Spanish property market 2008
It's no secret that 2008 is going to be a tough year for the Spanish property industry. Sellers will be having a tough time, agents will be closing down or cutting costs and many jobs in the industry will go.
But, are we going to see prices fall? Are we going to see a full market crash? Are there going to be loads of bargains? Are developers going to leave developments unfinished because they haven't been able to sell enough properties on them?
Have your say. What's your view on what 2008 has in store for the Spanish property market? Any comments good or bad, we want to know!
Just click on "Post a comment" below and let us know what you think....
But, are we going to see prices fall? Are we going to see a full market crash? Are there going to be loads of bargains? Are developers going to leave developments unfinished because they haven't been able to sell enough properties on them?
Have your say. What's your view on what 2008 has in store for the Spanish property market? Any comments good or bad, we want to know!
Just click on "Post a comment" below and let us know what you think....
Labels: Spanish property
posted by Eye on Spain at 6:41 PM
20 Comments:
Definitely the year we see loads more estate agents going down. Hopefully this will filter out most of the dodgy money grabbing ones.
I'm hoping to pick up a bargain apartment for myself as prices are really falling now. Many desperate people wanting to sell, it's what I've been waiting for!
Just got back to england after a week looking at poss investments and a place to settle in the sun. The future looks even better now with the falling prices, bargains to be had by all!! hopefully see you all very soon
Confusion for 2008, surely not???! Legal advisors saying sign off on the apartment before the first occupation licence is granted to protect the property should the developer go bust. Mortgage lenders saying that banks cannot grant a mortgage without the first licence???!!!
Everyone has a different opinion.
Does anyone out there know what is fact?
Tired and emotional, somewhere in England.
My builder (Ideaco)is showing signs of being in trouble, laying off office staff while still trying to get buildings finished. I am sure we are going to see many half built properties laying idol as builders run out of money, and agents run out of buyers.
It had to happen!!!
Our place on a Golf Complex has just been completed in Murcia. Have been told that the rest of the development will not be released until all existing homes have been sold.Many houses still up for sale.
I think prices will have to drop some way yet before the market gets going.
Would be better if all future building was now curtailed to let things catch up.
Think this could be in for a few years yet.
Hi Justin.
Always enjoy "Eye on Spain" keep up good work!
Wrt Spanish property market, there are the following factors to take into account:
1) European interest rates have just gone up and are not far off UK base rate, which is under pressure to reduce to prevent a recession.
2) The value of the euro is already at a high against the pound, the interest rate situation will maintain or decrease the value of the pound against the euro. When dealing with huge sums such as property purchase a difference in exchange rate of just a few cents can make a property a lot mor expensive. For example we bought our property when the £ was worth 10 cents more than it is now. That makes a 500k euro property cost almost £24,500 more now than October 2006 when we bought ours.
3) Confidence in UK property values is evaporating and we are about to enter a credit squeeze era, so lenders will be reluctant to lend on the equity that people have in their UK homes to purchase abroad
4) The above factors complicate whether to remortgage a UK property to buy in Spain or to take out a Spanish mortgage.
5) If demand falls due to the above factors (which it will, because British buyers make a significant proportion of the total number of buyers, then supply will rise, making properties cheaper.
6) No one will sell if they are going to lose money on their property unless they absolutely have to, therefore supply of properties will reduce stabilising prices.
I do not have the economic nous to put these factors together and say what our property will be worth in a years time. I can say though that we have no intention of selling in a years time, so its' value will be irrelevant.
I think the way to gauge the market is to count the number of distressed sales and the price of these properties now, and every 3 months and see where the trend goes.
Apart from that, use a crystal ball!
Andy
n my opinion and this is just an opinion! before I get an ear bashing off someone who knows better...One of the reasons behind this so called slow down in the market as well as all the overbuilding which goes without saying, is that some people now selling on from when they bought at a time of great demand have too high expectations of what they think they can get for their property. I am not saying its always them that are at fault but sometimes the people who give them this false hope of obtaining such high prices for their properties in the first place. Perhaps then it might be wiser to get a proper valuation from the bank, and not always rely on a valuation by an unqualified person, many are not and remember a market valuation is only one person’s opinion and the true value is what someone will actually pay for your property. You cannot really say what someone will buy or pay for a property at anytime in the future as there are so many situations that change and alter peoples ideas. The price which can be agreed at the time depends on the way the market is and that of course can change in the course of time depending on many factors not least being the mortgage rates and economy, may properties that are on the market have been so for maybe two years or more but a bank valuation could also help people who are selling from when they are disappointed say if they have an offer accepted only to then at a later date be told by the bank that the valuation is not enough for the mortgage they need! Often the case here due to the very sudden rise in property prices a couple of years ago when the demand then WAS was much higher and so people were then over pricing.
I do believe those days are long gone now with the economy the way it is and also to be honest most people know someone here either owning a holiday home or living here full time already who can advise them with their own experiences. The days are numbered where the bigger companies that charge such a high commission are concerned, remember if they are offering to pay for your flight and accommodation and meals etc it has to come from somewhere, nothing in this life is free and people are not stupid. as Steve (first posting says) only the best will remain and the best ones are the ones who charge a reasonable fee for a good job done and those who think long term and tell the truth warts and all!
