Rixxy

Ha ha ha - of that I have no doubt, but so far so good. I was so pleased to see the Telefonica man I nearly hugged him lol. Am in Salobrena on the Granada coastline and its soooooo lovely. Chuffed to bits!

Windy rainy, but a nice 22c. Pretty much non stop sunshine for the last few weeks. Looking out of my office to the sea 100 yds away.

How are you, trust you are well and business ok?

This from Bloomberg - not known for sensational reporting.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aJZo3AT8u6.o&refer=home

Spain's Sinking Property Market May Roil Europe (Update1)

Dec. 12 (Bloomberg) -- Julia Gavin sold more than a house a week as the Spanish real-estate boom peaked last year. Now that business is drying up, she's sharing leads with competitors, reckoning a partial commission is better than none at all.

``We're up to our ears with work, but no sales,'' says Gavin, 52, who works near Madrid. ``It's horrible.''

Spain is suffering collateral damage from the collapse of the U.S. market for mortgages to the riskiest borrowers and the swoon in U.S. real estate. Spanish banks have exceeded their European peers in tightening lending standards, prompting a plea from Prime Minister Jose Luis Rodriguez Zapatero not to strangle growth.

Three-quarters of Spain's 60,000 property companies may end up bankrupt, according to Fernando Rodriguez de Acuna M., an analyst at R. R. de Acuna & Asociados, a real-estate research firm in Madrid. ``They've been caught by the two things at once, the demand problem and the liquidity problem,'' he says. ``Everyone is going to have problems.''

``The banks are coming up with a million excuses not to give loans,'' Gavin said. ``They don't want to take any risks.''

Well! ..we heard all this circa March 2007 and still 'no crash'

But we also hear about the same for your home or buy to let in UK!

The market in EU is slow and will be until circa early 2009

But that does not mean no one buys!

it all depends on the reason you are buying...if it is for full/ part time living or as a holiday home it is a 'life style choice' and 'it is a good time to buy in good locations'

For the good new off plan locations the prices are and will remain firm and for the good 're sale locations' the prices are reasonable 

For dealers there are in all EU good deals to find ........but for most people if you want to buy, have the money or the ability to get a good mortgage [ & in Spain they have never been better....like UK but lower interest!] early next year may be just the best to find 'what you want'

You will not flip it for a profit but you will enjoy it and in the years to come [ just like buying in UK now in a slow market] you will , [from all projections] look back like many before you ....and the profit is a bonus to your 'life style' enjoyment   

Brian as an estate agent you are typically haveing it both ways. You say that current prices are reasonable, but back it up with nothing of any substance. Prices are infact by any sensible measure completely ridiculous. The boom was created by an investment frenzy and completely unsuitable lending practices. Now that both the investment angle is gone and lending must return to prudence, prices have to fall a long way. Its just common sense. Prices in Spain are probably by any sensible measure the most expensive in the world, I'm talking price to local wage ratio, and yield. However to be fair to you when have you ever heard an estate agent tell you its the wrong time to buy?

When I speak my mind about property, many people seem to get the hump, as if I am personally attacking them. However my stance on property is no vendetta against this asset class. The facts are that this asset class has been the darling of the world for atleast the last decade, every man and his dog has made money from property, and its currently and has been for some time the dinner party topic.

After doubling and trebling in the last decade, it might occur to people thats its had a fabulous run and is now perhaps overvalued. A quick look at hard facts, rather than emotional talk would definately confirm this. The simple facts are that if property had had a sustainable rise on the back of riseing prosperity and increased demand, then rents would have risen with prices. But this is not the case and this is ultimately the acid test. Wages have risen in line with gov. inflation figs and hence yields have dropped like a stone and wages to price ratios have gone thru the roof. No where has this been worse than Spain. It would be bad enough in cities around the world where there is riseing demand, very limited supply and jobs can be had that pay very decent salaries, but the reality is that after many years the boom has spread to areas of the world were there are little if no underpinnings to the economics. Local wages are tupence hapenny, there is more land than you can poke a stick at and yet house prices have gone thru the roof, mainly as a result of foreign naieve and greedy speculation.

