, using the Google trends link attached http://www.google.com/trends?q=spanish+property it can be seen that the lack of searches is not just a Spanish phenomenon. You can compare different counties by separating each search by a “comma” e.g. Spanish property,Bulgaria property,Cyprus property the results clearly show that the search trends are almost identical.
I accept that Spain’s reputation and in particular the CDS has been damaged by corruption and over development and would expect this to take 1-2 years before some equilibrium is restored.
The area of the market that will continue to suffer is off plan as potential investors realise there is not a quick buck to be made, for this reason we see that attention is now focusing on sensibly priced, well presented resale’s in good locations, with buyers whose prime interest is not ROI and yields.
Jim
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I work as an IT consultant for an estate agent on the CDS and have definitely seen a “cooling off” in the market here. We have also seen a lot of investors turning to emerging markets such as Bulgaria, Turkey and Brazil. As have many of the bigger estate agents (some quicker than others) – as their Spanish property sales are clearly not paying the bills.
On a personal note: I myself am looking to buy on the CDS in 2007, but am looking to buy to live rather as an investment or to earn rental income.
If I thought that over a period of time my property would not increase in value then I would not buy and would instead continue to rent. But I am confident that a) I can find a bargain since it is definitely a buyers’ market and b) over the medium to long term it will still prove a sound investment, because despite everything, people still on the whole like Spain.
Just my two penn’orth!
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I work as an IT consultant for an estate agent on the CDS and have definitely seen a “cooling off” in the market here. We have also seen a lot of investors turning to emerging markets such as Bulgaria, Turkey and Brazil. As have many of the bigger estate agents (some quicker than others) – as their Spanish property sales are clearly not paying the bills.
On a personal note: I myself am looking to buy on the CDS in 2007, but am looking to buy to live rather as an investment or to earn rental income.
If I thought that over a period of time my property would not increase in value then I would not buy and would instead continue to rent. But I am confident that a) I can find a bargain since it is definitely a buyers’ market and b) over the medium to long term it will still prove a sound investment, because despite everything, people still on the whole like Spain.
Just my two penn’orth!
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Following this thread I decided to look at a few resale properties
in my area
Over priced ? Extortionately overpriced would be closer the mark.
All British vendors.Top of the range fixtures and fittings…whose range? Have seen better in Wickes. Most of these properties need an expert makeover.
Just because the properties are larger than people had in England ,in a sunnier clime, and in many cases has more land , albeit landscaped by using tons of gravel ,why do folk think they can double to price.
No wonder they don’t sell.
Estate agents must help the market to become more realistic . -
Following this thread I decided to look at a few resale properties
in my area
Over priced ? Extortionately overpriced would be closer the mark.
All British vendors.Top of the range fixtures and fittings…whose range? Have seen better in Wickes. Most of these properties need an expert makeover.
Just because the properties are larger than people had in England ,in a sunnier clime, and in many cases has more land , albeit landscaped by using tons of gravel ,why do folk think they can double to price.
No wonder they don’t sell.
Estate agents must help the market to become more realistic . -
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I agree with Ashtondav to a point. I was trying to simplify the reasons (and indeed my argument) for a falling market although there are many and varied underlying factors which affect any property market. The macro economic background together with the micro climate all have an affect on the ability anddesire to purchase or move.
The main issue is that there are less buyers buying (for a variety of reasons) and therefore more properties available (with more being built).
This means that the market will (and has already) fall. End of story.
Until such time as there are less properties available (or more buyers buying) the market will struggle.
As I mentioned in my first post – this is completely localised – if you have a rare property in a popular location you still stand a very good chance of selling (and having to fight off competition is that is what you want to buy).
As with most things in life, it is best not to generalise because there are always examples of “bucking the market” however it is a difficult market and those looking to buy should ensure that they are paying the right price for their new property.
In response to Melosine’s post – quite often agents don’t set the price of a property, the vendor does. (IMHO this is quite wrong). It may be that those extortiantate prices are fixed by the vendors. (personally I wouldn’t take a property on that was so much higher than the market).
No doubt they will become more realistic in the future if they suddenly NEED to sell.
As for JVMills post – I totally agree. Buy because you want to live there. If it makes money in the future then so much the better. But don’t bank on it. Enjoy it for what it is – a home.
Aunty
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I agree with Ashtondav to a point. I was trying to simplify the reasons (and indeed my argument) for a falling market although there are many and varied underlying factors which affect any property market. The macro economic background together with the micro climate all have an affect on the ability anddesire to purchase or move.
