Spain Real Estate News

FIGURES RELEASED by the College of Registrars for June reveal an impressive 7.04% increase in Spanish property sales over the same period in 2009. This is further reinforced when compared with the 16.28% increase over the final quarter during the previous year.

The reasons for the spike in the graph are contentious.  The consensus of informed opinion suggests the Euro’s eighteen-month high against the pound has been aided by a belief that property prices in Spain have finally bottomed out.

Chris Mercer, director of Mercer’s Costa Calida’s hub is upbeat about the improving market. He says: “We can reveal a quite spectacular increase of 157% for the first quarter of 2010 over the same period in 2009, based on the number of enquiries we are receiving.”

Perhaps the clearest signals are coming from international property portal Rightmove.  Their findings show that during May, Spain topped their potential buyers’ enquiry list. As yet these figures have yet to translate into a similar increase in sales; when they do so the sales figures are set fair. Over the first quarter of 2010, five-thousand homes were sold to non-residents of which 1,574 were buyers British by nationality.

It is clear that sales will need to accelerate to clear the log jam of unsold properties, especially new builds. It is, however, a big step in the right direction.

Mike McLaughlin of southerncomfit.com says the news is ‘a real confidence builder’ and will be welcome news for buyers and sellers.

Source:  RoundTownNews

Two years ago, Spanish banks prevented waves of mortgage defaults by swapping homeowners debt for assets -- homes. This averted huge write-downs on debt, but loaded up Spanish banks with houses as assets instead of loans.

Thus Spanish banks kicked the can down the road two years ago hoping that they would be able to sell of their inventory of acquired homes into a rebounding property market.

Too bad the rebound hasn't happened yet.

WSJ:

Spain's housing market has only gotten worse, and now the bill is coming due as the banks labor under the weight of an estimated €59.7 billion ($73.8 billion) in real-estate assets on their books. Under pressure to make further markdowns on the assets by their main regulator, the Bank of Spain, many banks are now scrambling to unload the properties as quickly as possible.

In some cases, that means offering deals to consumers that are suspiciously like those that got the global housing market in trouble in the first place. The tactics include not just 100% loans, but also low initial teaser rates for buyers or initial payment deferrals for as long as three years.

They're now desperate to sell off the property assets on their books, especially since the Spanish central bank has declared that banks must increase their loan loss provisions against their property assets within a few months, fearing that Spanish banks haven't properly set up reserves against the risk of their vast property holdings.

Given that increasing loan loss provisions would force Spanish banks to recognize losses in their income statements, many are now eager to sell off their houses -- even with no monye down and low teaser interest rates, just to get them off the books and effectively convert their property assets back into loan assets. It's ironic how they initially acquired these property assets in order to do the exact opposite.

So once again, Spanish banks appear to be trying to kick the can ever further down the road and avoid recognizing losses, by offering out dirt-cheap loans whose potential losses won't have to be dealt with for another few years.

"Need a home? Now is the moment!" says Caja Madrid on it website, where it also advertises financing options and special offers, such as an apartment in the small city of Manresa, near Barcelona, for €247,000.

"Escape your old home!" says the site of Valencia-based savings bank Bancaja, which advertises no payments for as long as three years at the start of the mortgage.

Note that even the seemingly more responsible Banco Santander (STD) is in on the teaser mortgage game according to the Wall Street Journal. One has to wonder if the easy mortgages are available to Americans, because if so, then with the weaker euro it's a great time to buy that Spanish vacation property you always wanted.

The latest real estate figures on prices and transactions are giving some hope that the Spanish property market is improving but foreign buyers are still not returning to the country in any great numbers. Prices are still falling, but less with every passing month, according to the monthly house price index published by Tinsa, one of Spain’s leading appraisal companies.

Average Spanish property prices fell by 4.4% over the 12 months to the end of May. ‘If the Tinsa figures are to be believed, the rate of decline in Spanish property prices has been slowing since June 2009, when it peaked at -10.1%. If the trend towards smaller declines keeps up, average property prices will be stable, or even growing slightly before the end of the year,’ explained Marc Stucklin of Spanish Property Insight.