Also with the market being slower in the USA and the UK obviously will have a knock on effect here with people needing to be able to to sell before they can afford to make the move. One of the main reasons people move to Spain is the climate and the cheaper cost of living there is still a gap but not quite as wide as it once was, believe me and most people especially if they still need to work need to get some equity out of the property that they are selling in their home country to live on here, this is still the case really whether they are retired or working to be honest as it takes time and therefore a lot of money to set up home in a new country more than your average pension.
So yes Joe and Neil there are bargains to be had although if the euro continues to drop the exchange rate will see to it that its not as big of a bargain as you may initially think.
and anonymous it does sometimes seem like nobody knows the arm from their elbow, and this is not always their fault, the red tape and rules and regs are sometimes a nightmare out here and also different banks even have different rules ... get a good solicitor who regularly updates his knowledge with the new rules and regs one that is unrecommended and unbiased.
It is tiring and emotional at times, I think it's called life!
and after all that I am tired although unemotional for today at least!
Hi Justin
Thought I would add my €2 worth.
If anyone cares to think back to when Thatcher gave the Banks the key to even bigger profits in 1989/1991.
I was just one of the thousands of her statistics who lost everything we had worked for and made homeless.
Not one to roll over and expect hand outs, at 57 it was not easy to start off again but I did manage to survive.
Working up to 16 hours 6/7 days a week for little more than £3.20 an hour I managed to get a mortgage and was now back on the ladder.
By 1997 house prices rose and my little place had risen also.
One of my daughters was living in Spain and kept trying to get me to move.
I used to come out for a few days and the more I visited the more I wanted to stay.
Decision time! I managed to sell my place in the October of 1998 with a small profit, I arrived in November saying I will give it 6 months...
In May 1999 using everything I had I managed to buy a small apartment (still live there).
Although they went back I stayed and have not looked back.
****************
So what has all this got to do with the Spanish Property market 2008!!!
yo may ask.......
I have friends in the USA and they told me of the emerging house problems there over 2 years ago.
The Banks are really legalized thieves as everyone knows, looking at what has happened in the UK, with the government turning a blind eye as usual...
So this year, not just here but everywhere we will see millions of hard working people made homeless through the BANK'S never ending greed for more and more profit.
Between the Banks, Estate Agents. and Credit card companies they are the one who control the economy.
And when they feel it's time to make a little more, it's Mr & Mrs Joe public who suffer, but then they are just more statistics.
If they were a little more humane even a little understanding (I say tongue in cheek) maybe extending the mortgage term keeping the payments the same until such times things leveled out.
It would not be so bad PROFIT WISE but would help so many.
But no, after making them homeless they panic and reduce the interest rate! Horse/Stable door???
All we see now are cheap properties being snapped up by investors in the UK to rent out maybe to the same people made homeless by the Banks.
The old saying What goes around comes around!!! the Northern Rock farce was just the start.
Everyone who invests deserves a return on their investment, the shareholders in N R will never see their investment return a Profit.
So be it home owner or investor you are still vulnerable and risk losing all...
Let's be honest about the whole PROPERTY MARKET! there are thousand of young potential home buyers out there, but all we see are luxury villas and apartments going up.
The young do not earn enough and are held back from even thinking about buying.
They are the future generation! with no real future.
Don't think it is only going to affect 2008 but also 2009 /2010.
Pete (retired)
Campbell - my opinion and not necessarily that of Survey Spain.
I believe that 2008 is going to be worse than 2007, certainly until autumn. The local economy will slow down for the reasons Andy gives. It is the same throughout western economies and thus the demand will reduced substantially. The supply of houses is still here. Hopefully, existing developments will be completed and not left as unsightly, semi-derelict areas, but others planned will not be started.
Good properties in popular locations will still continue to sell and their prices should not fall substantially as there will always be competition for them. Some of the back line apartment blocks may never sell unless they are offered at prices that will enable people to hold onto them until the next wave of occupation comes or they can offer them at very low rent.
However, that there will be a wave is not certain and is most unlikely to be like the one we have experienced. The change to the Europe-wide euro; the millennium effect; the existence of mortgages in Spain where there were not any before; the significant rise in house values and availability of equity release by second mortgages in the buyer home countries; low interest rates; all these contributed to a unique situation.
However, the principal reasons for buying here still exist. So, the steady and gradually increasing numbers of long term holiday home and permanent resident buyers will continue to take up the best properties. In addition, as prices fall, we will see some investors coming back to buy and hold property in the hope of increase in the longer term.
Then there are the effects of climate change. It's now accepted that it will happen, with the only doubts being as to timescale. Less rainfall will mean more requirements for desalination. That's possible on the coast, but inland properties may experience difficulties. A national water grid, similar to that for electricity, is the long-term answer, but that has political and cost problems that will cause delays and it may never be practical to serve smaller pueblos.
Sea level rise will be the principal detrimental effect on the coast. Beaches will disappear and some beach front properties will effectively lose their ground floors. One should not forget the effects on rivers backing up and flooding previously safe areas.
