3.4 million empty homes....where are they?

I came across this article today in the paper and thought it would be of interest. Much of the information many will already know but nonetheless I found it quiet interesting.

Spain has the highest number of empty houses in Europe: 3.4million of them at a time when many are facing evictions for defaulting on their mortgages. House prices in Spain are also at an all-time low, according to Instituto Nacional de Estadística (INE) numbers for December 2013. What is more with prices so low, record numbers of foreigners have been flocking to buy houses, with numbers tripling since 2009. These things in themselves are not news; we’ve know this for a while and it’s been well publicised in the press both in Spain and abroad. What is an interesting exercise is to look at where these empty homes are and how much house prices have dropped in those regions. We don’t have the data for where exactly expats are buying the most houses, but we can make an educated guess that it will be on the Costa del Sol and the Costa Brava.   So first lets look at where the empty houses are. I’ve plotted them on a map, with the bigger red bubbles corresponding to larger amounts of empty homes:

Where are Spain's empty houses?

Click on the bubbles to get the stats for each region. The first thing we notice is that the largest numbers of empty houses are in the Valencian Community and in Andalucía. This figure holds true, even when we look at the percentages: 18.5% of houses in Andalucía are empty - almost a whopping one in five. Valencia isn’t far behind on 14.7%. These are big numbers. Surprisingly, Cataluña is third with 13% - despite being one of the few regions to have seen a drop in the total number of vacant homes. As you may have suspected it seems that a large number of houses were built in theses areas because they are popular for second homes, both for Spanish nationals and ex-pats. So where are the cheapest houses? Or rather, where have the biggest drops occurred? The INE published the figures, and as you can see from this graph they’ve been dropping steadily since 2007 in some communities, with all areas having experienced large declines.

What is interesting is that, despite having the highest number of empty houses (both by volume and %), houses in Andalucía and Valencia have held their prices far better than other regions. Andalucian properties are going at 73% of their 2007 value and the Comunidad Valenciana is seeing houses sell for 68% of 2007 prices; the third and eighth highest on the list, respectively. Not so Cataluña. Prices have dropped to 55% of their 2007 level for the Catalans, despite that overall reduction in the number of empty properties. Why might this be? One possible conclusion is that the number of foreign buyers snapping up cheap properties could well be preventing more pain in Valencia and Andalucía, where the areas around Benidorm and Malaga/Marbella remain favourites for ex pats. Let’s have a quick look at who it is buying the most properties.  Which nationalities are buying Spanish homes?

% of foreign nationals

UK %16.54

France %10.3

Russia %8.09

Germany%7.67

Belgium,%7.44

Sweden %5.89

Norway %5.19

Italy %3.47

China %2.74

Holland %2.62  

By far the biggest buyers are the Brits - which will surprise few - but the figure fails to take into account is that 12.85% of all new house purchases in the fourth quarter were by non-Spaniards. How long that support will last is anyone's guess, but the number of foreign buyers is higher even than before the crisis, perhaps showing how any recovery from the crisis is leaving Spain behind.

[Source : Billy Ehrenberg - El Pais]

By far the biggest buyers are the Brits

Ian,  

            have you got any number.  Percentages mean very little,  16%  of 100 of course is only 16.   Whereas, how many properties have been sold,   means a lot more and reflects the market better

Here are the figures that correspond to the percentages - 4th quarter 2013

Thanks ian,

So from 900,000 properties sold in 2006   to about 300,000 in 2013.

As I suspected 1,400 in 3 months is not a signal of the good times they are a’coming back anytime soon.

http://www.globalpropertyguide.com/Europe/Spain/Price-History

Agree johnzx, but it also shows the appetite amongst the Brits to keep on buying!!!!  Proving all the doom mongers who said no one would ever buy in Spain again wrong.   I don't think those heady days are coming back either, but I do think that if property prices in England  start to move significantly upwards outside of London, then we will start to see more property in Spain shifting.   It will be a long haul for prices to start recovering though.   

The property market will not improve for many a year to come, and unless a property is in an exceptional position there is sadly little hope for sellers. Taylor Wimpey are part way to completing a new development along the beach from me, west of Estepona with 1 bed starting from 300K; this development will also take a long time to sell, but being fron line beach will eventually go, as are the apartments at the Kapinsky Hotel nearby. Other than these sorts of locations, I feel sellers of second hand properties must hang on for better times.

As I have said in an earlier blog, the government has blown the chance to start moving sales by failing to proceed with the 160,000 euro level for non-EU citizens to get permanent residency. Another own goal by a government that simply igrones the reality of the situation.

According to these figures which I suspect should be taken with the proverbial pinch of salt if issued by the INE – expat buyers are not even putting a dent in the housing stock. Nobody has mentioned the annual ongoing foreclosures and abandoned mortgage delinquent homes.