The main issue is that there are less buyers buying (for a variety of reasons) and therefore more properties available (with more being built).
This means that the market will (and has already) fall. End of story.
Until such time as there are less properties available (or more buyers buying) the market will struggle.
As I mentioned in my first post – this is completely localised – if you have a rare property in a popular location you still stand a very good chance of selling (and having to fight off competition is that is what you want to buy).
As with most things in life, it is best not to generalise because there are always examples of “bucking the market” however it is a difficult market and those looking to buy should ensure that they are paying the right price for their new property.
In response to Melosine’s post – quite often agents don’t set the price of a property, the vendor does. (IMHO this is quite wrong). It may be that those extortiantate prices are fixed by the vendors. (personally I wouldn’t take a property on that was so much higher than the market).
No doubt they will become more realistic in the future if they suddenly NEED to sell.
As for JVMills post – I totally agree. Buy because you want to live there. If it makes money in the future then so much the better. But don’t bank on it. Enjoy it for what it is – a home.
Aunty
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I totally agree that agents can play their part.
Sadly many agents in Spain have no basic understanding of property in general, let alone a property market that is in for the toughest conditions in the last 10 years!
Lets hope there are 50% less agents in the coming years but those that survive are the ones that actually do a decent job.
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I totally agree that agents can play their part.
Sadly many agents in Spain have no basic understanding of property in general, let alone a property market that is in for the toughest conditions in the last 10 years!
Lets hope there are 50% less agents in the coming years but those that survive are the ones that actually do a decent job.
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Aunty Val, in a perfect world those remaining agents that do a decent job would survive. Unfortunately the usual larger rogue agents like Awful Estates for instance still carry on misleading people in Spain and elswhere because the Spanish Gov’t is weak (and Bulgaria’s etc) by failing to clamp down on their illegal practices. They’ve had plenty of opportunity to do so but turn a blind eye which makes them as bad as the agents involved.
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Aunty Val, in a perfect world those remaining agents that do a decent job would survive. Unfortunately the usual larger rogue agents like Awful Estates for instance still carry on misleading people in Spain and elswhere because the Spanish Gov’t is weak (and Bulgaria’s etc) by failing to clamp down on their illegal practices. They’ve had plenty of opportunity to do so but turn a blind eye which makes them as bad as the agents involved.
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Article in today’s Las Provincias suggests price increased during during 2006 by 13.1% in the Valencia communidad, 3% above the National average. This relates to new build prices and not sure if it is the price of properties for sale or actually sold!
Still not sure who is buying all these new constructions!
Jim
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Article in today’s Las Provincias suggests price increased during during 2006 by 13.1% in the Valencia communidad, 3% above the National average. This relates to new build prices and not sure if it is the price of properties for sale or actually sold!
Still not sure who is buying all these new constructions!
Jim
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Many of these buyers are Spaniards flocking to the fast expanding city satellite towns. See my most recent blog posting which uses figures from the Spanish national statistics institute.
http://valenciapropertymen.blogs.com/valencia_property_men/2007/01/campo_de_turia_.html
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Many of these buyers are Spaniards flocking to the fast expanding city satellite towns. See my most recent blog posting which uses figures from the Spanish national statistics institute.
http://valenciapropertymen.blogs.com/valencia_property_men/2007/01/campo_de_turia_.html
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Whist I am sure that the CDS property market is atypical to the rest of Spain, there are some worring signs:
According to relible sources here, there are currently several thousand properties for sale or to let east of Malaga alone, with supply far outstripping demand, I too have been told that it takes an average of 3 years plus to sell here.
As for a good long term prospect, as prices start to bottom out? I don’t think so. Nobody can see past the next 5-10 years and that is what is being quoted as an investment term.
You have to be very sure that you can ride out this falling market in the CDS at the moment, it’s not for the faint hearted. -
Whist I am sure that the CDS property market is atypical to the rest of Spain, there are some worring signs:
According to relible sources here, there are currently several thousand properties for sale or to let east of Malaga alone, with supply far outstripping demand, I too have been told that it takes an average of 3 years plus to sell here.
As for a good long term prospect, as prices start to bottom out? I don’t think so. Nobody can see past the next 5-10 years and that is what is being quoted as an investment term.
You have to be very sure that you can ride out this falling market in the CDS at the moment, it’s not for the faint hearted. -
Show me the stats! Where are reliable stats on prices like Nationwide and Halifax produce in the UK? NOWHERE.
All this talk is just anecdote. I’m not surprised it takes 3 years to sell some properties given the way the Spanish plan developments like sewers and destroy most views with plastic greenhouses a couple of cranes and a lorrry full of rubble.
