Going up - or Down?

Woodbug,  You ask - "Why do Brits believe that only the Spanish property market can change the rule of supply and demand?"  IMHO the answer is "Thy don't".

You must take account of the fact that there is a natural consumption of properties every year. It is estimated that this is circa 300,000 to reflect places that both are knocked down as being past their sell by date, plus the constant demand from an increasing population. 

There has been very little building work in Spain in recent years which is why the glut of property that has stood empty and unloved is beginning to diminish.  In a couple of years it may have disappeared and building work will re-start in earnest and prices will increase.

Inspectahome - you mention the sales on Mazarron Country Club, I think this is largely due to the favourable comments received on "Homes in the Sun" and several like TV programmes in the poast 12 months.  There was an auction there a month or so held by the liquidator of the developer and I understand that all the properties (about 30) were sold at realistic prices, plus a few building plots.

Why do those in the industry think that the whole Spanish property market revolves around poorly built concrete meat lockers on bankrupt holiday ghettos? It doesn’t matter if Ex-pats are paying over the odds for these at the moment; there are still plenty around if you really want this life-style.

Only when the huge unemployment in Spain is reduced and the banks get back on an even keel will a true picture emerge of the housing market. I just hope we don’t go back to the times when the “passport and pulse” 150% mortgage offers were around and TINSA massively over valuing everything that had a roof on it.

I know some Spanish Estate Agents who rarely come into contact with Brit or any other expats and none of their properties are ever advertised in newspapers or on Kyero/Think Spain and they tell me that only keen prices will sell their properties.

Clearly there are two different markets operating in Spain, the local economy market and the wealthy expats.

This message was last edited by Woodbug on 30/11/2015.

"Why do Brits believe that only the Spanish property market can change the rule of supply and demand?" 

Supply and demand is an esoteric concept where property is concerned.  The proof of this is obvious.  Compare a house in London and in Glasgow.  Do you think two identical houses would sell for the same price or ahve the same property value performance?.  If you had 10.000 vacant houses in Milton Keynes do you think this would have any impact on the house prices in Manchester?  Lumping the whole of the Spanish Property market into one homogenous 'market' is not sensible.

There will be considerable market divergence one region to another, and one town to another, and one street to another.  Just compare the price performance of two adjacent post codes in the UK to see what I mean.

Here are some facts for you to consider:

1. Unlike commodity markets (gold, oil, currencies, electricity, equities etc) you cannot 'short' sell houses.

2. Location (down to street level) has an extreme impact on house prices, but gold sells fort he same price no matter where it is.

3. Urbanisations, or housing estates tend to get abandoned, torn down and rebuilt if they don't get a minimal level of occupation.  This does not matter where in the world they are built.  New York City included.

4. Are sales of homes in Spain or Murcia in this case going up or down?

5. The UK has had a chronic shortgage of houses for years, so why when most areas are rising in price, some in double digits are some areas still flat or even slightly down?

Maybe you need to ask the question, "Are prices going up or down in...

Nail on the head perrypower1. There isn't a "Spanish Property Market" there are a number of local property markets. Each of these markets are affected by the participants, who are not necessarily the same people.

People looking to live and work in Barcelona and Madrid won't be interested in a retirement home with a beach view on the costas. People looking for a retirement home in the costas won't be looking at small holiday apartments on a gated community. People looking to catch some R&R in the sun may be looking for a cheap apartment on a secure gated community.

These markets will move at different rates as demand increases. All the figures seem to point at prices in areas with high demand and limited supply like Barcelona and Madrid are rising. Other areas are flat or still declining for residential housing. There are definite signs that the cheap end holiday apartment market has bottomed and is starting to see small rises as Roy pointed out.

I would bet that I am not the only person in the world who has their main residence abroad, is still working, has some cash in the bank earning 0% interest and fancies a cheap apartment in Spain for the price of a motor home. I would also bet that a cheap apartment in Spain won't depreciate as quickly as a motor home in the short term and has the very real possibility of increasing in value over the next 20 years.

No crystal ball here, but I suspect that there will be similar patterns on the way up to those we saw on the way down. In the same way as vendors can be in denial during downturns in property prices, so can prospective buyers. Remember that phrase about greed and fear? As history has shown time and time again, the "let's wait for prices to drop further" mentality can easily turn into some fear of missing the boat.