The Med and eastern europe are going to get spanked when people realise that their domestic homes are falling in price and mortgages return to normal prudent lending practices. I think many of the newly built apartments with none of the "location etc" attributes will be unsellable at any price. There is way too much supply and little if any demand, once the investement angle is proven to be just the reverse - wealth destruction.

In just two months, the Central Bankof Spain (Banco de España) has sold
off 20% of its gold reserves, equiva-lent to 80 tonnes of pure gold, and
worth about 2 billion dollars. Ex-perts close to the Banco de España
have characterized these sales as mere “technical adjustments of the
reserves” but the fact is that the Spanish gold holdings, which in
March of 2004 held eleventh place in the world’s ranking with 523 tonnes,
have been reduced to little more than 300 tonnes.
The vertiginous fall of gold reserves in Spain is not just another decline,
because, since 2004, it has plum-meted 60%; this drop can hardly be
attributed to “technical adjust-ments” as the Banco de España
claims.
This policy of selling off gold can only be understood if one considers
that Spain’s current account deficit is reaching almost 9 billion euros in March alone. The Spanish trade
deficit is out of control. It is the worse deficit in the country’s history
and worse than in any other country in the world in relative terms.
But, why the gold reserves? The government could have used other
more effective means to give liquid-ity to the current account balance
without having to sell strategic as-sets. But that would damage the
public’s perception of Spanish Prime Minister Jose Luis Zapatero’s
economic management because the public deficit would increase and
thus finish with the impression of a surplus, as well as with the fiction
that the economy continues to go full speed ahead due to the gov-
ernment’s good administration. Sell-ing off the gold reserves looks more
like a maneuver so that the unpleas-nt part of our economy, being that
we spend much more than we pro-duce, remains unnoticed – while in
technical terms, we enjoy a fiscal surplus and have a government
staging good economic manage-ment.
What the Banco de España has done is similar to the situation of a family
that resorts to selling off jewels in-stead of requesting a loan. There are
no debts, but neither is there any backup to face unusual situations.

You respond very quickly...are you just 'copy and paste' virtually a 'spam'

I am not 'with respect just an 'Estate Agent' but took a property /valuation/ economic degree at London University in 1965 and have lived ,worked, bought and sold through all the markets since then

Nearly bought in Spain 1976 and have regretted ever since...but making up

I can say that I have seen it all and currently , even with the credit crunch, and the slow state of the EU economy ,and it follows the EU property market, if anyone wants to buy for 'life style' there is no reason not to for reasons stated in my last post

I have been in business when inflation was 15% . 3 day working week, base rates at 15% 

Nat West saved by the Bank of England [ but done in a quiet way!]

Do you know that a 'life style' buy of a Caravan location in Abersoch North Wales have a waiting list front line at circa £500,000 [ yes £ not €] and that is a 20 year lease...........not the SE!!

So much for the UK economy!!!

It is not like the 70's or 80's mainly because of low interest rates and low inflation ,so for most of EU who would like to buy in Spain[ and it is the EU most popular location for that 'Place in the Sun'] ................why wait.........get it now...........if you can afford it

Brian

With the greatest of respect you quote no facts what so ever, but use terms like good value, low inflation. All could be described as emotional at best.

The fact is that money supply in the UK is growing at 14%. If you look up the correct definition of inflation you will find it is "increses in the money supply, namely M3" Real inflation is therefore 14%.

Governments around the world are hideing the truth about inflation, but the public is rapidly catching on. Just look at anything of real value that is not imported from China, like milk, or food items, or energy or council tax bills. They are all going up at double digit rates. Oil at close to $100 a barrel is feeding inflation into everything, and its going up because central banks around the world are printing money.

Give me some facts, what nett yield are you gettting in Spain. What is the house price to wages ratio.