I still maintain there’s nothing to worry about if you’ve got a decent property in a decent place with a decent view.
Or show me the stats…
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Show me the stats! Where are reliable stats on prices like Nationwide and Halifax produce in the UK? NOWHERE.
All this talk is just anecdote. I’m not surprised it takes 3 years to sell some properties given the way the Spanish plan developments like sewers and destroy most views with plastic greenhouses a couple of cranes and a lorrry full of rubble.
I still maintain there’s nothing to worry about if you’ve got a decent property in a decent place with a decent view.
Or show me the stats…
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@ashtondav wrote:
Show me the stats! Where are reliable stats on prices like Nationwide and Halifax produce in the UK? NOWHERE.
All this talk is just anecdote. I’m not surprised it takes 3 years to sell some properties given the way the Spanish plan developments like sewers and destroy most views with plastic greenhouses a couple of cranes and a lorrry full of rubble.
I still maintain there’s nothing to worry about if you’ve got a decent property in a decent place with a decent view.
Or show me the stats…
Stats going back several years and not produced by agents/developers can be found at:
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I broadly agree with what has been said so far
Ashtondav -I can see the logic in your rules, but as a graduate of Economics, I don’t think this science has much to offer the real world, especially so when, as you say, proper stats are so hard to come by.
But in terms of your conditions;
1)The price of petrol has risen rapidly and mortgage repayments increased significantly, doesn’t this mean that real spending power has decreased?
2) Any idea where to get the figures for proportion of mortgage debt?
If this condition is in place in the UK, I think it would be logical to say that Spain is moving in the same direction.
3) Rates have been rising, and are predicted to continue to rise. Consensus suggests that we are at or near to neutral rates, so maybe we are at the point where further rises will significantly and fundamentally affect the economy.
(Also, interest rates themselves mean much less without an idea of people’s level of debt.)
4) I take it that oversupply is not a point of contention.What is more, I remember it being widely quoted recently that property prices in Malaga had risen by 10% last year. In my opinion that figure is pure propoganda from a government department, so where on earth do you begin to find the real statistics?
I appreciate Jerezgirl providing a link, but my impression was that this Sociedad de Tasacion is probably a department from the “Ministry of Truth”One other point that I remain unconvinced about is that
“all those cranes are there because people have paid deposits and stage payments”
My contention is that billions of euros of black money are pumped into the Spanish construction industry each year. Added to this, significant government subsidy; and I reckon that the building continues, and has continued for quite a while without home buyers at the other end.Another point which is frequently made is that if you buy the right house in the right area, you will be ok even if the general market tanks. I do accept the idea of localised markets, but I think that this argument is overstated, in that the general economic environment is the major determinant of price.
Finally, I do hope that people continue to contribute to this topic, because I think it is of great value to people like myself that are considering buying in the near future.
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Hi Guys – personally I think the market will stagnate for a couple of years due to several factors. Its not news to me as I have forcast this for several years now! I lived through the late 80s and early 90s in the UK and was stung hard. However, I am actually finding business is good as canny investors recognize now is the time to come back into the market. Personally I have invested and bought in Marbella and am looking for another couple of units in due course.
It will all make for sepculative and interesting news.
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@Inez wrote:
However, I am actually finding business is good as canny investors recognize now is the time to come back into the market. Personally I have invested and bought in Marbella and am looking for another couple of units in due course.
Sorry to be a cynic, but considering you are the founder and Director of a Spanish property auction house – i feel like treating your comments with a little touch of scepticism?
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Inez, May have been a partner of Spanish property auction and you . may have a cynical point/ scepticism.
What she says is not rocket science, over supply of any commodity takes its natural cycle to adjust and besides people who buy in auction are experienced buyers and I would have thought that they would be buying for short or long term speculation anyway.
Inez, could have used another name and we would not have been any wiser.
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I’m sure there are a few people like Inez who have a vested interest in keeping the property bubble going in Spain (which it is not currently).
Over 92,000 properties for sale in Malaga alone, the Spanish property market overvalued by as much as 30% we’re told by knowledgeable data, corruption and scams being uncovered daily, weakness of the Spanish Gov’t to do anything immediate about the problem, rising crime on the Costas being reported, destruction of the coastal landscape on the Costas, and the same dodgy agents, developers, and lawyers still operating etc etc.
It’s all beginning to look like Bulgaria, Turkey and Cyprus etc in 5 years time.