Exactly Honey, this was one contributory reason why the price of Spanish property spiralled out of control! We were told constantly by the property marketeers that the price of property would continue to rise so buy now, shortage of quality properties, laws due to change etc. The latest 'buy now as prices are rising' advice is exactly as it was 10 years ago and so are the same claims on many websites that the Paramount Park, Corvera, New Shipping Marina, Hi-Speed train are underway that will transform Murcia  .... yeah you guessed it: "Buy now as prices will soar once these are completed".

I have been listening to the same drivel for years now.....Yawn.

I'm not sure that's what honeywater meant. The phrase is be fearful when others are greedy, be greedy when others are fearful. Most people buy into rising prices as they are greedy and think they will miss out. Few people buy into falling prices as they are fearful that prices will continue to fall and they will lose money. The advice is the opposite. Buy when things are cheap (nobody is buying at the trough) and sell when they are expensive (everyone is buying at the peak)

I don't think anyone can say we are currently at the peak of a property price bubble. There are signs that a bottom may have been reached in some areas and prices are stabilising. This doesn't mean that we will immediately turn into the next bull run and property prices will soar into the stratosphere. It does mean that perhaps a few people who are "greedy when others are fearful" might just pick up a bargain. The longer the prices remain stable, the more of these people there will be. It will only be when the market has recovered and prices start to rise that most will forget their fear and buy into greed and the next bubble will be formed.

These things run in cycles. I remember the property boom in the 1980s followed by the collapse at the end of the 80s followed by a period of stability before the next boom leading to the peak in 2007. Interesting blog on where we are now (in the UK) compared to the last bubble

http://www.rettie.co.uk/blog/housing-market-cycle-where-are-we-now/

Why do people bother buying in Spain if they are going to spend the rest of what little time they have  pulling their hair out worrying about whether the property has gone down or up who cares if you have one foot in the grave get on with life start enjoying what time you have left when you have gone what money you have left will be on no concern to you that will be for your so called love one's to fight over so don't forget to leave a will atleast that will keep the greedy relative's away that haven't bothered saying hello for the last 30 years .

Mmmm a bit of a "downer" Windtaker, but I take the view that prices are so cheap right now why not move to a better property.  Sooner or later prices will go up, so if you trade up now (ie sell cheap & buy cheap) you'll be better off.

(With apologies for making a positive suggestion on what is clearly intended as a doom and gloom thread ).

Except that the cost of moving in Spain is extremely high and you'd need prices to rise considerably to make anything on it if that's what you want. The 3 or 4 percent asked by agents to sell it in the first place and the solicitors/notary fees on top.

Then, when buying, the ridiculous 10% "transfer tax" and the same solicitors/notary fees.

Obviously depending on the property but we looked to sell ours and move up but it would have been almost €30,000 on top of what we would get plus buying the new one. Can't see property rising that much in the near term.

Mariedav, I wouldn't dispute your thoughts or figures for a moment. 

But my thinking was more on the fact that prices are 50% of what they were a few years ago and if you intend staying in Spain for a few years you may still be better off by trading up now. 

I guess it depends on individual circumstance, but some of the deals available are jaw dropping and personally I like to live in different places - waiting for the price to go up before selling doesn't work for me.

Hello 

I have seen some bank reposessions apt on la tercia golf, they are very reasonably priced, we do not have any experience buying in spain and wonder if any of you that already have property could tell us if its a good idea buying there

thanks

Chuckle - you must be having a laugh. 

In all seriousness, you need to speak to the owners on La Tercia Golf, preferably the ones who aren't selling, and then decide yourself. 

But it does seem a nice place - http://www.tripadvisor.co.uk/VacationRentals-g1903578-Reviews-La_Tercia-Vacation_Rentals.html

So today TINSA tell us that property prices are up by 1.9%......... but not really! They claim that prices  were up by 1.9% compared to last November but down a "fraction" from September this year.  Another "reliable" source informs us that asking prices actually fell by 2.1%

Woodbug, any survey or poll is a snapshot based on selected data at that time.  There will always be a margin of error, usually dependant on the size of the survey and the care taken to ensure that the sample is representaive of the whole.

But given the current situation and the fact that materials, labour and building costs are increasing and there are increased planning constraints it is surely inevitable that prices will rise.  IMHO the only real questions are "when" and "by how much"?