It is estimated that upwards of 90,000 homes are repossessed each year (93,600 in 2010 the last figures considered reliable) so if expat sales are heralded as the ‘turnaround’ in the Spanish property market and the foreclosure figures can be trusted, the uptake generated by overseas sales represents only 27% of the annual repossessions – and does not reduce the historic housing stock of 3.4m by a single unit.

The next problem we have is that there are millions of homes in negative equity so these owners are locked in and can’t sell, or they would owe their lenders a hefty balance between the achieved sale price and the sum owed – this creates a stagnant market which inevitably leads to more repossessions with falling incomes and the need to devaluate nationally – devaluation is always paid for by higher interest rates which will reflect in higher mortgage repayments.

For those who are prepared to take the view that property prices will not fall further, there is no lending support in Spain or if it can be secured it will cost! Credit is the fuel for the property industry and without it the engine will not start.

Estate agents tell us that Russians and other Europeans are queuing to buy here and are buying in huge quantities – not enough properties – cash waiting…………. I think these figures prove that this is not the case. Spain has to act and her masters in the ECB must decide one way or the other HOW they intend to tackle this crisis.

And yet they still keep building????? I'm the President for my urbanisation on the Orihuela costa, we bought off plan in 2002, there were delays and finally it was completed in 2005, however 5 are still unsold and we have had 8 repossessions. Where we are sadly it's been over developed by miles and spoilt and now they are trying to building on the last piece of land were you can still see the sea, even though it's suppossed to be protected. The Spanish don't get it and never will. Yes, some Brits are still buying, but every one wants a bargain and the poor souls that need to sell are losing thousands. My advise would be unless you want to move lock stock and barrel, don't buy in Spain, instead buy in the UK, rent it out and use the income on lovely holidays. Most holiday homes in Spain don't get used very often, you have to maintain them, clean them, pay Community fees and Spanish taxes even if you don't rent it out. Run for the hills and spend your money elsewhere.

The reason they are building..... because the Russians and Norwegians are buying and they only want new properties across the road from the La Zania Boulavard there are lots of new Apartments, I was in there a few Weeks ago they told me that they are all sold out, Phase 6 down in Punta Prima have a few  left, and all the gost estates around the Costa they look so bad.......However I love Spain and it will always be my number one spot and spend 18 Weeks a Year there.

The problem in Spain (and other countries) is GREED and builders should stop building until the existing properties have been sold. When we bought off plan in 2001/2 it seemed like a good idea as the firm we bought though said that they would rent for us and would give us a good return for our investment.We trusted these people, which turned out to be our biggest mistake ever, because once the building was completed these "sharks" said that they could not offer such a service. (the firm has long since shut down). We have eventually sold and would never ever buy in Spain again. Perhaps the government in Spain will eventually wake up one day and smell the coffee - and they want Gibraltar !!! They cannot even manage their own land.

I also was struck with the replica of property prices going back to 2000. At the time my brother in law was sold on the idea of off plan and cosy little group meetings in peoples houses by the British Agents in England. That was Campassol, Murcia which he got out of at 10KEuro cost. He then spent a summer in a caravan with temperatures in the 40's. Settling on one in the old town, but refurbished  in Mula at 130K. Now sadly deceased and his wife can't even get anyone to look at it for 39K and thats been the situation for 3 years. I only say this to illustrate the problem as graphs and percentages are not peoples real experiance. Many ex pats have just up sticks and gone, whilst others have given up as the empty houses are just stripped.

I just don't know where they get their info from, that is the INE?? Obviously trying to talk it down for some political reason.

I live in Catalunya and my house price and others in my area according to several estate agents has only dropped by 10% since 2006 and they are selling. There are a lot of wealthy Barcelonians with second homes in this area on the Costa Brava.

There is a large amount of Russians looking for properties and this is also helping to keep the prices up.

Of all the comments, I feel that Woodbug is nearest the mark. There is a lot behind these figures that is not always clear to see. I am up in Catalunya where the property market has effectively stalled. The only things that are selling are the giveaways so if the REAL market has totally stopped the firgures are distorted. Another factor is that many owners are now renting out theirs apartments all year. This is new; just five or six years ago it was unheard of. So that obviously affects the buying market. But the single most significant thing is the absence of bank finance. That is why the only things selling are the real cheapies. There are always people with cash but why should they buy at full price when some poor sod is having to sell at half price just to get rid of the yoke.

OK

I feel that one of the biggest problems that is as someone previously said ......"the choice of picking up sticks and leaving".

But as long as these people with the sticks remember to pay all outstanding bills, and until their property is sold and paperwork complete still continue to pay bills there can be no problem and Spain is not losing money. Its not just as simple as running back to mummy (unless mummy wants to pay all bills).

There is so much money being lost to Spain due to people just deciding one day not to pay. So I can understand why they are not interested in giving out Reidencial Permits like "Happy Hour" (buy one get on free).