Spain no longer looks a good investment, more like ‘house trapped in the sun’ unless it’s somewhere to live away from all the overdevelopment and crime.
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I guess you don’t own a property in Spain then Paul?
Whilst Inez has a rather obvious interest in the health of the Spanish property market, I would suggest that everyone who owns a property (or has a deposit paid on one) will have a shared interest.
Whilst there is little we as individuals can do about the overall state of the market it seems rather pointless to perpetuate the downward spiral of prices.
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My goodness my comments did fly some feathers around. Personally I dont have a vested interest in keeping market prices artificially high. For over 4 years I have been saying reality needs to come back to theis market. I have lived here for 12 years and have visited Spain since the early 70’s with my parents. I know what the Spanish will pay and what is realistic.
Lower prices makes an easy sale for me thank you very much.
We have sellers every day desperate to sell, but not many will or can afford to drop the price to enable the property to sell. We even find ourselves in the situation of turning sellers away as they are in such financial dire straights their only option is to let the bank take the property back.
I cannot see how anyone can possibly comment on increase percentages when the figures these are based on are not the true picture. I have had this argument with valuers as they use such varying factors which do not state the true picture.
Spain is a strong market – it has just reverted slowly back to a normal market, where people will come to live or for genuine second homes for their own use. Cant beat the weather!!!
And ps I am already getting auction stock from Bulgaria and Turkey!!!
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Aunty Val, I did own property in Spain (mis-sold to me by Awful and a waste of nearly 4 years and money). I don’t know your position there and am sorry if you are in a fix, are you trying to sell or waiting to complete on something you’d rather not complete on, or are you an agent?
The fact is that I along with many others were taken for a ride by dishonest agents, developers and lawyers there and we are trying to stop others falling into the same trap by warning of the pitfalls not only in Spain but in those other countries I’ve mentioned where the same scams are happening now as in Spain a while ago. People will get their fingers burnt elswhere too, so the more it gets publicised, the better.
Personally I wouldn’t know who to trust with Spanish property now, but if I wanted to live there (not invest), I would try and drive a hard bargain.
If you are happily living there, I wouldn’t think you’re affected too much, and a shakedown of all the bad practice in Spain is long overdue.
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ashtondav
that’s a bit harsh on Paul, for many of us who may be saying goodbye to our life savings through no fault of own, we are more concerned with bringing the low life sharks to justice. We all know the housing market is a bloody mess on the southern costa’s. The more the bad dealings are brought to the attention of everyone the better. If i had known what a bunch of liars and crooks i would be dealing with, i would be about £45,000 better off at this moment.
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@forestfire wrote:
Also, the British public has become more aware of the scandals and corruption that exist in the spanish market and are looking to other cheaper alternatives.
Obviously the white whale scandal highlights the reason why Spain is often refered to as the money laundering capital of Europe, and this inflow of money has helped sustain the market. But surely at some point this flow will dry up and then the market will fall harder.
Ashtondav – this thread was started by forestfire. I suggest you re-read certain parts of his original post (have posted the relevant parts of it to make it easier for you).
Considering forestfire refers to the effect that the white whale scandal and corruption has had on the Spanish property market, surely Paul is allowed to also refer to it?
And whether you like it or not, all these scandals are affecting confidence in the property market which in turn will affect prices.
So I found your post to Paul arrogant and actually quite off the mark.
I will add my twopence worth now.
Nearly all the British expats I meet where I am in Greece say they wouldn’t touch the property market in Spain with a barge pole. Most of them know someone who has had their fingers burnt in one scandal or another, and say how so much of the coast is like one big cement slab with too much traffic.
Here, you can still park between the olive trees by the beach, no double yellow lines, no highrise allowed above 2 floors (even hotels) and virtually no crime.
And best of all for me – not a sniff of a fish and chip shop, or the cringe-making ‘English pub’. Just lovely Greek tavernas serving great traditional food.
If Spain doesn’t pull it’s socks up along many of its coasts – and let’s face it many people still like to enjoy the beach and have a swim, more and more people will desert the idea of buying there and will look elsewhere.
And that WILL affect the property market.Spain has two whammys going on at the moment, over-development and scandals galore. Unless these are addressed Spain is going to realise that there are many other paradises-on-earth that people will prefer.
And that figure of Paul’s, 92,000 properties for sale in Malaga alone, may well seem like a drop in the ocean in years to come.Sorry, that was more like fourpence.
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laggen – what you say is a very valid point, especially in this day and age, but I am not saying there is zero building happening on the island. Of course there is – there is hardly anywhere on this planet that is not having new builds. But the important thing is, how it is done.