Have you any idea how many banks have gone bust or announced multi billion dollar loses. Why are central banks around the world having to pump billions upon billions of dollars into the system to try and avert a meltdown?

Wake up and smell the coffee, property is the last place you want to be.

Asking prices in Spain to me look like they have not fallen that far. But this is a misleading picture. An example will illustrate.

Supposeing I bought a Mars bar for a tenner, and put it up for sale at a tenner. I could say that I have not lost money and asking prices for my mars bar have not fallen. However its highly likely that no one is going to be stupid enough to buy my confectionary.

If I reduce the said item to 5 quid and advertise it at a 50% reduction, does that make it a bargain.

The figure that matters is the selling price of my chocolate bar. It might be that I have to reduce it to 50p before I get a buyer. But if I can't find a buyer no one really knows what my mars bar is worth.

Developers realise the importance of reduced selling prices so do everything in their power to not reduce them. They do this by offering cash back, kitchens, upgrades, anything to avoid the truth, that selling prices are dropping.

In time real prices will emerge, but by them it will be much too late for naieve buyers. The property market in Spain may take several years to fully unwind.

In the US after a year or so of denial, experts are now predicting that in some ares of the country prices may fall by 50%. This is in the richest country in the world, where average prices are atleast half what they are in Spain. 

Lending is in limbo as Northern Rock’s shadow reaches Spain

Hi TJ222,

I always read your posts with great interest as they are generally logical and offer great financial advice.

I do take a little offence at the comment on another thread that everyone on here generally has a vested interest when making comments regarding the property market,as an agent you do have to have faith in the product and the market conditions at the same time i do have a grasp of reality.

You are obviously very educated in the financial sector and would probably make good financial decisions when it comes to property.

The only thing that concerns me is the fact that i cannot recall you ever using the term "buying a home" it's generally property or investment.

I wont bore you with the usual "living the dream" dross but there are othere reasons than financial gain for people choosing to buy here.

I remeber losing 50% of the value of my property in the UK in the early 90's when property prices crashed and interest rates were at 15%,i didn't move i hung in and in the end made a profit,i bought the house at the time because i wanted to live in it and make it my home,if i based my decision to stay or go on the financial markets i would have moved to emerging market,like the eastern block or Asia.As i quite liked the UK at that time and knew i would not be looking to sell in the near future i stayed and in the end moved upwards to a new home with the benefit of making a profit.

What people have to remember is the fact that your house is only actually worth x amount on the day you sell it,anything else in projecture and hearsay.

I know what you are saying about the credit crunch and it is obvious to a blind man that there are troubles world wide and it will inevitably affect everyone in some form.

What i am trying to get across to you is that there are a lot of people still buying in Spain for the reason that they will get a greater quality of life,they put a greater value on walking along the beach than opening there bank books everyday to see how much money they have,they want to come here to set up a "Home".

I feel with your background that you are tending to look at the country with one eye,not everyone wants to rent with their families and then upsticks and move the minute a bargain comes along,it's not always about the Dinero.

I take it you have settled in Spain now and being a financial expert there must have been some reason for you to move to a falling market,surely the wise money is in Brazil,Goa etc..... or maybe it is because you actually enjoy it here??

Don't take offence at my reply as i have said earlier i think most of what you say makes a lot of sense but some decisions in life you need to make with the heart as well as the head.

Regards

Georgia

Georgia

Good post and I apologise if I have offended you with my vested interest comments, I hope you can accept my apology.

The vested interest thing is very real and the victim is always the punters, while a very few people have reaped vast rewards, mostly sucessful agents, property developers and banks. Its hard to get an objective view on the true state of the market, and these professionals have played on the naievity of the general public, whose expertise in these matters is extreemly limited.

I have indeed moved here to live and enjoy the many wonderful things Spain has to offer, but that does not change the fact that property is an accident waiting to happen. I can live here and enjoy life without buying, as I said it makes no sense when renting the same property is half what it costs to buy.

