UK in recession, buy in Spain instead?

So the UK is formally into a recession, how will this news affect property prices? I keep an eye on UK property prices on zoopla

Does this mean more UK investors will look to other countries less affected by the global credit crisis?

Should i start looking at Spanish investments now to avoid the major rush in a few months?

I don't think there will be too many UK investors looking to buy outside whilst the Exchange Rate is through the floor.

Yes the ex-rate is through the floor, but so are interest rates.

Also prices of properties have come down and as there are so many properties to choose from you can really strike a deal.

As I keep saying, if you are looking for a long term investment, then now really is the time to buy property, either here in Spain or indeed the UK,.

Even if the prices continue to fall over the next year, the prices will start to rise again during the latter half of 2010, and by 2012 will be worth more than they are now.

And this is what the vast majority of Property Experts in the UK and Spain are saying.

I agree there are many bargains around but the UK is in the same situation and opportunities are there as well.

From an investment point of view I would take a bargain in UK over a bargain on the Costas,If  you see the exchange rate moving back toward 1.40 the Spanish property will devalue as GBP improves so would need a big move up in property prices to compensate for that. This is of course if you are buying/investing via GBP.

I can't see the holiday home buyers returning until for example you can buy a similar property in Spain for a maximum of 2/3rds of the price of a similar UK home, whether that is due to a move up in UK prices, a move down in Spanish prices or a move up in GBP exchange rate.

This of course is looking at it from an investment point of view, there should still always be lifestyle buyers where the price is not so important.

As I have said on another thread (the popular one about giving the UK two fingers!), if you only watch / read / listen to British news, you are in danger of missing the bigger picture. There's no point jumping out of the frying pan and into the fire. There is a GLOBAL recession. Who knows which countries will be hardest hit? Google for the latest news on the PIGS. You'll find plenty on Spain right now especially. If some top American investor tells us the UK pound is finished, should we believe him, or wonder if it is some self serving propaganda to help him make a fat profit on shorting Sterling? I don't know. Read some articles on the euro, and decide for yourself whether you think it's any better than Sterling!

Techno, with all due respect, I think the one thing we have all learned from this "crisis", is that we should be very careful about listening to "experts" on anything connected with the economy. I have no idea when property prices may start to rise again, let alone reach previous levels, but how long did they take to recover after the last crash - which by most accounts was nowhere near as serious as this one?

I agree with Alcaidesas last comment, "This of course is looking at it from an investment point of view, there should still always be lifestyle buyers where the price is not so important". So in answer to the thread title, if it's for investment, you should probably buy gold instead of property or any other investment anywhere. If it's just a case of, the UK is stuffed, let's go to Spain, like I said on the other thread, you need to seriously examine your true motives - perhaps the recession is a red herring?

Quote Roberto:

"So in answer to the thread title, if it's for investment, you should probably buy gold instead of property or any other investment anywhere. If it's just a case of, the UK is stuffed, let's go to Spain, like I said on the other thread, you need to seriously examine your true motives - perhaps the recession is a red herring?"

Hmm!

It wasn't that long ago that the Gold Market fell through the floor and also took some considerable time to recover.

Recession is currently a global problem, however when you examine the term ‘recession’ you will find that on this occasion it is being used to show ‘negative growth’ in the economy year on year from 2007 to 2008, and not a spiralling, unchecked decline that we had during the 1980’s.

The difference between the 1980's recession and this recession is that this one is 'artificial' by its very nature, as it is being driven by the Banks. At first it was caused by the banks over extending credit and creating the 'credit crunch' syndrome, whereas now it is being driven by the lack of credit due to lack of confidence between Banks and Investors. Market forces around the world are bound by 'liquidity' in the banking sector, and without such we are all doomed no matter what we do, as indeed was felt during early October, at which point for a few hours on a certain day, the British Banking system nearly collapsed.