And certainly people who have been here for years have been very ‘spoilt’ in that they could enjoy no-one near them for miles – which is bound to change with the years.However the reason why it can not “move the way as CDS” is because of the strict building laws and the cross-checks in place.
For example the minimum building plot for a house is 4000 sq metres (outside the village boundaries), which goes a long way to prevent overbuild. They are now even talking about changing the law to make it 6000 sq metres as a minimum plot for a 200 sq metre house. So if anything, the Cretans are going in the opposite direction.
Plus there are the height restrictions I mentioned before which is 4 metres high for a one storey, 7 metres high for a two storey. No multi-tiered wedding-cake type villas allowed!Corruption is kept in check by a simple system of several quite separate departments involved in building permission being given.
Building permission has to be accompanied by a Clearance Certificate from The Forestry Dept. (even if there are no trees on your plot), the same with the Geological Dept. (in case you have ancient pots buried!), both visiting the land in question to do their checks. Then there is the local Town Hall, as well as the department in the nearest town for the final building licence approval.I think this system of not one man/one department can approve, acts as a good check against corruption.
No ‘nod and winks’ can be given by any one department, for example the forestry department have aerial photographs of the whole island taken back in the 60’s. So even if one tree is cut down naughtily on the land – not only will the Foresty Department know about it, so will all the other departments as the aerial photos of your plot have to accompany each application.
Certainly destruction of huge forest areas (of which there are many) for building can never happen here, as happened in Elviria.Cretans are fiercely proud of their island, every family in villages have known each other for generations, so even if the local mayor tried to give approval for something he shouldn’t, the village would immediately be on his back, his family would be shamed.
As long as all these checks remain in place, the strict building regulations stay as they are, we should escape over-development…..and long may it last.I often look in the window of the very few estate agents that exist where I am, and I have never seen a development for apartments. All the developments are for little groups of individual villas where a large piece of land has been bought, each with their own gardens and pool.
If you check with your friends I think you will find the ‘development’ being planned behind them are at least for villas, not blocks of apartments.
Yes, of course the island will change with the years, but if done well – I personally do not have a problem with that.The moral of this particular story is careful development in any area will ensure prices will continue to rise, which they are currently on Crete.
Many parts of Spain is over-developed over-priced, over-stocked with unsold properties and needs to get its house in order corruption-wise. Unless addressed, I think the future of the market in these areas looks bleak, certainly in the near future. -
Charlie, I hope you are right about the enlightened development on Crete. Long may it last.
But consider the following: According to Transparency International, Spain ranks 23 in the corruption league table, just behind the USA, Chile and Belgium, and just in front of Barbados and Estonia.
Greece, on the other hand, is way down in position 54, just in front of Costa Rica, Namibia, Bulgaria, El Salvador, Colombia, Turkey and Jamaica. Greasy palms are a serious problem in Greece then.
Admittedly, Spain has dropped in the rankings over the last few years, largely because of property-related corruption. Nevertheless, it is still far less corrupt that Greece. Hey, even South Africa is less corrupt than Greece.
It is a fact of life that corruption thrives on bureaucracy. Corrupt officials love the power to grant licences because they represent lots of little enrichment opportunities.
Charlie, you say “Corruption is kept in check by a simple system of several quite separate departments involved in building permission being given.” You then list all the bureaucratic hoops you have to jump through to get a licence, as if this were a good thing. I know nothing about the realities of getting planning permission in Greece, but the realist inside me says it won’t take long for greasy palms to get the better of enlighten development in Greece. Since when did corrupt officials ever care about anything other than their own pockets?
There is corruption in Spain, and it is being dealt with. I don’t deny that huge mistakes have been made in Spain, which other countries can learn from, if they can be bothered. And I don’t deny that corruption scandals are damaging the property business in Spain. But Spain still has a hell of a lot going for it, and is a remarkably corruption-free society, especially when compared to the other countries with pleasant climates like Greece.
If you really want zero corruption, you have to move to Finland. Don’t forget your tanning oil.
Check out the full 2006 rankings from TI here:
http://www.transparency.org/news_room/in_focus/cpi_2006/cpi_tableMark
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Hi Mark –
Re. the Transparency Table link – I gather this represents corruption as a whole generally, and not just property-related corruption which was the subject of my post and forestfire’s thread.
General corruption in Greece? I can’t comment as I have no idea. Property-related corruption on Crete? – no visible signs here yet as everything I see has been built within the regulations.
That I can say which is more than I can say for Spain.You say “There is corruption in Spain, and it is being dealt with”.
