Will the property market ever recover

I think some of you have your beer goggles on if you really think things will be back to "normal" in a few years rofl!

Who do you think the banks will unload property to?  The younger people in Europe can't find work,and those in work are generally too scared to commit to mortgages so they aren't going to buy.  The 40 somethings are probably already hiked up with property debt, so they aren't an option.  Then we get to the retirees. This group will well remember that the bust at the end of the 80's took about 10-15 years to recover, and if someone is in their 60's they really don't want to take that risk long termand buy in Spain at the moment do they?  Unless they are happy to buy a place at a real bargain price and then leave to their kids.  The buyers are just not about in large enough numbers to make a difference. Of course you always have "mug" punters and they are the very people who have been buying in Spain over the last 5 years or so, as property prices are still coming down considerably in some areas.  I live in London and I dabble in property here in central London, which is going up in price with foreign investment as we speak.  In London the words property in Spain is now considered a joke and definitely not  a place to think about buying at the moment, and not for the foreseeable future.  Yes we are heading back into a time when we only buy property to live in and not for profit, and at the same time we are in a very bouyant rental market all over the UK, rents are rising monthly  and I believe this trend will continue all over Europe, much like it was in the 60's.  Spain has no job growth and without this the property market has only one way to go, and that isn't up.  I believe the job market will take many years to resolve itself,and this fact will this halt any increase in property prices for many years to come.  IMHO i think a decade or so is feasible.  That said, we have cash and if we see a bargain in Spain over the next year or two we may buy a second home to spend half our time in Spain and the other half in our Surrey home.  We kept our powder dry over the last 8 years as we lived in Ireland at the time and could see the writing on the wall for Spain, ie overbuilding and a diminishing job market.

Fair comments MetGB and your observations support been my original post. Why should Spain be any different to any other country in its current weak position. The facts surrounding the massive Spanish problems are well known and agreed by all those hard-nosed city investors and the big hitters operating the money markets, so all the wishful thinking in the world is not going to alter their position.

Some properties are bought by strategist consortiums that will gamble on the future, or go for long term growth, and life-style homes in places like Marbella and Madrid will always be in big demand, but for us mere mortals, gambling our life savings or splashing out 3 million quid to ease our tax situation, ain’t an option!

Spain is experiencing exactly the same situation that the Republic of Ireland went through some time ago when all property in Ireland was expensive and a house in Dublin was astronomic. Now they can’t give them away! Nothing is selling at the moment, even at rock bottom prices, and out of a collection of 36 distressed properties in an auction, held last month in Ireland, only two lots were sold, the rest were withdrawn from sale.

I have a colleague based in UK who handles considerable sums of money for his clients and makes it ‘work’ for them I various ways. I asked him why he doesn’t invest in Spain and he replied that he couldn’t and wouldn’t put his client’s money at risk because of the ‘usual reasons’ associated with Spain.

Last year the Spanish government embarked on a ‘property road-show’, touring the UK and mainland Europe, extolling the benefits of investing in Spain. The reception from all investors was lukewarm to say the least and the general consensus of opinion was that until Spain became responsible for overseas investors, they were not remotely interested. Why put money into a country where nobody seems to know the law, where the local authorities have their own rules and where not all lawyers, mayors and others in authority are as honest as they might be and most of all - why invest in over-priced, poorly constructed property that was built using the same out-dated techniques that haven’t improved for centuries, with an fair chance of losing your money and/or your property?

It’s a very sad situation and our thoughts should be with the poor, decent Spanish people who are losing their homes and jobs - they deserve better. Can you imagine the stress and worry these folks are going through, and all we seemed bothered about is if our holiday homes or paid-for houses here drop a few quid in value.

Woodbug

MetGB, you mellow through your posting and towards the end you effectively say "it's a matter of time" you say, a decade or so, which is not unreasonable - and we're not really that far apart.  I also dabble in property and had thoughts of buying in Spain, but my one reason for not doing so currently is that I would be buying to rent out and the rental market might be relatively weak for a few years.

Interested to hear you've got property in London.  I've looked to buy several times in recent years but I cannot believe the prices.  But each time I look, prices have increased.  Unlike Spain it's been a steady rise over many decades.   London has more to offer than any other city in the world, but still I wonder if the European problems might possibly cause a hiccup there too.   But perhaps this is sour grapes on my part for not buying 15 years ago, when I first looked.