All in all, the next few years are going to see significant change, but prudence in acquisition should be able to mitigate many of these.
Enjoying reading all your comments. I part own an apartment on a golf resort/urbanisation with the rest of my family. We waited five long, expensive years for our apartment to be available for the holiday lettings market, which to date has been very slow. In our experience we haven't yet come across a solicitor who has been proactive on our behalf or a property valuer that can be bothered to visit and value our property in order that we can make any educated decisions for the future of our investment. Can anyone out there recommend a solicitor or valuer in the Estepona area or indeed a UK outfit that can offer honest advise as investors?
I totally agree with Andy's comments on the Spanish housing economy. We have just got our money back from a large developer on CDS involved in the cooruption scandel. The bank took the development over but it still took many months to get our money back after cancellation. The very large agent that sold us the property were not interested at all. I hope they have to close down. Professional advisers are not proactive and seem to favour the developers - I agree with Susisu. I really would not know where to look for proper independant advice in Spain. This is very sad and extremely damaging for the housing market confidence. Prime properties with a view or near the beach will still sell slowly but anything else will be dead for the next five years. I have completed on a lovely apartment and am happy as I can use it for the purpose for which it was bought. In 2008 and 2009 those investors that are hanging on will have to lower prices and it may entice some buyers. The pound will not recover against the euro for a long time as Gorden Brown has got us into so much debt (government and individuals) hence prices alrady look 10% higher to UK buyers already - hence the price fall in euros to entice buyers is going to havr to be significantly higher if they are to look like bargains
Although the effect on the local economy is the same for all current houseowners, it certainly is healthy to see the market normalize. Even a rate of 400.000 houses a year is still a lot. It is only good for quality and the crooks should stay in jail (Malaya case). I am not so worried about the price levels in the long run (5 yrs). In the meantime I have a very nice house at an even nicer spot in a much better climate.
What struck me is that all UK people have alsways been so impulsive to buy a property. The business models of the UK-born owners of real estate agents was fully geared towards this habit, and did not work for Belgiums, Germans or Dutch, to name a few. So I believe that this situation is also good for all my friends from the UK. Although I still see those who hunt for bargains....
I only hope that unavoidable nemployement will not translate in higher crime rates, etc. Many sons of farmers can now go back and florish the land and catle rather than playing the role of a carpenter or builder for 3 times as much salary. This would be good for environment since it would also stop the growth of the desert in Southern Spain.
Rent with option to buy contracts will be the best option in my opinion, for those poeple who want to buy but want to see first.
An arbitration clause will put fears out of both tenant and owners regarding payment of fees and solution of problems.
So, I think that the most advisable combination for relocations is: rent-to-own + arbitration clause.
mick yes the year for a bargain. If you're looking in spain to buy I suggest renting for a while. keep your money in the bank and look around. Euro not good at the moment. loads of property owners gagging to sell before completion [been there]. rent instead of buy for a year;look around with your money in the bank and when a bargain comes along ... good luck
year for a bargain. go to spain but rent for a year. look at a lot of different areas an places when buying. Euro not good at the moment so keep your money in the bank.loads of people gagging to sell beforE completion[been there] So spend the year looking around, and when you find a property you like you've got the money to bargain with..HAPPY DAYS
Reply to Susisu. (difficult to reply to this one about advertising!) For an independent valuation try a chartered surveyor. Survey Spain www.surveyspain.com , with an office in Estepona, is one of those and I am a director.
There are a number of good lawyers out there with a professional conscience and knowledge.
Always remember that the estate agent's client is the person for whom they are selling the property, unless they are buyer's agents and NOT receiving a fee from the seller.
Has anyone heard any news re Santa Ana del Monte golf in Jumilla? Builder San Jose Grupo. Should I be worrying?
Mentioned on the radio this morning up to 40.000 agents could close their doors. Good. Serve the greedy and money grabbing B´s right. 30% to 40% commissions on new sales is an outrage. Although I am sure they will have transferred their illgotten gains to a tropical island, the losers will be the staff who will end up with no job, no compensation and no hope.
Market outlook for property looking worse than ever, agree with the blogger who said rent for a year and then think about buying. The can of worms is hardly open yet, properties are being demolished in Almeria and the Costa Blanca. The British press will have a field day with that story. The European Union does nothing and more rip offs will come to light.
Developers will go bust, cut corners on construction ,so much rubbish has been built that in a bear market no one will consider it.
People who bought off plan will not have the money to complete or arrange
One good thing COULD be that at the end of it Spain will put its house in order as far as planning goes although I doubt it. Money is the new god in Spain, today the courts have started to back peddle in the Malaya case , suspended sentences and small fines. As usual the big fish will be left alone and the small man will lose.
Yes! Finally prices will adjust after the craziness of the recent past years. Before it was buying a slump for the price as if you were a millionaire. Spain has one of the lowest birth rates in the world.Young matures stay at their parent's house long after their hair turns gray. Let's see if Spaniards can have a life with the economic adjustment and the money stops being in the hands of the old and the elite.
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