Well why is it just recently someone I know who went to court to try and get his money back for an apartment he bought on an illegal development, several years overdue, no legal building licence/no LFO…… and the judge found in the developer’s favour?
Not dealing with it very well, are they?I could relate dozens of stories where trying to get justice for being ripped off in a property-buying situation is like banging your head on a brick wall – still.
As for Spain being a “remarkably corruption-free society, especially when compared to the other countries with pleasant climates like Greece”.
I gather by that sweeping statement you are referring to your Table link, well maybe, who knows……but it is definitely not referring to that part of society involved in the Spanish property market.
In my previous post, I was. -
Mark
see my pm to you on this subject.
To anyone else interested, we have a black and white case of several huge breaches of contract in our contract. No ifs, no buts, just obvious and wrong. We are using what we believe to be very good lawyers, but still they say the judge might go against us. Our case is so blatent, we shouldn’t even need a lawyer. We are talking about the CDS in Spain, need i say more?
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Mark
Every Country in the world has corruoption. Corruption under pins Capitlism. The difference is the levels and at what level does it affects an ordinary person on the street .
You say, Spain is doing something about it !!!!!!!!!!!!!!!!!!!. I am sorry to say that asking people to provide the source of the funding when they are buying a property or Notary not completing without a NI number hardly counts towards it.
It is affecting/or will affect, the innocent buyers who in good faith and in having respect for the legal system, notary etc placed their trust/life savings in their purchase.
The protaganist of the mess will carry on and whilst the Judges adjourning the innocent buyers to be the one who are greedy. The clean up by the Goverment will not work nor inspire confidence.
Sorry, Mark I love the Country as much as you do, but we have to call a spade a spade or else things will not improve irrespective wether it is Spain or UK.
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Special prosecutor Antonio Vercher is the new prosecutor appointed to tackle building fraud and corruption.
His plan of action?
He said Spanish law was clear that illegal homes should be demolished –
regardless of whether they had been bought in good faith 😯Honing in on the ‘guilty’?
Sr. Vercher said he did not believe that most owners were unaware that their houses were illegal, and that many were just greedy and had benefited from lower prices for properties. 👿Well isn’t that attitude just the perfect way to reinstate buyer-confidence in the Spanish property market, Sr. Vercher.
Am sure once their homes are demolished, they will happily buy again and so will all their friends and family 😀IMO, an important step to start tackling past and future corruption and to kickstart confidence in the market, is to deal with the rogue developers who should be prosecuted and brought to task. And preferably ‘removed’ from the Spanish industry.
It is they who planned/plotted and bribed – back in Mayor Gil’s day – which enabled them to obtain ‘bent’ building licences to build, knowingly in contradiction to the Junta’s PGOU plan.
And now these developers who can’t get LFO’s for their developments are crying “it is not our fault, we obtained a legitimate building licence/approval issued by the Town Hall. It is not our fault it has now been suspended because of Town Hall corruption”.
Yes it is. They know full well they bribed the officials to get the BL in the first place. They were the corruptors.Corruption is like a boil – if you don’t brutally lance it, it will rear its ugly head time and time again.
And Sr. Vercher – for your information, it is no good ‘lancing’ the purchasers!
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for heaven sake, what is the innocent buyer supposed to do? Things like illegal licenses, no LFO, no BG, reduced apartment size, huge changes to original plans, 4 year plus build times etc.
In any kind of decent society, we should not even have to worry about not getting a fair result with these massive breaches of contract/lies/fraud what ever you want to call it. If the Spanish system is so bent that it cant recognise honest buyers from bent Agents/lawyers/Developers, then i really think an authority that does know right from wrong, from an e.u country should step in sort this out NOW!
How much longer do we have to wait for justice?
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Thanks Charlie and goodstich44, at least we know what we’re on about, whereas the post originally by the so called ashtondave at the start of this thread about 3 out of 4 points leading to property decline clearly forgets to mention one of the most important points which is BAD PRESS caused by the Dodgy Agents, Developers and Lawyers in Spain which I’ll re-iterate, so the poor s-d can moan at me all he likes, after all what does he know?
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BAD PRESS caused by the Dodgy Agents
Doesn’t seem to have stopped any of the (new) posters on this board continuing to be conned, paying higher prices and forgetting the judgement they would apply to buying a chocolate bar in the UK.
Now maybe get back to the point of the original thread. No maybe not – lets get back to corruption, illegal builds, bribes etc. Big yawn…
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ashtondav, as you seem so anti me or anyone posting about the property corruption in Spain and elswhere like Bulgaria and Turkey, can we assume that you are working in the sales office of some Awful agent on the Costa Corruption and business is getting a bit tight there?