But the bottom line has to be that Spain will recover - it's just a matter of when.  It's a fantastic country, unfortunately run by muppets who for far too long have been in denial.  Finally they now seem to be starting to get their act together, so I think there is reason for optimism in the future.

Woodbug that's an excellent accessment of the facts and also the way people view the situation in Spain ie solicitors, local authorities etc which is the identical scenraio of what happened in Ireland.

As you rightly pointed out investors here are steering clear of Spain as they don't want to jeopardise their clients money, and private buyers here in the south are extremely rare when it comes to buying in Spain. I personally think that anyone who is switched on will not be inbesting in any property in Spain for the foreseeable future.  There are of course some like us, who would like to retire to Spain and have the cash to do so without worrying about our investment.

I totally agree that it is a sad situation for the Spanish; they are paying the price now that us and other foreign property buyers caused by inflatng the pricesin Spain.  And this mess will take years and years to resolve itself. Anyone suggesting that mess  this will sort itself in 3 years or so is unrealistically optimistic. 

I do think we have more bad news coming ie with the eurozone, which could collapse prices even further.

Spot on Woodbug.

Acer, unfortunately those muppets are everywhere these days lol.

I agree Spain is a fantastic country and its such a sad situation especially for the Spanish.

London is a financial epicentre and the pressure on the rental market here makes it very good for property owners ie take Earls  Court as an exampled (used to be little Oz) if you were to buy a studio flat for around £150,000 this would yield a whopping £1500 a month or so in rental income,  minimum.  It's a no brainer for an investor.  I think the UK as a whole will be affected by the eurozone but i am confident that London especially will continue to rise.  This is wholly due to foreign invtesment ie Russians, Brazilians and anyone else that's managed to rob money from their own countries!   The demand here is overwhelming and supply is short.

I do believe the property market in Spain will recover sometime in the future, but probably not in the way the market reflects the prices in the past ie the bad ole days of massive price inflation are unlikely to be repeated, this is just my opinion of course.  I see us, as i said before returning to an attitude of buying a hpme to live in.  So many people over the last decade mortgaged themselves to the hilt in order to tell people they had a property abroad, this illusion informed everyone "we are doing well".  Short sightedness is not a new phenomena nor is ego lol.

Great post, Woodbug and as two (early) retirees aged 60 and 64 with the cash to buy a place in Spain (as we had once thought), you have hit upon the exact reasons why we definitely won't be buying. We are watching Bloomberg TV as I write and it has been anounced this morning that Spain has now been classed as 'uninvestable'.

However, we love Spain and its people and we will definitely be spending 6 months there every year from now on......renting a place and showing our gratitute at being able to do so by spending as much money as we can afford in local bars, restaurants and shops.

oooops!

Yes renting is a good option, and we have been to Spain 2 years running and rented long term ie from Nov thru to April which has been very good.  But our concern re renting in Spain is more to do with logistics and maths. We want to seriously off grid in Spain as Europes utilities are heading to go through the roof over the next 5 - 10 years and we would like to have a property with solar and wind power and we can't get that renting.  I am proficient in solar energy and this is a must for us.  At the moment the average UK gas and electric bill for an average 3 bed house is set between £80 - £110 per month and they are predicting a whopping rise, and Spain is going to be hit even worse.  So eg is we live another 20 years to 80 or so that means paying at todays prices is £24,000 which would actually cost more like £40,000 to £60,000!  Utiliities rose last year on average £218 and are set to rise again every year.  So for the cost of solar to supply heating/hot water and pool its a no brainer for us really to go the eco route and consider buying a bargain like a cave dwelling,they are very appealing in many ways and lend themselves perfectly already to being off grid with a pretty stable all year temperature inside.   But we are investigating all options at the moment very thoroughly.

Dear All,

the forum used to have a lady auctioneer who contributed, but like so many seems to have abandoned it.

but with a depressed market and some realism of the crap construction and legal integrity beginning to emerge perhaps cash loitering at 2% could be wisely invested somewhere in Spain.

