Reply To: Spanish property market 2008: soft landing or train wreck?

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#77060
Anonymous
Participant

One of the most perilous acivities is to forecast markets, and the only reason I stuck my neck out is because I know that we are all voting on something which has actually happened. The market has crashed and this will become evident as repossesions increase.

I reiterate what I wrote previously, ..”those of us at the coal face of this industry…”, the local bank manager is a person at the coal face of the industry and his comments are alarming, his 28 years experience not to be ignored.

And for those misguided bargain hunters amongst you gloating on buying property at 40% below bank valuation, forget it. Banks do not value properties, banks appoint a panel of surveyors to value property, and these individuals use the same criteria to value primary and secondary homes.

I remember once slavishly answering the questions being posed to me by a surveyor . His questions included the whereabouts of the nearest bus stop, cinema, local school, railway station etc..

What influenced values were front line to a private golf course, south facing and sea views. He had absolutely no idea as to what he was doing and acted like some robot just filling in a questionnaire. His work had no foundation to it whatsoever.

Moreover these valuations may be higher than they should be so that the LTV can be maximised. At one stage in the cycle we went through a cash back phase, can you imagine how crazy that was.

You apply for a mortgage, the valuation comes out at 40% more than the asking price, you get a 90% mortgage and hey presto you get a cash back! Banks were too eager to lend and assumed that property prices would always rise and that the debt in real terms would, after a period be amortized through inflation. Great theory in a rising market, not so good today. I think that this is enough from me, thanks for your comments.