During the Property Market crash in the early 1980's property prices fell through the floor in a incredibly short period of time and people were left in 'negative equity' situations whilst interest rates were high. This time there is a reluctance of owners to sell their property as they do not want to lose the nett gain that their property has obtained over the last few years, in addition there is a lack of new build homes on the market. Thus property prices are artificially reduced by overzealous estate agents trying to make a living whilst at the same time interest rates are being reduced to stimulate liquidity.

Now, is it me, is it some expert’s opinions, or is it the old saying of what goes around comes around? There is boom and then there is bust, and then the whole thing starts all over again. Now the real question is "How quick will it be before the next boom starts?"

By most opinions of most experts around the globe, it will be short lived in comparison with other recessions due to stronger resolve by Governments to react to an ever changing global economy, an economy with ever increasing global integration.

Result: At some point in the immediate future there will be stimulus in the property market around the globe, as there are bargains to be found whilst interest rates remain low., and the interest rates will also remain low for some considerable time.

I'm not in the property market as you know, however if I had any large disposable sum of money, I wouldn’t invest that money in any bank, nor would I invest it in any commodity on the financial market. No! I would invest it in something 'physically' tangible that could result in some nett return without its disposal..

Hmmm right back at ya!

invest it in something 'physically' tangible that could result in some nett return without its disposal.

Where's TJ when you need him? I'm pretty sure he would say the only really tangible asset is gold. Are you saying that if you had spare cash now, you'd plow it into property and rent it out? IF you can find a tennant, you should get a better return than in a savings account right now, but that's a big IF.

in addition there is a lack of new build homes on the market

Huh? I thought part of the problem was that way too many homes have been built.

Sorry Roberto I was actually referring in that part to the UK market when I said there was a lack of new builds. However the rest is aimed at property investment in all parts of the globe.

Trouble is, if the world’s commodity markets should falter, due to continued unrest in the financial sectors, what would you do with the Gold? You won't be able to sell it!

However, if you had a property that you were able to get some rental income from, via a long term tenant, at least that would give you a monthly income greater than any Bank would give you interest on the same amount of capital investment.

Food for thought eh my friend, food for thought.

TechNoApe

to get back to the title. Until Spain can sort out the problems that had nothing to do with recession, corruption, lack of regulation, overbuilds, poor justice (Priors being most highlighted), then how many will buy in Spain in future anyway?  Of course some always will, the weather, the location etc, but in the required numbers?, i'm not so sure without telling the world it wants to change to system of law and justice in the property world that can be relied on, and i'm not seing much sign of that.

Dear All,

just a simple question given that

Also prices of properties have come down and as there are so many properties to choose from you can really strike a deal.

As I keep saying, if you are looking for a long term investment, then now really is the time to buy property, either here in Spain or indeed the UK,.

Even if the prices continue to fall over the next year, the prices will start to rise again during the latter half of 2010, and by 2012 will be worth more than they are now.

And this is what the vast majority of Property Experts in the UK and Spain are saying.

is this a good time to be selling a UK property???

and what is to be done with the low value £'s????????

Regards

Norman

Norman, I thought we were talking about buying property, not selling?

Techno, I've heard also that there's a housing shortage in the UK - but surely it's just a shortage of the right type of housing? There's no shortage of unsellable new flats in converted wharehouses in Manchester, Leeds, Liverpool etc. just as there are loads of unsellable holiday apartments along the Spanish Costas. Christ, one UK developer is even raffling 11 designer apartments in London because they don't expect to be able to sell them in the current climate!

I didn't quite follow your logic suggesting that property prices are now artificially reduced. My understanding was that they are coming down because they previously were artificially inflated. If you follow the reasoning that property prices must reflect wages, this makes more sense.