As for your ridiculous comment about new posters not stopped from being conned, you forget that because of this site, the S. Times and Mail on Sunday articles,and tv programmes. at least 100’s maybe 1000’s of others have been made aware and so decided to pull out of Spain’s falling property market despite the lies of the same agents involved as to it’s potential.
As for the original thread, I don’t see any reason to believe Spain’s Costas property market will be buoyant in 2007 or for quite a few years to come. It’s overpriced (as much as 30%), overdeveloped, still over-hyped, much of the build quality is poor and not to original spec., and, still has too many scammers for confidence to return. That said, I don’t see a rosy future for Bulgaria either, it’s going the same way as Spain but without the Winter weather!
Now yawn away in your office!!!
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Just going back to the original question, which asked about various other sectors and places in Spain….
I work as a market analyst and have been seeing the sales slowdown all across the country. Certainly, there are certainly some hot spot in the interior – especially in places where the AVE is going to arrive – but there has certainly been a slow down in sales (there’s a number floating around that a property takes 4 times longer to sell than a year ago…I don’t think that’s quite true across the country, but it is in some areas).
For residential, people are starting to look in some other markets further East or they’re being creative (golf complexes, leisure complexes, etc.), but at the same time some other sectors are starting to take off. Hotels and Shopping Centres in particular come to mind. Industrial/Logistics centres also have some decent yields also the offer is fairly scarce. For the small investor, these don’t sound quite as exciting…as they are more commercial investments…but there are some opportunities albiet a less familiar process.
Spaniard don’t seem to think that prices are capable of dropping (which is pretty silly) so it will be interesting to see reactions over the next few months. Real estate is almost always a smart term long investment, so I think any decent, attractive property in a nice location will pay off in the long haul.
Oh, and as for corruption, Spain is trying to make the process more transparent. That’s whole idea behind the revisions of the Ley del Suelo. Say what you will, but you generally have some recourse in this country…which isn’t the case in more developing countries.
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The vast majority of posts on this thread have been from one perspective only, from that of the owner or seller of property. Perhaps it is now time to have a different view, from that of a prospective buyer.
The Spanish property market to me seems very soft, Mark calls it is a buyers market. Prices and activity have stagnated, 92,000 unsold properties in Andalucia alone, it took 3 times longer for a sale in 06 than it did in 05. If prices are inflated it will take some time for the market to correct this.
Buyers have been put off by the scams and scandal, those who have not are much more careful. Buying in Spain is a more comlex matter than in the UK and a wise buyer will do thier homework, take time working out thier esritura from thier copia simple. There will be buyers out and about this year but not in the numbers of the past and looking for a keen price, i know because i will be one of them.Ditter
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wynnwill, I agree that a good property in a good location should pay off in a slump, it’s the old saying ‘location,location,location’ and that applies to any country.
However Spain’s attempts to make it’s property industry ‘more transparent’ is pretty pathetic really, they’ve known of the problems for years but still fail to crack down on the sharks with any haste, and as for ‘some recourse in Spain’ true maybe, but what a lengthy frustrating procedure through it’s Courts, 5 years or more I believe. Many people have to ‘walk away’ in the end because they can’t finance waiting so long apart from the stress involved!
I agree that it’s likely to be much worse though in Bulgaria for instance, why anyone wants to invest there apart from cheapness, beggars belief. I spoke to an agent today who says there is virtually no resale market there, and, it’s miserable Winter and standard of living may be reason enough for so many Bulgarians now wishing to enter the UK. Big problems ahead for many investors there!
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Paul, certainly agree that the process can be long and frustrating and their efforts to make things more transparent certainly wont accomplish all it should. That’s spain for you though. However, there is the more established renters and resale markets and Spain carries more years in the EU, which certainly gives it a leg up considering some more riskier, eastern investments as you mention.
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The property market in the CDS MUST be bad! I found this on another site about a well known EA known to Paul and myself!! It was posted this afternoon!
Please do not deal with this estate agent, they are very expensive, dont care for their clients after the purchase and treat their staff like sh*t. At this moment they dont have any money and are not paying the salaries for their staff
This knowledge is taken from the inside….
