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After 18 years in the estate agency business i have obviously seen the rise and fall of property prices both here and in the UK.
As a rule and bearing in mind i am at the sharp end of things as they say, 80% of all property across the board is not going down,this is a not a myth,not a journalistic view to sell papers or tv slots its actually realistic.
Developers in this area are not dropping their prices just offering incentives,Banks that are repossesing properties are after adding their fees to an already large outstanding mortgage not releasing properties back to the market at bargain prices
Private vendors in general are holding out for a decent offer and not accepting anything silly like the urban myths that seem to surface in these times.
Also with the pound being so weak,people who bought last year at 1.48 have seen their property rise in price if looking at it from the UK between 10 and 15%.
Beleive me as an estate agent you wait for a drop in prices to kick start a stagnant market as people hunt for bargains,unfortunately bargain hunters are getting dissalusioned by the lack of.
The biggest problem in the Spanish market is that the once predominant buyer from the UK has seen the pound reduced and reduced and in real terms are actually getting less and less for their money.
The other factor is that the mortgage criteria is stricter than ever with banks only lending to people who dont actually need it in the first place.
I have spent the last few days with Bank Managers who face the sack because they have so many defaulting clients,they are blamed for issuing the mortgage so they are in the first line of fire,when a stack of files was placed on the desk my first question was how cheap are you going to let these go? the answer is outstanding mortgage+costs+legal fees, no cheapise there then!!
Ther market may well take a bit of a hammering but in the last 6 months prices on the whole have not gone south.
Of course there is the other 20% that come out at the moment from desperate vendors but they are very few and far between.
I am not trying to talk the market up or am i pretending that this is not the worst time for the industry i have seen for many years but i feel it is underlying factors rather than overpricing,especially in this area.
Who knows what tommorow brings but it seems the anticipation is greater than the reality.....................
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www.taylorlandandpropertygroup.co.uk
still here after all these years!
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I just noticed yesterday that an apartment similar to mine is on the market for the same price that ours was last year . We did not buy a property to make a profit but because we want to ive in Spain when we retire but is still a very reassuring sign As you said Georgia developers are not seling at ridiculous prices .
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Tamsin
There are millions of properties on sale for silly prices, that does not mean they will sell. The fact that property sits on the market for months on end perhaps years is a sign that asking prices are too high. Asking prices tell you nothing other than the aspirations of the seller. The very fact that sales are down 25% in Spain is a sign that there is a stand off between asking prices and selling prices.
Developers all over Spain are going bust, this is also a sign that prices are too high. If the asking prices were right, why would all these developers go bust.
These things take time to unwind, as I understand it Bnaks are currently sitting on foreclosed property. It won't be long before they are forced to dump them.
How long will the rich and prudent members of the EU put up with funding Spanish banks in trouble. Why is there a widening gap between Club med euro bond debt and northern european debt when its all the same euro? Financial markets are voteing with their feet. This message was last edited by TJ222 on 7/2/2008.
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Georgia
It takes time for buyers to realize that the party is over. What happens is people hold out hoping things will change, over time reality begins to set in. I live up in Madrid and my wife and I are pretty obsessed with property prices. We've been following the market for about 2 years and Tres Cantos (desirable burb north of Madrid) prices are off by about 25%. We get regular email updates, at first it was "new photos" same price, then you started getting getting emails with "Price Reduced by 7.000€. Now where starting to get emails where the owner has dropped the price a further 30.000€ and still almost nothing is moving. Most people we've talked to suggest waiting another year or two. Most people can last 8-12 months at which point they will begin to get desperate. Then you will really see the prices drop.
Secondly it's normal for a bank to try and recover all the money owed. In the US it was the same way, property goes up for auction, doesn't sell, bank pulls it back. At some point they wake up and face reality and sell it off for what they can. That's why you have banks making multi billion dollar write offs.
As TJ has said many times before prices HAVE TO REFLECT WAGES. And by current standards Tres Cantos is 50% over valued. One of my students bought a property (large 3 bedroom) for 240.000€ 3 years ago, at the peak it was worth 450.000€. Unaffordable on Spanish wages.
TJ is 100% correct, if you want to buy, rent and wait a year or two, worse case you pay abit of rent and pay the same price, best case the house drops 70% or more in value and you save a ton of money.
I've been through a housing crash (Canada in the 80s) and it isn't pleasant, trust me, wait and don't over pay.
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Decided after all I don't like Spanish TV, that is having compared both.
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Four simple reasons why prices will drop
1. Prices have to reflect wage particularly true Madrid Barcelona
2. Credit Crunch: can't get a mortgage can't close on your dream property, had a friend go through 4 serious buyers (not tire kickers) before he found a buyer that could close (he also had to drop the price but he wouldn't tell me how much)
3. Specific to the coast lack of British buyers. The whole boom was based upon the idea of plane loads of Brits coming every week buying up everything in sight. The first thing that goes when money is tight is the second home.