By most opinions of most experts around the globe, it will be short lived in comparison with other recessions - well, that all depends I think on which papers you read and which "experts" you believe. Suffice to say, I am reluctant to trust any so-called experts! I admire your optimism, but I'm not so sure. As for renting your "asset" out, I think you have been very fortunate to rent yours quickly. From what I can see (with my own eyes, no expert opinions here), there's a glut of rental property now, since many have given up trying to sell. The few surviving estate agents around here now have mostly rentals on offer. Check out the Sur property pages; they tell a very different story from a year or two ago. I think the vast majority will remain empty, costing their owners (IBI, community fees, mortgage etc.), and with no certainty that they will appreciate in value any time soon, let alone recover to what was paid for them. (prices haven't bottomed out yet in the US - why would they do so any sooner here?) There may be some apparent bargains around, but not so many in the best locations where you may be able to rent them long term. I'm certainly not tempted to jump back in yet, even though falling interest rates mean a dwindling return in the banks.

True, gold doesn't give you an income, neither is it certain to increase in value in the short term, but if the recession gets worse or drags on, surely more investors will seek it out as a safe haven? Therefore, yes, I would think you could sell it - but wouldn't want to!

This is all very confusing (for a bear with little brain). Maybe gold houses are the answer. Mmmm..........gets me to thinking about Dubai again!

Good night.

Roberto,

my post was a rehash of Techno's earlier one and my trying to understand why he is buying in Spain and selling in the UK.

This is of course also what Gravit' planned to do.

I agree Techno has been very lucky to let long term so quickly for which he thanks the forum.

But there again, current advice seems to recommend rent now and buy later so he seems to be bucking the trend.

Did not someone say "do the opposite to the herd"???

Maybe he will be just as lucky in quickly finding a euro paying job, as may his wife.

With the proceeds from the UK sale plus the low interest mortgages he will certainly have a useful buffer.

If they both also get jobs then all will be rosy for them, which is of course the good luck that I wish them.

Regards

Norman

i know a few of you on here are very knowledgable about buying & selling in spain

on the subject of buying in spain what about selling property in Spain can anyone adivse me how the agents fees are calculated on the sale and what deductions to expect at completion. 

i made enquiries  & was informed of a 5% agents selling fee,  (reputable agent).  a fee that came as quite a surprise!!.... i spoke with the agent at great length but didnt go into detail about fees

kind regards

debbie

There is no legal limits for Agent´s commissions in Spain. They can go from 1% of the property to..... 15,20...%.

This is one unexistent part of the Spanish legal system that needs to be created....

A petition?

maria

thank you for that information most apprecited..

i rang only one agent in la manga club which is where my bank and solicitor is based..

based on what you have kindly informed me i really need to make a few more calls as the fee would be quite a large amount deducted in addition to the reduction in property price that i would have to consider.

just another quick question my power of attorney has left the practice what does this mean when selling my property as i have struggled to get sight of my mortgage papers and my 'bank manager' & 'he' were related and have now moved on?

once again thank you

kindest regards.... Debbie

Roberto wrote

Techno, I've heard also that there's a housing shortage in the UK - but surely it's just a shortage of the right type of housing? There's no shortage of unsellable new flats in converted wharehouses in Manchester, Leeds, Liverpool etc. just as there are loads of unsellable holiday apartments along the Spanish Costas. Christ, one UK developer is even raffling 11 designer apartments in London because they don't expect to be able to sell them in the current climate!

I didn't quite follow your logic suggesting that property prices are now artificially reduced. My understanding was that they are coming down because they previously were artificially inflated. If you follow the reasoning that property prices must reflect wages, this makes more sense.