If I ever get anything back as a victim, I might try again, though I am having a quite good life style here with my various 2nd hand conservatory garden structures, even a double glazed workshop to play in, plus a freestanding aperitif house.

It is a shame when markets over adjust and become irrational out of fear, I suppose.

Regards

Norman

I tend to agree with you Norman.

I'm not sure I concur with the thought that now is necessarily the time to rent rather than to buy either.  It will depend on individual circumstance, but if you are committed to living in Spain for a few years or more and have found the right location there is a strong argument to buy now whilst prices are so low.

The time to rent was 5/6 years ago, before the property price collapse.  For some, paying rent will just be money into someone else's pocket.

Of course there will be others who've not yet found the right location and whilst rents are so cheap also there's no great loss in trying out an area or two.  But, for sure, it is a buyers' market.

In response to Normans post, he mentions ‘crap construction’ and this surprisingly is rarely mentioned by anyone in Spain as the main focus of complaint is the dodgy planning laws, corrupt officials and lawyers, along with ‘here today and gone tomorrow’ developers and estate agents. In most countries a strict set of building codes have to be adhered to and if anyone ignores any part of the proscribed sequences or fails to comply with the approved drawings, then the job stops – end of!

In Spain anything goes and despite the new Eurocodes (which Spain cannot possibly comply with) the inferior and defective buildings continue and habitation licenses are issued.

I recently saw a new-build, shell up, render started and roof 50% complete. Leaning on the gate I spotted several obvious defects ranging from no damp course or membrane, no cavity walls or insulation and gaps in the masonry over which render will be applied, Timber used as window lintels, and untreated mild steel internally propping the gables, amongst many more glaring errors. This building is a disaster waiting to happen and the damp/condensation problems will be horrific to say nothing of the freezing winters and baking summers the buyer of this house will have to endure. If ever the term ‘latent defects’ was coined, it was made for Spanish buildings.

In which other country would you part with a couple of hundred thousand quid to buy a house that has not undergone a structural survey by a fully qualified chartered surveyor with a Professional Indemnity to fall back on, if he misses anything. In which other country would a bank be prepared to loan money on a property knowing that it is sub-standard there are no valuation benchmarks or comparisons……. Yep, its Spain!

The ecological approach to construction in Spain is non-existent with the materials and methods of construction have hardly changed since Adam was a lad. Perhaps this is another of the causes that have compounded Spain’s construction/fiscal problems.

I'm probably more optimistic than most posters on this thread. Those who have been around a long time wil know that these things are cyclical. The recovery will come gradually. In fact, thare are buyers coming back int the market: from Scandinavian, Germany, Rusia and more recently Latinamerica (like myself). Why are prices not recovering then?, I hear you ask. Very simply, because there are too many properties for sale and because the banks are not lending. But money is being invested in good quality, well located properties.

The property market in Spain is very complex and so different, even within the same areas. Take Costa Blanca South, for example: very overbuilt between Alicante and torrevieja, and yet very attractive further south, particularly between La Zenia and Torre de la Horadada, where building restrictions resulted in fewer andbetter quality properties being built. No wonder the spanish flock to these areas in the summer and so many Spaniards and other Europeans spend winters there.

I think once the oversupply of 2 million houses has diminished and the banks start lending which by the looks of it will be a long time.

Hi jagudelo I do wish I could share your optimism – but our problem is not just the generic European recession it’s a many headed serpent and I would love it to go away, the fact is it won’t.

I have weathered two previous recessions in business and agree that patterns do tend to emerge, but never before have we had such a situation as we are currently witnessing in the Eurozone. It’s never been tested and certainly not under this pressure, so as a realist and not having all the information (which I don’t think anyone has, including our leaders), we have to fear the worst.

Spain has little, or no control over its beleaguered economy – Germany seems to decide nowadays on what goes on in Europe. The Spanish unemployment statistics are scary and the uncertainty of the banks positions, give us all a clear indication that this is not a situation we have seen before.

The fact that life-style buildings are still being sold is no basis to assume that things are improving, these properties will always sell to wealthy individuals but it does not help anyone and it hardly makes a dent in the true figures.

In view of the foregoing and the unknown hidden problems, there is nothing to persuade me that this is just a temporary blip that will resolve itself. For too long we have been trying to stick an Elastoplast over a deep wound.