A step in the right direction, which incidently will not effect the "good guys", is to start an effective debt collecting system. But beware............!!!

There is one inccident I beleive, where a British, debt collecting company were used, they successfully collected some outstanding debts but, the Community have yet to receive any money from them. The company is now in the process of being taken to court for non payment to the Community.

Perhaps they should have performed a background check on the company first.

Has anyone ever watched "BountyHunters" on TV (it is an idea, maybe).

Spain has a perfect tool that they could use to keep check on .....who owns what.......who pays what..........who owes what.....who lives where.......its called electronics, you know they use it a Malaga Airport, that way on some short haul flights you might have to show you boarding card and passport 3 - 4 times !!

But I am sure that with a little tweaking, a housing control system could be put in place (if they of course are interested).

Come on you bad guys, dont try to cheat the system. It feels great not to have to look behind you all the time (I have also noticed a lot of light brown envelopes with O.H.M.S. appearing at various postal collection points. Don't forget to pick yours up!!

The biggest - not ONE of the big problems in Spain, Toro, is Spain! They have so many duplicated make-work systems that they are suffocating under the tonnes of paperwork generated for no particular reason except to keep hordes of individuals employed and create total confusion all round. A good case to point is the innocent British couple who 3 weeks ago  had their house in la Nuncia repossessed by Solvia (Sabadell) by mistake. The lawyers acting for the owners blamed the system and too much paperwork!

As for your crazy idea of having Dog Chapman and his extremely large wife chasing round Spain playing ‘gangsters’ with toy guns is laughable – besides he would need ‘papers’  for his gang of special ‘theatrical’ agents and that would take several years to issue at the current rate of progress.

People who leave their homes do so for a reason and in doing so, many are forced to leave behind a huge equity – not the actions of a ‘bad guy’ as you so cruelly put it. The blame in most cases is firmly with the government, the system and the banks – not the families who lost everything as a result of the terrible conditions in Spain that we have all had to endure over the last few years.

Debt collectors?  Don’t be silly, it takes years to get any case into court as it is and a court order would need to be obtained so that’s a non-starter. Besides who would license and regulate them..... Don’t tell me.......... we create a new government body and paper driven system.

Electronics – in Spain? Where? I think with the greatest of respect that you may have been misled. Nothing gets done in Spain until the man with the rubber stamp has had his say – that’s why we all have to carry our passports, and have to carry important documents in our cars at all times. That why we have to jump through hoops to obtain registration and residential papers that we are obliged to show on demand.

Don’t ever forget that 99.9% of Brits contribute a lot of money to Spain and many UK businessmen and women subscribe to the Spanish economy so Spain would be a bloody sight worse off if we all decided to pack up and go!

Your penchant for snooping around other peoples post is quite extraordinary and the correspondence that appears to interest you so much, will now be quite old as all important matters from UK are now dealt with by HM Customs and Excise or the Department of Works and Pensions – you may like to note this for your future investigations

In closing, I ask you to please try to find a little sympathy for those poor honest families both British, Spanish and many other nationals who have lost everything through circumstances beyond their control – there but for the grace of God!

Many thanks for you more than spirited response.

Just a couple of points

As far as the gangster scenario is concerned its purely a matter of the passing of a torch, Britain has now been replaced by our Eastern brothers (their suitcases contain more Euro).

To close we are also an honest (thats a good word) family that is making a good life in Spain.We are trying to integrate as best we can. (rather than only drink at our bars). As a bonus you will find its also much cheaper for you.

I do not snoop, it is because all our community mail is stached at the guard house. (Check-Point Charlie). One day whilst having to search through the Blocks post, I could not be help notice many "light-brown envelopes". Luckily for me there was  a talkative English lady who was more than prepared to tell me of the envelopes, their consequencies and that they should be assamed of themselves, and that her s*it did not stink.

Looking forward to more constructive. spirited responses (rather than wingeing).

Sorry forget to mention the use of electonic systems, It is a tool that CAN be used with the proper implementation don't you agree ?

They are starting to use more electronic systems, but Spain does like paper work. I had to deal with the Orihuela Council over some Community problems. The offices looked liked they were in the dark ages, file boxes covered every inside wall on shelves, it was unbelievable. Old computers, it's no wonder things are in a mess. The time wasted must be considerable. It wasn't that the Council weren't helpful, it was that the systems in place are not time efficient, which in turn means they can't be cost effective either. This is how Spain is run and there is still a lot of corruption, and back handers going on. I still say unless you are moving to Spain to live, don't buy a holiday home, it is cheaper to rent, whether it be for 3 or 4 weeks or a few months. Too many people bought a property with a romantic notion, unfortunately the dream for many has turned into a nightmare. I do agree with Woodbug when he says how much money the Brits and other countries citizens have spent and paid into the Spanish economy, it must be billions. So why is Spain in such financial trouble?? Where has all the money gone?? Maybe we should have spent it in our own countries instead.