But he points out that the Tinsa figures are based on their own valuations, not actual transaction prices. ‘Most of these valuations have been paid for by banks and for several reasons they might not give a true picture of property prices. Nevertheless, they are interesting in what they reveal about trends, not to mention the valuations used by banks for mortgage lending purposes,’ he said.

The Tinsa figures show that prices have fallen the least over 12 months in coastal areas and the Islands, areas traditionally popular with foreign buyers looking for holiday and retirement homes. Prices are down 4.1% on the coast and 2.4% in The Canaries and The Balearics. On a peak to present basis prices are down 16.5% nationally, 21.4% on the Mediterranean coast, and 12.8% in the Canaries and the Balearics.

But for the Spanish market to recover it needs foreign buyers to flock back and there is little sign of happening at the moment. The latest figures from the Ministry of Housing show that non-residents bought just 513 holiday homes in Spain during the first three months of the year.

According to the Ministry transactions were up in the first quarter by just 1.5% and on a cumulative 12 month basis sales were down 85. Sales increased over 12 months in places like Catalonia, up 13,6%, The Balearics, up 7,9%, Asturias up 4,6%, Madrid up 4,5%, Valencia up 4% and the Canaries up 1,4%.

Prices fell by 22% in Murcia, were down 14.4% in Extremadura, down 10.3% in Castilla La Mancha, saw a fall of 9.5% in Andalucía, some 7.8% in Navarre, 2.8% in Cantabria and down 0.6% in Galicia.

Stucklin also points out that foreigners who are buying tend to be economic migrants from places like Morocco and Ecuador buying primary homes in or around Spain’s big cities.
‘They won’t help mop up the glut of holiday homes on the coast. There are tens, if not hundreds of thousands of holiday homes for sale on the coast that will need to attract foreign buyers in large numbers if the holiday home glut is to be dealt with anytime soon,’ he explained.

Last week a new report from Spain’s Property Registrars suggested that transactions are bottoming out, though it is still too early to declare a recovery under way. The number of property deeds of sale recorded in the property registry rose by 7% in the first quarter of 2010 compared to same period last year. This is the first time in several years that annualised sales have risen in a quarter.

The report cautions against declaring a recovery under way. They point out that temporary factors such as the imminent increase in VAT on home sales, and elimination of tax relief on mortgage payments, could be bringing forward sales and boosting the figures temporarily.

Source:  PropertyWire

Spain saw a marked increase in overseas property searches in May on leading listing site Rightmove. The country was responsible for half of the site’s top 10 climbers in May with key indicators of interest being Minorca up 9.06%, Marbella up 6.68%, Galicia up 5.96%, Northern Spain up 5.22%, and the Balearic Islands up +3.65%.

“May was a great result for Spain, fed by returning confidence among buyers as the bad memories and headlines of last year fade,” said Robin Wilson, Head of Overseas at Rightmove this week.

“It’s always hard to let go of what your property was worth at the peak of at the market and accept times have changed, but vendors also seem more open and have much improved realism about prices necessary to make transactions happen. The improving Euro exchange rate is definitely playing a part, up 10% on January this year and 20% on January last year, meaning buyer’s budgets can go further.”

Foreign exchange specialists Moneycorp also saw a rise in enquiries for Spanish properties, with enquiries up 11.8% between March and May. According to David Kerns, Head of Private Clients at Moneycorp, “throughout May, sterling gained good ground against a weak euro. Having started the month at €1.14, the rate eventually reached €1.18 towards the end of the month.”

The pound also benefited from economic data which continues to support the view that the UK recovery is gaining traction. In contrast, the euro has continued to weaken, following news that Spain’s AAA credit rating had been downgraded. It was sent even lower when the European Central Bank warned that eurozone banks faced writing off another €195 billion of bad loans last week. The increase in the sterling/euro exchange rate would have made properties within the euro zone an increasingly more attractive prospect for euro buyers, and explains the surge in interest in Spain.

The United States also saw some interesting trends in the Rightmove Search Report with a 15.5% fall in searches for Florida, a 9.11% fall in the Gulf Coast and 6.05% fall in the Orlando/Central Coast region.”