4. Massive and I mean massive glut of unsold homes, figure I keep hearing is 1 million unsold homes. Or about a 5 year (pre bubble) supply. Till that is gone prices can't go up.
Like I and TJ mentioned it will take time for the effects (affects) to work its way through the system, which is a good thing or we'd be in for a real depression rather than a recession.
My wife and I are simply going to wait it out, we'll buy a property but not for a year or two. I bought into one bubble (Southern Ontario late 80s) and I won't do it again.
Edit: A buyer in Las Vegas was quoted as saying when asked why he was buying property "because prices never go down"
need I say more. This message was last edited by Rob in Madrid on 7/2/2008.
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Decided after all I don't like Spanish TV, that is having compared both.
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Rob,
You are only telling me things i already know,as i said as the very start of my post "After 18 years in the estate agency business" this is not something i wandered into last week!
I have seen it all before,ridden the storm and have come back for more...............
I was just stating that in my area which i consider myself to be an expert we are "still waiting for the prices to drop"
I deal with property all day everyday which is why i can give an honest realistic view of the market.
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www.taylorlandandpropertygroup.co.uk
still here after all these years!
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opps sorry mis read you comment, don't you just love the internet for that! 
I have to add after living here for 2 years I can uderstand why people fall in love with Spain, do love the year round sunshine.
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Decided after all I don't like Spanish TV, that is having compared both.
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georgia, we are noticing increasing developers trying to shift offplan stuff coming up with innovative ideas (fixing to sterling, dual ownership, almost shared ownership where they still own part of title) but no prices dropping.
where their is a "reduction" is in sellers reducing price if they want to return to UK but a 15% reduction if the person is returing to uk and yielding money in uk is the same price as last year at 1.45
TJ loves a story but when I was last down at my mums:-
Diesel was still 50% cheaper than UK
10 tapas, 6 beers, and 6 coffees was less than 18 euros
The fresh fish at the market was 60% cheaper than the UK
And it was sunny
LOL
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There will be some distressed sales both by developers and private owners, but not a lot and in general not in the best locations
Those who can, and they are probably the majority, will just hold on for better times.....predicted to be 2010 for a start of the recovery and 10 years or so to the next boom!!!
As in UK, where the large developers now seem to be in more of a mess than in Spain , there will be incentive offers
So all in all, if you are a life style buyer, now is as good a time as any to buy...look hard and you will find a good buy in a nice location
The majority of developers we deal with between Alicante and Mojacar have had sensible prices since the start of 2007!......and even if you look at Polaris World at Condado de Alhama you will see the prices sensible.....a 2 bed unit at 119.800 € with delivery circa 18 months [ late 2009/early 2010] can only be a good long term buy.....with all the facilities which will be on hand
Show houses for Los Naranjos can now be seen and even with PW there is the odd incentive around!!
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FRANKFURT (Dow Jones)--The European Central Bank Thursday raised its key interest rate to 4.25% from 4%, as widely expected.
The ECB didn't immediately provide a reason for the decision, but President Jean-Claude Trichet will comment at a policy briefing scheduled for 1230 GMT.
The ECB has kept rates steady since June 2007, throughout the global financial turmoil of the past months.
Observers expect Trichet to highlight inflation concerns and will closely study his statement for any hints of further rate moves down the road.
Interbank money markets have priced in up to three rate increases during the next 12 months, since Trichet said the ECB's governing council was in a state of "heightened alertness," at the last rate decision press conference June 5.
Euro-zone annual inflation was 4.0% in June, according to the flash estimate from Eurostat released Monday, up from May's 3.7%.
The ECB aims to maintain price stability, which it defines as an inflation rate of just below 2% over the medium term, a period it says is between 18 to 24 months.
However, euro-zone inflation has been above this level for the past ten months.
Policy makers fear that soaring oil, raw material and food prices may trigger a self-perpetuating price spiral as these effects feed into consumer goods.
Evidence of a vicious inflationary cycle would make a strong case for further rate hikes, economists said.
The risk of second-round inflation effects, or the spillover of high oil and food prices into wage and price setting, are increasing, ECB governing council member Klaus Liebscher of Austria warned Tuesday.
Liebscher urged restraint in forthcoming wage negotiations and said companies should be moderate in their pricing of products to keep second-round effects from manifesting themselves in coming months, according to a published summary of his semi-annual macro-economic report in the Austrian parliament.
Both German Finance Minister Peer Steinbrueck and his French counterpart Christine Lagarde this week called on the ECB to also consider economic concerns when making policy decisions.
