Is Now The Time to Buy or Sell ??

We have an apartment on the Costa de la Luz and in the past 2-3 months 12 apartments have been sold in our manzana alone. Mainly to the Spanish.There were also lots of viewings going on when we were out there the week before last so yes I think that there is probably only a small window now to buy at the low prices before they start to increase as demand gathers pace.

"I think that there is probably only a small window now to buy at the low prices before they start to increase as demand gathers pace."

Who knows - maybe  !!!

John mentioned the stock overhang of about 1.7M - does anyone know what the historical annual absortion rate is ?? Also, I wonder how does rational about the market gathering pace sit against the current  oversupply + economic conditions ??

Perhaps, John, Graeme or others may wish to comment on this aspect.

Harry

Increase??...not sure if i or anyone else qualified to speak on this matter but personally....i dont see them rising/increasing for a few years yet.

May not make pleasing reading for property owners....but again...sadly, thats currently how it is.

Most property owners prefer when i give "worst case scenario"

Removed as it was a duplicate post, sorry.

Hi Aly not in Spain.  Yes, I've commented elsewhere on this obsessive protectiveness over Spain and I've speculated on the reasons behind this.  Just thinking about it now, one possibility is that these are primarily people living in Spain who subconsciously worry that they've made the wrong decision and are now trapped, but cannot accept this, so have to be vehemently pro-Spain. The gentlemen are perhaps protesting too much.  They presumably feel unable to admit that they may have made a mistake, which is perhaps a common human trait, but not one that more self-aware and secure people would exhibit.  I don't see it as a weakness to say that I have made mistakes.  We've made plenty of mistakes in Spain - buying land that we now don't need and can't get shot of, for one.  I wouldn't feel the need to say I was really pleased about the purchase; I'm not.  The way I see it, you win some, you lose some. 

The method of financing a purchase does not move the market. Demand alone moves the market.

The affordability of debt may have fundamental effects on the wealth of individuals and the ability to repay similar effects on the lender but not only do they have nothing to do with prices of properties they also have nothing to do with the current financial health of countries. The last mentioned is purely a political issue with weak-willed, self-serving politicians interested only in their own jobs not the wellbeing of the communities they are supposed to serve.

The other factor which determines the ability of the individual to fund a foreign purchase is the currency exchange rate.We have all forgotten that money is merely a means of exchange, a token to make barter possible between supplier and consumer. It is nothing short of ludicrous that we now trade that token as if it were a commodity. Many of our woes would be solved by a single currency; not a currency for groups of countries but a single world currency.

Imagine how many of the unproductive leaches on society currently employed by banks would become irrelevant. The sophisticated among you will doubtless cackle at my naïveté but bankers will break out in a cold sweat that the idea is even promulgated. Let them beware. West African has had a successful currency union for many years and Europe will have again once the pain of this correction is past. The Asean countries will no doubt move towards a similar union in the not too distant future and there's the olderst currency union of them al, the greenback. In use in over fifty republics in North America and the pacific (including recently independant Timor Este) it doesn't look likely to disappear any time soon.

There's only a pond between the Euro and the Dollar and two countries between the Euro and the Cefa. Morocco is very keen to become part of the Euro zone and Mauritania must  eventually fall into the Cefa camp. Since the Cefa is already tied to the Euro we cannot be too far awy from a single currency which covers more than half the countries in the world.

What has this, I hear you squeal, to do with the timing of a purchase, well that depends. If you are a proeprty speculator waiting for the right market conditions - everything; if you believe a house is for living in - nothing at all.

The method of financing a purchase does not move the market. Demand alone moves the market.

What nonsense! It's impossible for those two statements to be true at the same time.  'Demand' in and of itself is powerless to move a market price - any market price - higher without the financial means or methods to bid higher than the then current highest bid.

You can have as much demand as you want but without the ability to finance that demand, the price can't move as much or as fast as it would with looser credit. This isn't just my 'opinion'. It is a fact that has been proven by the growth in prices starting in the 80's and peaking in the early noughties, as credit limitations were eased or removed. During that time, demand did not triple or quadruple nor did supply fall to a quarter. However, the amount available to borrow did increase substantially through lower interest rates and lax lending standards. It isn't a coincidence that house prices sky-rocketed as soon as interest rates were lowered and the reponsible lending practice of 3X income limit was raised.   

www.guardian.co.uk/business/economics-blog/2012/sep/19/rise-30-year-mortgages-worrying-trend

Quote: "Lax mortgage rules only result in higher prices – creating demand where there would have been none".

