Reply To: Black July?


The Swiss bank UBS along with Moody’s credit agency have this week painted a downbeat future for Spanish property. A prediction I personally have always maintained in my postings on here since the market imploded.

UBS collective predictions come from a group of economists, sociologists and various other specialists in market predictions. They maintain that Spanish property is currently close to the bottom in market value and will now stagnate for the next fourteen years.

The demographic reasons for such a prediction are in my view sound. Spain has suffered economic decline on a catastrophic scale. Unemployment is almost now the norm. The population is declining as Spanish people emigrate to find work and a better future.

Historically that’s nothing new. Spanish workers like the Irish don’t sit around bemoaning their plight. They get off their backsides and go where there is hope. Or at least they who have ambition and drive do. In other words the cream of a generation become lost to their nation state.

Another barrier to any market revival is the prospect of higher interest rates across the board, not just in the UK or USA but in Europe itself eventually. Higher property taxes, deflation in Europe, over supply not utilised, rising maintenance charges and utility standing charges and death duties are all factors acting as a brake on investment.

In fact property investors such as I have abandoned the market completely, not just in Spain but everywhere else with the exception of the  UK. Here the market remains buoyant and rewarding and likely to be so for some time.

UBS are unique in that they base some of their predictions on demographic factors such as the declining and aging  working populations. If you study the numbers in comparison the other states it’s clear this factor alone has the potential to be devastating to the domestic Spanish property market.

Back in 2008 Mark wrote a piece regarding another UBS prediction which reading it now seems a very conservative estimation but none the less very close to what  actually happened. I see every reason to accept this new UBS estimation of property stagnation  and in my view with the potential of lasting as long as twenty years.

Spanish property prices set to fall 30% say Swiss banks

The truth is that for foreign buyers the prospect of loss on any investment over that period of time must be unacceptable and a serious barrier to investment to the thinking adult, even for vacation homes. Loss will manifest itself in increasing overheads and lack of capital growth, not even enough to mirror inflation. That level of overhead cost cannot be justified by any equation or self justification you care to make.  You may be able to sell a property for what you paid for it in twenty years time but what’s the purpose in that?

Spanish property and all the hyperbole which surrounds it is truly dead. Let it be given a decent burial and put in a place where it can no longer do ordinary people such harm.

  • This reply was modified 7 years, 1 month ago by logan.