. 😯
As was said to me when I relayed this to a friend: What goes around..comes around! 😀
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I suppose it’s understandable since the bulk of the British expats are based around the CDS, but the region does dominate posts such as this one. Indeed, it dominates most post on SPI. On behalf of those who have bought elsewhere in Spain, it is worth pointing out that everybody involved with the purchase of my house in northern Costa Brava behaved impeccably. The purchase, admittedly not off-plan, went through far smoother than it would have done in England and the value has risen by at least 33 per cent in three years – and that’s a firm offer rather than the estate agents’ hype that seem to be a constant factor on the south coast. Look away from the CDS and it’s not all doom and gloom, although I accept that the prices are usually higher.
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colinB
good to hear it, that’s where i would choose to live in Spain, given a choice, lovely area/people, as you say though, very expensive on the coast, but what a coast!, makes the CDS coast look very dull to me. We chose to buy in the south as we intended to rent and thought the climate would mean a longer rental season. If we only knew what a mistake we were making! Obviously there are many happy buyers in the south that are sick of us moaning about our nightmare. As soon as we get justice we will shut up if required, but untill then we need to tell the world about the nightmare that to often takes place when buying off plan on the CDS. Anthing to force change!
So glad it’s been better for you, i’d love to have bought in that area.
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Goodstich44
Interesting to hear your view. I note a continuous thread on SPI and the misleading relocation programmes on TV which suggests prospective buyers are told of excellent rental income which will pay the mortgage. Look at the number of apartments and houses on the CDS and the number of people with friends who own property there and it only needs half a brain to know rental income will be hard to find. You’ve found that to your cost, obviously, but it can’t be repeated often enough for the benefit of newcomers to this site who are thinking of buying abroad. We factored in zero rental income, but – as predicted by our agents here – our four-bedroom house is always booked at £1,000 per week throughout July and August, mainly by Spanish and French families. The rest of the year – nothing. And that suits us just fine. If I could give Brits one piece of financial advice about buying in Spain, it would be to do your sums and see if you can afford the property WITHOUT any rental income. If it comes, it’s a nice bonus.
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The posting Claire found re Awful Estates? is typical of their lack of service and concern to clients once they’ve paid their deposits, after all these years it seems as if they have not learnt anything about honesty and transparency!
colinB, how many of us wish we’d purchased away from both the Costas del Sol and Blanca both of which have become eyesores with overdevelopment. Good for you, the Costa Brava is much prettier.
Totally agree with you goodstich44 about telling as many people as possible about the nightmares caused by rogues on the CDS and CB, the only way to clean things up there, and, I hope those who’ve been conned get the justice they deserve and sooner rather than later!
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The OECD has issued (another?) warning regarding Spanish house prices.
http://www.forbes.com/afxnewslimited/feeds/afx/2007/01/23/afx3351649.html
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Well Mark of SPI says in his sunday times column:
“Still plenty to gain from a home in Spain”
“With tax rates now reduced, a home in Spain makes a shrewd investment, as long as you do your homework…..”
http://www.timesonline.co.uk/newspaper/0,,2771-2553889,00.html
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Yes, but the main problem now is a serious lack of confidence in the market. This could easily go into freefall and if yuo read other forums, many others are saying the same.
Too many distressed sellers losing all their deposits, developers either selling out or going bust as are many agents around. Its a mess.
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I read Mark’s article in the Sunday Times, and his posting on this thread, and undoubtedly he does bring a few positives to the debate. There are a few points he makes that leave me less than convinced…
I don’t agree that corruption in Spain is being dealt with to any meaningful degree. When the police seized assets as part of the White Whale operation they admitted that they had recovered only the tip of the iceberg. Corrupt mayors will replace corrupt mayors while the politicians believe they have a legitimate right to be “funded” by developers. & while there have been a number of arrests over the last few years, they are insignificant to the number of those involved in money laundering on the coast who continue to live the highlife. As much as I would like the system to improve, I think that measures taken so far have been token and insubstantial.The gambling industry, which is prehaps Gibraltar’s biggest industry has been hitting the front pages for all the wrong reasons of late. Here are a few articles:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/22/cngamble22.xml
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/23/ccgamble23.xml&DCMP=EMC-mcn_23012007
I think that any benefit that Gibraltar may have brought to the housing market on the costas in recent time, may be over for now. I don’t see new businesses coming over to Gib, what I see is tough times ahead for one of their biggest employers.& over the last month or so, the financial industry is begining to factor in the possibility that interest rates may rise higher than previously thought…
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My view is that we have reached the peak of this cycle of credit/liquidity growth. The relationship between risk and reward in many investment markets is now decidedly unhinged and no market can be sustained by speculative excess indefinitely. The emergence of corruption and fraud scandals seems to be a common occurrence in the latter stages of many speculative markets.
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