....and for more lengthy, in-depth analysis...

www.milkeninstitute.org/pdf/Riseandfallexcerpt.pdf

Snip: "This sweeping change provided the mortgage industry with greater liquidity, helping to make new loans
accessible to more Americans at different levels of income than ever before. But by 2004, it was becoming ever
more apparent that credit was expanding too rapidly, on terms that were too loose. What began as healthy
growth in mortgage originations and housing starts swiftly became a home price bubble.
As home values kept escalating, many borrowers were unable to obtain loans on the basis of traditional
standards. Mortgage brokers and lenders were able to keep churning out seemingly profitable mortgages
in such an environment by casting their nets even wider. Soon many loans were being written on such loose
terms that they made homes more affordable, at least initially, but were clearly unsustainable unless home prices continued rising. Real estate agents and many of those originating mortgages earned fees by allowing
buyers with shaky credit histories and modest incomes to dive in and then passing the associated credit risk
on to others. In the reach for yield, many financial institutions made questionable loans, while the regulatory
authorities failed to take steps to slow things down to a more  normal pace."

This message was last edited by JD01 on 22/09/2012.

 I will refrain from describing your contribution as nonsense - being terrified of name-calling women. Simply point out that the opportunity to buy may be created by looser credit but it is still the resultant demand which creates the market. I realize this may not accord with popular theory or the economic gobbledeygook of journalists but the principle was established long before the eighties. I tend to use more established sources for my economic theory than journalists whether they be populist, liberal or heavyweight.

The summaries you quote describe how the credit boom developed and don't change the basic premise that more buyers than seller makes for higher prices while more sellers than buyers has the reverse effect.

Now I really must leave this discussion as a nice bottle of wine has my name on it and that#s much more important than playing wordgames with the boys and girls on a Saturday evening.

Hi

Lot of discussion in this thread about the Spanish economy.

I would suggest that, on the Costas, it is not the Spanish economy that you need to look at if you want to predict the upturn.

I would suggest you would do better to look at the UK and perhaps the rest of northern europe because that is where most of the buyers will come from.

There are a few signs that the UK economy has reached the bottom. But a good recovery is another matter.

However I like to guess and my opinion may be as good as the next :

With prices on the Costas below inland areas I would guess that they will not fall much further and are pegged by the general prices in Spain. Recovery towards prices rising above inland prices will depend, as I say, on the economies of N europe or at least when the citizens of N Europe next feel that they are confident enough of their finances to consider a place in the sun.

How about two years time when the UK government will be loosening the purse strings to try and make people feel good and vote for them in the next election?

Ted

ps you would be ill advised to make any financial decision based on my opinion.

Hi Ted.  Is it the case that properties on the coast are cheaper than those inland? Where do you think this is the case?  I would have thought that despite drops in the value of property across the board and more so on the coast because the prices had further to fall, properties on the coast would still be much more expensive than those inland...

Hi eggcup

Yes. Hell of a generalisation.

But I'm not talking about million euro villas overlooking the sea or the like which will obviously fetch a premium.

I used to have a property in Mazarron and now have a flat in V Martin. I have always kept an eye on the equivalent size property inland (Mazarron/Totana or V Martin/Orihuela). Not scientific I'll agree as the Spanish inland buyer and the coastal expat would not normally want each others property. But it does give me some guide to the base value of my property when the expats stop buying.

My investigations, such as they are, do indeed show what I say. At the peak 6 or seven years ago the costa properties were in some cases 2 times the inland prices now the realistic selling prices are equivalent or even lower in some areas. I bought two years ago and have seen little change in prices since then. It was the comparison of the prices that gave me the confidence to buy. The only flats sold in my block since I purchased have gone to Spaniards or Danes.

Ted

I will refrain from describing your contribution as nonsense - being terrified of name-calling women.

Aw - It was nothing personal. I only described it as nonsense because it deserved nothing less. It doesn't make you less of a person - man up . 

Also, I am not a name-calling woman. So, there is no need to be terrified. However, being so ignorant about the basic facts of a subject that you presume to debate is far more frightening -and is probably indicative the general level of mythology, swallowed by the uninformed, that got us here.

Simply point out that the opportunity to buy may be created by looser credit but it is still the resultant demand which creates the market.

You still don't get it. There is always a demand for housing better than that currently occupied - but it can't ever be satisifed without finances. Otherwise, if demand alone was necessary, as you incorrectly claim, countries with the largest populations (China, India etc.) would have the highest property prices because, by definition, their demand is greater than countries with smaller populations. That is clearly not the case.

