Who'd buy in Spain after this stark warning?

From the publication Money week written by Economists, not agents etc!

http://www.moneyweek.com/investments/property/uk-house-prices-a-warning-from-spain-about-the-property-market-14969.aspx

With one pound sterling equal to one euro as well there are still no bargains for the British in Spain.

Do not agree...just go to Spain to have a look

and the exchange rate is not generally predicted to stay at 1.10 ...infact it should improve in the short term and after our election which will remove the current uncertainity about the route the UK economy will take

and if you wait for it to go back to 1.45+ then you will wait a long time!!

As to values, it is no use making a comparison with what happened in the boom years. it is value now and what you have to pay to acheive your objective in life

For those wanting a life style change or just a holiday home your starting point is the life style you have in the UK and can you improve it for your benefit better in Spain or other countries, or even within UK and the cost today to acheive that aim

If you can not then do not do it

But  compared with those who were lucky to have a good exchange rate and low cost, at least it is completely safe to buy in Spain.now......provided you treat buying in Spain the same as you would buying in UK

Well.. I read the moneyweek article and just think it is just reality:  the sign of new times:... and actually good news for you Uk people.

The over supply, price fall.. in Spain bring oportunities to you northerns looking for sun, lifestyle....

Spain coastal properties are available to northern economies which , not having been that relying on the brick, wil recover earlier.

As I recently put in a blogpost, I tend to think that Spain is  now the property free market for northern european countries which needs our sun... we need the finantial injection that the presence of foreigners bring to our economy.

Why do not we just compensate economies and markets as an Union we are and look for commun objectives, we overhave what other lacks and viceversa?

Well.. I am quite tired and lacking energies right now, but I do believe we can keep going ahead together.

Well of course you wouldn't agree Rowland with your agent's hat on, agents are notorious for talking the falling Spanish property market up because their's is a vested interest in doing so.

As previously said with the exchange rate at near parity and forecast to get worse for a while plus the exhorbitant completion costs of buying in Spain, IMO and the opinion of many others, it would be foolhardy to buy there now especially in the overbuilt concrete jungles along the coast.

Then of course there is the large amount of shoddy build urbanizations.

When people realise as many do that it's not all cracked up to be they then try and resell and to get their money back is nigh on impossible, then of course when the exchange rate swings back in favour of the pound they will also lose out heavily yet again, but, the agent will still make his large commission if he manages to sell for the client.

There are many, many, people housetrapped in the sun in properties that look like 1000's of others and they are desperately trying to resell.

If anyone is looking to buy there, now is not the time, but if you still wish to, do your homework thoroughly, buy in quality locations, and, take what the agent says with a large pinch of salt.

Reports .Reports .Reports  .If This .If That

Well if anyone agrees that house prices in the U.K may fall by another 40 % from here then carry on

Another report will out tomorrow and this will be yesterdays news.      Nope not an Estate Agent.

Just when you think it can't get any worse for Spain, it can and it does!!!!!!

http://www.telegraph.co.uk/finance/economics/6228390/Spain-tips-into-depression.html

Well since we're all chock full of bad depressing news I'd thought I'd throw in my 2 centimos worth. Generally speaking most people here are only interested in two things, pound euro exchange rate and the state of the housing market. But one large area often overlooked is the state of the Spanish economy. Unfortunately due to the Euro Spain cannot devaluate its currency anymore so it's stuck with having to do an internal devaluation, which is unlikely to happen.

This from Edward Hughs (edited to keep it short)

What I am driving at here is that the problem with Spain at the moment is that 5 million people with little skill, and a low level of education, were brought here to help build houses that no one now wants (and what is the opportunity cost of that, well no one says), and these people now badly need work before they start to starve. Spain's government is only running out of other people's money to spend because the original model collapsed, and no one wants to hear about building factories to make T-shirts and sandals.

......Basically, Spain needs a sharp and urgent internal devaluation to restore price competitiveness in some (yet to be identified) export sectors capable of generating large volume employment, or the whole earlier bubble will simply continue to deflate and deflate, dragging down employment and income levels with it, lowering living standards, and sending a large chunk of the banking sector running to the EU Commission and the ECB looking for urgent life support injections.


So my main objection - as a macro economist - to the kind of reasonaing Àlvarez uses is that we have urgent short term problems on our plates and people are trying to solve these problems with long term visionary gambles. As a result there is a "term" mismatch, and this is a very obvious "old Keynesian· point I think, the two issues have differing maturities, and the short term problems will simply blow up in our faces before the long term solutions have time to mature.

Spain's problem is not that there has been excessive government spending,although this is evidently what the debate is now going to revolve around. Such a response is rather foolish in my view - and I am NOT in favour of the way Zapatero is spending money. I am in favour of spending money to try and solve the problem, but not in favour of spending it to try and deny the problem exists. Ideology is always the main enemy of sound economics.

Basically I have to admit, I have no real idea what Spain could export, since I am not a sectorial economist, and anyway..... I think if there were a 20% drop in the general price level over the next three months we would quickly discover what people could export because those who are going to do the exporting would suddenly see the opportunities. But this price correction, unfortunately, isn't going to happen, so we are all off to a very bad place here in Spain, and the only thing left for us to do is try to keep our spirits up while we wait for the worst of the thing to pass. Unfortunately, we may have quite a long wait.worth

http://www.oecd.org/dataoecd/6/29/20213257.pdf

Spain economy outlook by  OCDE.