Woodbug

I concur Woodbug and am having a giggle here at "In which other country would you part with a couple of hundred thousand quid to buy a house that has not undergone a structural survey by a fully qualified chartered surveyor with a Professional Indemnity to fall back on, if he misses anything. In which other country would a bank be prepared to loan money on a property knowing that it is sub-standard there are no valuation benchmarks or comparisons……. "  again that would be Ireland lol.  And their building practices are no better than the Spanish, the same mentality, identical in fact.  When we lived there a commericial was regularly appearing on TV from the Lackagh or Cemex Concrete extolling the virtues of concrete by a hand tapping on a wall with a loud noise, and saying this is what you want to hear the sound of concrete when you buy your house.  They were informing people of the values of concrete as wood builds had started to spring up and of course they didnt want that.  So building practices in Ireland still consist of screeding inner walls with concrete instead of plaster! And this is a cold damp country, along with all their other dodgy building practices.  When the celtic tiger was roaring the banks were giving away money to anyone who could pick up abloody hod!  Spain went the same route, and probably a vast amount of those so called builders were also Irish,  BTW I am Irish by birth lol.

At least Ireland is a little further along in the recession than Spain is and is dealing with problems - I don't think you can generalise that all building done in the boom were bad of course there are "cowboys" - they are everywhere.   Some estates were badly built - again not all of them. The docklands of Dublin and some of the architecture have turned out well - the infrastructure improved due to the celtic tiger - we also have a lot to be thankful for.  The banks and the way the financial regulator acted have a lot to answer for during that time.  I think we are at the tale end of the dark days now whereas I feel spain may be only heading into the eye of the storm. 

Enda and the rest of them are keeping very quiet re their balance sheets at the moment, and for good reason too, watch this space over the next year or two lol.

The original question was about the property market every recover, two years ago we had an oversupply in Ireland of appox 300,000 houses/apartments that figure has since reduced - prices are still falling - some say we have over corrected by as much as 26% - this may be the case - the only problem is the banks are not lending to people who are willing to buy at these deflated prices even though they have good jobs and have saved up a hefty deposit - again the banks should be held accountable for their actions - we don't want another "bubble" on our hands just a normal functioning property market.

Spain - the banks have God knows how many properites on their books and are willing to give out 100% mortgages for these to off load them.  On the other hand there are better properties in good locations which are not repossessed and the banks will not lend.  The only people buying are northern europeans and Russians - cash buyers.  The Norwegians are buying at presenet as their currency is strong at the moment so they get more bang for their buck.  Properties are selling but at what reductions - at the moment on the costas the  official figure is that properties are selling at 30% reduction.  Until the oversupply of two million properties has reduced prices will not stabilise and until like Ireland the banks start to loan money there will not be a proper functioning market..

I totally agree with you Angela on all points you mention.  My concern with Ireland is particularly in the  west of ireland, Galway and Mayo where people are mostly out of work and cannot pay their mortgages,this is a worry and of course history repeating itself once again.  I do agree with you  about the banking industry and the gross lack of regulation, but we the people have to also bear the guilt too.  People in Ireland thought the celtic tiger was there to stay and got carried away with lending and this is the end result for them.  So once again they have to leave Ireland, and most come to the UK for work to sustain a family.  Finally the days of cheap borrowing is over.  Ireland has been seen to implement austerity measures, but who did they penalise? The pensioners! They deducted €32a month from their pensions, scandalous and shame on them.  IMHO sadly  i do not see Ireland fairing very well in this mess either.

 "but who did they penalise? The pensioners! They deducted €32a month from their pensions, scandalous and shame on them" 

Obviously MetGB you are not working in Ireland at the moment - E32 a month is pittance compared to what the taxpayer has to pay a week in Ireland due to austerity measures which kicked in January 2011.  Most working people would say today that anyone who is retired at the moment and drawing a pension are the lucky ones and are on the pigs back - when it comes to my husband and I retiring we have to wait till 68 I don't think we will be in such a position as people who are retired at present.  My mum is a pensioner and 85 and depends solely on the state pension and is well able to survive on what she gets per week on saying that her needs are very little in that she doesn't travel on foreign holidays but other than that has a good life and thinks she gets a good amount.