The demand leading to higher prices can only come from more funds being available. You can have demand up the ying-yang but without the funds to satisfy that demand, prices won't - can't - move. As most people's readily available cash is limited, credit has become a substitute and it is that credit (in lieu of extra cash) which allows for higher bids. It is then unrestrained credit that leads to bubbles.

To believe otherwise requires an explanation of how the price rose in my example without ANY extra demand - something you have avoided addressing. But here is the example again:
Only two people bidding on a house. Buyer 'a' can only raise a £75K mortgage, Buyer 'b' can raise £80K. The house is on offer for £75K. Buyer 'a' offers the full amount but is outbid by Buyer 'b' who offers £80K. Upon returning home, Buyer 'a' receives a call from his bank informing him that they will increase his loan to £85K. He submits a new offer for that amount which is accepted.

I realise it's only an example but it is a very real world example which occurred thousands of times during this bubble. So, how did the price of the property rise from £75K to £85K when there was no additional demand? Something which you claim can't happen.

How can any argument put forth, that doesn't recognise the only element that changed in that transaction (i.e. the increased credit line) as being the cause of the price rise, be described as anything other than 'nonsense'?

I realize this may not accord with popular theory or the economic gobbledeygook of journalists but the principle was established long before the eighties. I tend to use more established sources for my economic theory than journalists whether they be populist, liberal or heavyweight.

Yeah, well, nice try - but by what principle is your conspicuously, unsubstantiated gobbleydegook any more valid? Which of your claimed, but unproven, principles were established long before the eighties and by which  'established' sources?  Inquisitive minds want to know. Simply making unfounded claims of 'principles' and deriding journalists and respected Institutes whose opinions don't support yours in no way adds legitimacy to your unproven claims.    

The summaries you quote describe how the credit boom developed and don't change the basic premise that more buyers than seller makes for higher prices while more sellers than buyers has the reverse effect.

More nonsense. First, it doesn't just describe how the credit boom developed but concludes that it was responsible for the property price bubble. It's hardly surprising that you would choose to ignore that finding but apart from you, I've never heard anyone conclude anything else.

Second, it is not a basic premise that there can be more Buyers than Sellers, At best, it's a woefully flawed premise and is probably more aptly described as gobbledeygook.

Every transaction has one of each - never more - never less. Whilst there can be Buyers who are willing to pay more or less for an item and/or Sellers who are willing to demand more or accept less for their inventory, there can never be more of one than the other and for a transaction to occur. And it is not just the willingness of the Buyers to pay more or the demands of the Sellers that leads to higher prices. The Buyers need the 'means' to pay higher prices. Without it, the Sellers can demand all they want, the price can't rise.    

Now I really must leave this discussion as a nice bottle of wine has my name on it and that#s much more important than playing wordgames with the boys and girls on a Saturday evening.

.... but not more important than to be condescending and patronising without merit or even a hint of substance to support your manufactured claims of supposed 'principles' - marvellous!   

 A geat bottle of wine. No further explanation required.

 A geat bottle of wine. No further explanation required.

 A geat bottle of wine. No further explanation required.

"A professor of theology, who was also an Oxford classisist told me that people who use more than A few words to explain themselves really have no idea what they are taking about as they are trying to impress. Btw he would have said what I said in 5 words, great man."

Yes, and I apologise for the length of response but unfortunately if you had read it, rather than any attempt to impress,  you'd have seen that most of it was just repetition of points already made but conspicuously not addressed with anything more than content-free drivel.

That's most probably because his argument was made of straw and had no answer of substance beyond an infantile "na na nana na - nice bottle of wine".  I'm sure your Oxford classisist would be very impressed

This message was last edited by JD01 on 23/09/2012.

 Whilst i proffer only self opinuation.

I have two properties that require rebuilding one due to uninsured fire and one due to refusal to pay out vandalism. Both on the outskirts of Alfaz. Neither property is worth rebuilding due to the low resale cost.

I currently rent at 300 euros a month on a renwable long term with a view to buy.

It is not the time to sell if one is selling to the wise man.

It is no the time to buy unless you are the wise man.

Being wise is believing in ones own self and where one thinks the bottom is. Remember where it was. Thats how far it can go. If offering offer 50% of the advertised price and as sure as eggs is eggs dont buy new.

There is a mug for every market buyer beware.

Antonp