Again: Our weakness can be your strength and your strength can help our recovery... why do not look at economy in a new global-approached way. We are always regions of a unity .

Best,

Maria

Hello Maria.    Its called blinkers.  

You are 100% correct.    We call it  "When 1 door closes another opens "

Well some of us anyway 

"Small financial intermediaries with solvency problems should be allowed to fail, which would limit the fiscal costs of interventions "

This statement appeared within the article you quoted Maria. Does this include developers do you suppose?

If so, there will be an almighty outcry of injustice if the significant court delays that are growing by the day are seen to have significantly compromised client's ability to regain their monies prior to "allowable failures ". The government should ring fence those monies owed to clients prior to any allowable developer failure ..............

May I suggest that a recovery might ensue then from potential re- investment of monies swiftly returned to clients through a valid legal route, where they are not under pressure to compromise on their  final choice of product , nor have pre-determined constraints placed upon them. Free up the monies owed to these potential future purchasers through legitimate legal methods as suggested above,  and see what happens then if they are given the freedom of choice on how best to spend those monies............. This way all will benefit by ensuring  true accountability is seen to prevail at the end of the day, while at the same time assisting the real estate sector.

Are you saying that the economists' views and the Telegraph facts constitute 'blinkered' Chimps?

Do you work in estate agency in Spain or are you an owner?

I understand what Maria is trying to say, that there will be opportunities, but with current exchange rates from Stg to euros, I can't see it makes any sense yet.

What would you say represents a real bargain Chimps, in percentage terms? Where would such properties exist that would represent a sound investment too?

Just curious to see what you mean by 'blinkered'!

I personally think it would be madness buying a property in Spain now, in the middle of an economic depression (in Spain that is).  What's the hurry anyway?  It's going to take years for the backlog of 1.6 million unsold properties to be cleared.

It's true that along the costas, values have fallen by up to 50%, but even with these falls, I don't think property is particularly cheap.

The house we are renting was apparently worth 250,000-300,000 euros at the peak of the market.  One down the street from us has just sold for 168,000.  That might sound cheap, but we only pay 550 euros per month in rent.  I make that a rental yield of 3.9% (12*550 per month/168,000), which is not a very good return.

I've heard it's been possible recently to buy properties in certain parts of the UK on yields of up to 10%.  It just shows how overvalued Spanish property still is in my opinion.

David

I'd like to add my 2 cents to Ads last post. 

Our developer went into voluntary administration in May 08.  Had we received our monies back then............by December 08...............or even Feb 09.............we were still looking at other properties to buy with our refund as we still wanted a spanish home in the sun to retire to one day. 

We are now in September, 09 and if we EVER get our monies back, then the way I feel now we will NEVER buy in Spain again.  How many others feel this way too?  If we had been treated swiftly and fairly, we would still have faith in the system, even though we had poor developers.  A slow system has done more damage in the long term.  I may only be one, but I feel one of many who feel this way.  Spain has damaged its own reputation for long after the recession itself is just a memory

I understand completely how you feel and can relate to those feelings of anger and disillusionment. I'm with you totally on that score.

Buy when you can afford it. Buy from an established source and avoid risks. Don't buy for investment unless you are an investor. Buy for lifestyle and buy what you can afford. Buy before you die and get on with the life you want.  THEN you can enjoy your property in Spain for the right reasons for years to come and not give a damn whether prices are up, down or sideways.

Minimise your risk and buy a resale property in an established resort/area. Don't overstretch and don't buy from developers in this market. Consider why you are buying. Is it for lifestyle? Buy for the right reasons and enjoy your property for many years. That way you won't worry whether prices are up, down or sideways.

 vcb........my sentiments entirely.

We will be sailing nov 1st  we have both just retired, and we are looking forward to out winter in spain.

If we find a property we like in an area we like we will buy.

Jeanie.

vcb........my sentiments entirely.

We will be sailing nov 1st we have both just retired, and we are looking forward to our winter in spain.

If we find a property we like in an area we like we will buy.

Jeanie.

I think the lifestyle reason is about the only one now for buying in Spain, certainly not for investment.

If you like the property and location, and the price, and high completion fees, and if British, you don't mind getting roughly 1 euro to the pound and you don't want to make a profit or sell in the future then that's probably a lifestyle decision but don't believe the agents' hype, not with a bargepole.

Another word of warning though, according to a recent survey of Eurozone countries, it's the Spanish with the worst financial problems, with 49% of them having problems paying the interest on their mortgages and loans. This will cause major problems for their Banks in the future with many defaults, pushing Spanish property further down in value, so it would be wiser to wait for these falls. Article in the Daily Telegraph Business section on October the 8th.

From Spanish Property Insight Forums:

http://www.bbc.co.uk/iplayer/episode/b00njwd7/Repossessions in the Sun/ 

Worth listening to

Further evidence as why Spain's property market is not safe to buy in, why so many Brits are house trapped unable to sell, how many properties are for sale, why Spain's tourism has dropped like a stone and more.