I accept that my view is partially a financial one and with my background is that way inclined, but you can't escape the fact that buying a home is one of the most important money decisons you can make. And like it or not money decisions affect our quality of life. If you have made a bad decision with property you can be chained to debt for years, saddled with something you can't sell and have to keep paying for month after month. This affects quality of life in a big way, just look at all the people who are stuck in jobs that they hate and take up most of their lives that tey could be spending wit their kids, just to keep up the mortgage and debt payments.

The next decade is going to see peoples quality of lives ruined by debt, mostly as a result of mortgage equity withdrawal and an unsustainable boom in property. The major banks are still paying themselves billions in bonuses, while homeowners and shareholders suffer and pick up the bill for all this excess.

I am jsut trying in my own way to slightly address the imbalance, afterall if you want some bullish property blurb you don't have to look too far.

Best of luck in what ever you are doing.

Tim

Tim,

Thanks for the reply,i do take on board what you are saying and as usual states good common sense.

I guess somewhere along the line the decisions you make at the beginning of any purchase govern the rewards you will gain for the future.

If you buying with a view to investment at this moment then i would say not a great time to buy as there is too much uncertainty around the global market and not just Spain,although if you have been toying with the idea of moving to Spain for some time and it is decision based around your family or purely to live out your later years in a differnt way then why not.

I always give people worst case scenario,don't over mortgage,don't stretch yourself financially at any cost and don't expect to earn a small fortune.

If you are buying in Spain because of the people,climate and lifestyle then you will realise a return(in life)

If you are buying in Spain to make a quick buck then basically your in the wrong country!!

Basically you have to decide what is most important to you in life,prices may well drop,they may well rise but at the end of the day the only thing that is guaranteed to do that is the sun on your terrace.

The price of anything is determined by the amount of pleasure you will take from it.

As always a pleasure to have an intelligent conversation.

Regards

Georgia

Hi Guys - I do love these heady debates. Very interesting and views mirroring my own from the outset and partially what spurred me on to launch my business.

I can report that investors are all holding back - I speak to numerous regularly, as the general consensus is that there is more to fall down.

I notice with interest the last figures produced with regards to 'increases in property prices' was in the positive, but I am convinced this is because of sellers having to declare the true value now! So, false increases from old devlared price to the new actaul price, even though a loss may have occured, on paper is shown as an increase.

Totally agree with you Tim and for the reason above, we will start to see the true prices differentials coming out - finally the selling price against the real old purchase price and therefore a true state of the market.

We are only selling stock where owners are losing money - last deal had the seller lose 55,000 euros against his purchase earlier this year - and that did not include his costs of purchasing! He was able to put it against a tax bill in Ireland, so slightly diferent situation, but also interesting is the latest sales are to buyers who are wanting to live here, already live here and decided to buy or people for second home use not actually bothered about renting.

This coming year will see a lot more falling out of bed wioth their lenders and an awful lot of stock on the market!

Hi Rixxy

Sensible post as usual, you are I suspect someone who can give a realistic view of the mkt.

Hope you are well and managing to maintain the all over tan!

There gone and done it now, wrecked the thread again lol.

Hi All,

Just echoes the posts we have been putting forward on the forum for the last 18 months plus.

DO NOT BUY FOR INVESTMENT PURPOSES ONLY AND DO NOT RELY ON RENTAL INCOME. SIMPLE AS THAT.

Hola TJ - not so much an all over tan as all over rust! Bloomin rain!!!

Hey ho - had to happen sometime, couldnt have 25 degrees blue sky and sun ALL the time could we, just wasnt so fair on the brits at home!!!!!!!!!!!

Back to thread - agree, buy for yourselves and not for SHORT term invesment, taking a mid to long term view is fine - check out the time spacing between peaks and troughs and if you retire at a peak then sell and rent!

Otherwise, just buy and enjoy the damn thing!!!!!!!!!!!!!!!!!!!!!!!!!!

Nearly Christmas!!!!!!!!!!