Finally, Malta was up for the 5th consecutive month and on course to break into the top 10 countries on Rightmove this year. Search volumes were up 73% on April 2009 and not far off 2008 levels.

Source:  OPP

After a decade that has seen a rapid growth in house prices in European markets, S & P question now whether the correction that began in the last months of 2007 has really come to an end.

House prices in Spain could fall another 12%, according to a report by Standard and Poor's

This is revealed by a document issued by the credit rating agency that analyzes housing markets and affected European countries where this sector has undergone a major correction and fall of prices as in the case of Spain, France, Ireland, the United Kingdom, Italy and the Netherlands.

According to the report by the chief European economist of the credit rating agency, Jean-Michel, Six housing markets of the continent "are showing signs of emerging from the recent correction in prices."

Thus, with the exception of Ireland, the collapse in prices has slowed in many of these countries, like France, Italy, Spain and the Netherlands.

After a decade that has seen a rapid growth in house prices in European markets, S & P question now whether the correction that began in the last months of 2007 has really come to an end.

He notes that the German market seems to be "undervalued", which is not entirely surprising, as that report says, as that country "did not participate in the ‘boom’ of other European markets".

In the case of the UK, property prices began to rise in November last year and this sector has experienced a rapid recovery. Prices stopped falling in October, according to data provided by Halifax, the largest lender in the country and since then, inflation in housing prices has returned to positive territory.

Several factors explain this rapid recovery in the short term, among which are included, as in the rest of Europe, the fact that interest rates have fallen dramatically in the UK from August 2007 to 0.5 per cent today.

For Spain, the document said that prices could fall even 12 percent more before the market recovers.

S & P indicates that there is evidence to suggest that the Spanish property market crash is near the end but conditions remain fragile. It also notes that although the country still has a decrease in the price of their homes, the pace of decline has fallen.

According to official figures contained in the report, the annual rate in house prices in Spain fell 6.1 percent in the last quarter of last year.

Source:  BarcelonaReporter

MADRID (MarketWatch) -- The stream of negative news from Spain's savings bank sector continued on Tuesday, with a report that the second largest player, Caja Madrid, will tap the government for 3 billion euros ($3.6 billion) of rescue funds.

A spokesperson for Caja Madrid said the report that appeared in several Spanish newspapers saying it will ask for funds from the government's rescue fund was "speculation."

The savings bank said last Friday it was in talks to merge with several regional cajas -- Caja de Avila, Caja Insular de Canarias, Caixa Laietana, Caja Segovia and Caja Rioja.

More bad news emerged for Caja Madrid when Standard & Poor's placed its A/A-1 long and short-term ratings on the savings bank on CreditWatch negative, saying it expects "pronounced pressure" on its operating profit this year and into 2011.

The negative status reflects the possibility of lowering counterparty credit ratings on Caja Madrid, though S&P said any downgrade is unlikely to exceed one notch. It's standalone credit profile and its hybrid securities could suffer a downgrade by one or more notches, warned the ratings agency.

S&P said Caja Madrid, Spain's fourth-largest banking group by total assets, will be closely monitored over the next 18 months to evaluate the magnitude of expected deterioration.

Downgraded on Tuesday was Spanish bank Banco Sabadell, the nation's sixth-largest group by total assets.

Fitch Ratings, who downgraded Spanish sovereign debt last Friday, cut its long-term debt rating on Sabadell to A from A+.

Fitch also downgraded Caja de Ahorros del Mediterraneo's long-term debt to BBB+ from A- with a negative outlook, and Banco de Valencia and Bancaja each to BBB from BBB+ with stable outlooks.

Caja de Ahorros del Mediterraneo is Spain's only publicly traded savings bank. Those shares /quotes/comstock/06x!ccam (ES:CAM 5.94, +0.02, +0.34%) were down 0.2% in Madrid.

It wasn't all bad for Sabadell, whose shares were down 3.6% amid weaker Spanish and European markets overall from nearly the start of trading.

Fitch praised its "good domestic retail franchise, particularly with small to medium-sized enterprises, as well as its track record of sound pre-impairment operating profit, good cost efficiency and an improvement in regulatory capital."

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