You are so right about this supposed lack of a housing shortage in UK..it's because nobody is selling!!  As we know the issue now facing people is job security which impacts on the market. Last month's results showed that people are not spending the reduction in interest rates on anything else but reducing their personal debts. The money is not going into the economy as the Chuckle Brothers in Downing St wanted. Couple this with the banks going back to sensible lending ie 2.5 x annual income will be the mortgage limit , annual salary being 25k say, we are talking about house prices continuing to drop until the first time buyers come in at houses at approv £80k..then the market will begin to revive. You are right that prices have been artificially inflated in past and we are now paying the price for believing that money grew on trees ( or houses).  House market growth will never be the same again as the banks and government have learnt their lessons.

so many people are now in negative equity  ...they 'cant sell' even if they wanted to..

high house prices meant extra equity in many cases which encouraged people to add more borrowing onto their mortgage ... i knew of someone who indirectly funded their car through the mortgage now their house has devalued which is worrying as not only are they left with no equity they are also having to sell the car which has devalued heavily & now worth 'peanuts'

Norman: if you follow all his posts, I think you will find that Techno effectively bought in Spain at least two or three years ago, and only because of circumstances has made the move over earlier than originally planned. And that is why he finds himself now putting a UK property up for sale, although he realises this is not the best of times. He's been planning it for some time, and it's not quite a case of  "buying in Spain and selling in the UK", although that is exactly what Gravitatin' is (was?) planning. In which case your question is perfectly valid (and I don't have the answer!)

JC1: You said: "House market growth will never be the same again as the banks and government have learnt their lessons". I'm not saying it may be any time soon, but I believe house prices growth will be the same again sometime, because history tends to repeat, and come on, you don't really believe government(s) ever learn their lessons, do you?

Willoughby, not too sure what you mean about your POA? If the person named on it is no longer around to represent you, then you'll need to make a new one - unless it was in the name of the company, and any legal representative of that company can sign for you? As for the mortgage papers, if the manager you dealt with has moved on, then deal with the new manager.

BTW, 5% has long been considered the "norm" for estate agents' commission. I would never pay more, and distrust any agent who asks for more. If you can find one that charges less, so much the better.

High house prices meaning extra equity, encouraging people to add to their mortgage borrowing - I've never been able to understand this. To me, a mortgage is just a debt, a shackle that would be best rid of. A young couple who bought their house 10 years ago for £54,000 with a 95% mortgage, now both earning in excess of £30,000 pa, knowing that the house is now valued at £120,000, up their mortgage to that level to fund the Porsche & Mercedes........I just don't get it, and find it hard to sympathise with anyone like this who gets into difficulties. They could easily have paid off the mortgage by now by being a little careful and responsible (maybe sacrificing one of the Caribbean holidays and settling for just 3 trips a year?), and then could probably buy their cars outright after another couple of years saving.

But that's just me

roberto... thanks for that info re POA... i dont actually need a POA just wondered if i still had any connection in any way to the one that signed on my behalf for the purchase of my property around 6 yrs ago. .. I put in writing a request for a copy of the mortgage but the bank telephoned me gave me the info verbally ... communication has been difficult with the bank but its not affecting anything at present....

the 5% fee didnt worry me too much it was the extra 'on top of  the 5 %'  if they involved a dutch contact who are showing an interest in our resort..

I totally agree with your thoughts re the lack of equity & obsession to fund material possessions due to the 'keeping up with the jones's..  I have to be carefull what i say here as at the moment have witnessed more than enough 'downsizings' in my neighbourhood & sadly some friends here in the uk.. but i must confess, here i sit in a glass house throwing stones having a colourfull array of credit cards after a good few years 'tarting'.. in the financial sense of course.  

once again thank you .. debbie 

Dear All,

this and the other thread have produced a lot of interesting stuff, but a lot of it is contradictory - coming from a different viewpoint perhaps.

Bobaol could not have been more negative about the US but my informants were the extreme opposite, not any old opposite but the total and extreme opposite (hope that does not confuse him). In fact my niece describes her life in Florida as living in paradise.

He was equally dismissive of Cyprus but multi-multi millionaires are seriously promoting it. Surely the aims and objectives of the would-be ex-pat cannot be that different?

Where is the logic???

Roberto, I think you are referring to Techno's holiday home purchase which he has let, his second purchase of a lifestyle family home is more recent I think.

Best Regards

Norman