Economists fear that further monetary tightening amid signs of slowing economic expansion could eventually trigger a recession in the euro zone.
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TJ222
You have a bear attitude to the EU property market and economy, and why not....long term you need bears and bulls to make the market system work
So what is your bear approach to say 2010 to 2015....or by then with the EU [ and UK] economy improving will you have changed to a bull!!!
In the meantime where will 'you' invest 'your' money...cash is no good...inflation
shares are intangible and can be worthless overnight
Oil etc not an available investment for most of us
Been here before several times......... and the only tangible investment [ touch and see and still be used for life style ] medium to long term is a sensible approach to property
In theory prices may drop a lot at varyng times, but for most of us you just stay put, enjoy it and wait for the rewards
If you can afford to buy then look for a good buy and enjoy your life starting in 2008/2009
Renting: residential rental returns have always been low but 2010 -2015 it will be your landlord who has the best chance of being a happy bunny!!!
Please keep up with your bear posts.....we need bears out there to help us bulls make some medium to long term money!!!!!.
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Brian
I am neither a permanent bear or a permanent bull. I have learnt from many years of experience that its a nasty trap to fall into. But you see it all the time, people "fall in love" with one asset or another, I guess its human nature.
Brits and southern europeans have by and large fallen in love with property and who can blame them. Unlike the stockmarket its something most people can understand and relate to and also unlike the stockmarket its been a one way ride to profits until last year. I can fully understand people's love of property, I myself have done very well from it by owning investment property as well as a home.
The problem is that as pointed out in my nett zero thread, property has to return to the trend line, it can remain above the trend line for many years, but no one is going to argue that it must return. This means either property stands still for the next decade and inflation catches up, or prices fall to the trend line. Unfortunately history shows that it does not jsut return to the trend line, but then goes and undershoots as much as it overshot on the way up.
I'm particularly bearish on Spain property jsut now, but not from want of emotion, just because its badly overvalued, there is way way too much supply and we are headed into a nasty recession. The hot money from nortehrn europe thatwas used to justify 20 times local wages for a Spanish house has dissapeared and its not likely to return anytime soon. Now property must return to Spainish wages and its got a long way to fall.
If this was not all bad enough Spain has all but cooked its golden egg by allowing every Tom Dick and Harry to set up as an agent or developer and rob decent honest people of their hard earned cash. Just take a look at the sob stories on this website, its tragic and anyone with any compassion must be feeling for these people.
However I will say one more time, if people already own a property as a home and they love Spain and can afford to pay the finance, then I would not recommend selling whatever happens. as you say its a lifestyle choice and their happiness is all that matters.
BUT>>>>>>>>>>>>>> Committing new money especially borrowed funds to the current market is imho very unwise and a completely different ball game.
Come to Spain enjoy the weather lifestyle etc etc and buy in a few years time when valuation become reasonable by all sensible measures ie first time Spanish buyers can afford a home without having to resort to 10 times earnings. It costs approx the same to rent as it does to buy etc.
Until then rent and if nothing else retain your flexibility and peace of mind, not to mention your bank balance.
If as Georgia says you can buy a property from him at these sensible levels as mentioned above then go ahead.
However I still think prices will fall much further, so I am a bear for now - but in 2 years no doubt I will be a bull. Lets see.
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"If as Georgia says you can buy a property from him at these sensible levels as mentioned above then go ahead."
Pheww !! Thats a relief then. Always reassuring to see your decision endorsed by a knowledgeable poster. 
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If you're going through hell keep on going, you might get out before the devil even knows you're there.
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Back to the original point, Georgia said he's still waiting for prices to drop. Real estate is about one thing and pretty much one thing only. Location Location Location, and I'd add to that all pretty much all real estate is local. It's very possible to see a US style crash here in Spain will seeing some areas not effected at all. Even in the US in spite of a massive housing collapse there are areas where prices are holding firm. Iowa for example, not my area to live, parts of the coast where very very desirable properties are still more or less holding firm. It's very possible that in areas of Spain where there wasn't rampant development and where the majority of owners are Spanish that prices will hold firm.
For those Spanish sellers to stubborn to lower the price, it will simply take them longer to accept reality. I had a student who bought a run down flat in a desirable area of Madrid as a good discount (offered 400,000 buyer wanted 470.000) at the height of the boom, why, the property in spite of being in a nice area sat for over a year, no one wanted it, too run down. She stripped it bare and renovated it from the ground up.
Around Madrid prices are definitely softening, no price collapse yet, but for sure prices are down.
PS I was just in Germany, Munich to be specific, and yes Spain is generally about 25% (outside of rent and house prices) cheaper than Germany.
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Decided after all I don't like Spanish TV, that is having compared both.
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Decided after all I don't like Spanish TV, that is having compared both.
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