Re: Re: Will people rent or stay away now the boom is over?

#76834
Anonymous
Participant
mark wrote:
Assuming the market takes a dive, and prices fall significantly in 2008, then you have to assume that holiday-home buyers will disappear completely. But what do you think the Brits and other foreigners who dream of moving to Spain will do? Will they still come and rent instead, or will they stay away and sit tight until they think it’s a good time to buy? Or will they just abandon their Spanish dreams? I had a heated discussion about this last night, so I’m interested to know what others think.

Mark

A couple of examples:

– La Torre Resort in Murcia. The asking prices for a 2 bedroom villa
is 247K Euros i.e. 181000 Pounds at today exchange rate. A 5% mortage would mean about 1100 Pounds/month payment. Add the cost of light/gas/water and the community fee and it gives about 1250 Pounds per month.

The same villa rents for an average of 200 Pounds/week (we paid 175/week but there are months where they rent for more). Consider that they rent for 26 weeks/year (which is veeery optimistic) and this gives
about 400 Pounds/months.

The loss is 800 Pound/month.

The advantage of renting is a no-brainer.

– Al Andalous resort in Vera Beach. Cost of 2 bedroom apt. is 150K Euro
i.e. 114 K Pounds. The monthly cost woould be at least 800 Pounds.
One can rent for an average of 170 Pounds/week i.e. would yield about
350 Pounds/month for 26 weeks occupancy (very optimistic, when we were there were about only about 5-10 lights in the windows at night).

The loss is 450 Pounds/month.

I can continue with other examples.

My conclusion: the prices need to go 50% down in order to ofeer any incentive to purchase. Anybody who purchases in the areas mentioned by me at current prices is either foolish or does not care about money.