Good News Property on the up!

I must say there is only one person on this thread who seems to have a grasp of the current Spanish property market and that's scambuster.

The rest just seem to be in denial, even when the property market was healthy here in Spain it could be differcult to make a decent profit due to  buying and selling costs, CGTetc. Throw in the uncertain exchange rates and it would  be a big gamble to buy now and think there would be any profit in the short to medium term.

Much easier to make a profit on the stock market at the moment

I'm not sure if that's a compliment gnik, I hope so. Are we speaking the same language because it seems you are echoing what I'm saying? Just trying to point out the harsh realities for people considering buying in Spain and Eurozone at these awful exchange rates and ridiculous fees and costs involved.

Mind you, if anyone is fortunate enought to sell now and convert back to stg. then they could be alright even if they dropped their price 25-30%.

Quote gnik "Throw in the uncertain exchange rates and it would  be a big gamble to buy now and think there would be any profit in the short to medium term."

If you look at previous posts I've made regarding purchasing a property in Spain, I have always maintained that you should not consider doing so if you just 'want to make a fast buck'.

Those days are long gone!

Further, I have also always maintained that one should only purchase a property here in Spain as a medium to long term investment in owning a holiday home, or if you are a 'lifestyle' buyer and wish to relocate to Spain.

When we talk about property prices here in Spain and fluctuations in the Euro to Sterling exchange rate, you have to consider that even though the exchange rate is very low at 1.10€ per £1.00, property prices have come down considerably in price since the days of 1.50€ to £1.00,.

So, if you purchased a property worth 150,000€ when the rate was 1.50, you would have spent £100,000 plus purchase costs of between 12% to 14%.

Now the same property is worth 100,000€ and the exchange rate is 1.10, therefore it would only cost you £90,000 plus purchase costs of 12% to 14%.

Therefore, if you purchased a property now, as opposed to a few years ago, financially you are actually better off!

And bear in mind, during the next five to ten years, property prices will go back up here in Spain.

So, again quoting gnik "I must say there is only one person on this thread who seems to have a grasp of the current Spanish property market and that's scambuster.

The rest just seem to be in denial."

Who is in denial? As you can see, not me!

As I am fully aware of the fact that property prices have fallen here in Spain, as they have done in the UK, but the difference is that a UK long term investor and/or the lifestyle buyer will now actually get a better deal than they would have over the last 5 years!

It doesn't matter whether you buy property here in Spain, the UK, Germany, France or anywhere else, you always have to sell for a price greater than what you paid in order to make a profit!

Just going slightly off topic ( I didn't start it!) I'm curious about Guslopez's claims that everything in the UK is priced 30% lower than in Spain. Perhaps he knows some places in the UK with amazing discounts, or maybe he doesn't know where to shop in Spain, but whenever I compare retail prices, I don't see such huge differences. Admittedly I haven't researched a great deal, but just quickly comparing on line for example a new Ford Focus, a Samsung TV or a PC, I just don't get it. So Gus, unless you're running a highly lucrative import business and wish to keep your supply sources secret, please enlighten me!

Lot's of thoughts about the property discussion - but it's Saturday evening and we're off out to bolster the local economy, so it will have to wait!

Roberto,

There goes the neighbourhood!

Para mi, una jarra cerveza, por favor.

Hi Roberto, no I don't run any sort of business,I just buy for myself & occasionally for my Spanish neighbours. I recently bought for my car,brake pads, front discs air,oil & fuel filters for 53,41inc vat +30,00 inc vat for del. = 83,41 pounds. The best price I could get for the discs here was online @86,84e with the rest the total would have been191,69e +del. I've just had 4 tyres & a complete exhaust system brought over by a friend for a cost of 397 pounds, the exhaust system alone ,best I could get was 680e+iva. Find me somewhere in Spain that I can buy constant velocity joints for 27,50 e. Alloy wheels, what they want for one I can buy a set of 4 in the UK. 

Cars, well in London early last year you couldn't get in a merc,bmw ,vw or porsche dealers for Germans, ordering lhd, paying in euros  & picking up in Germany.30% + cheaper & that was when the Germans hd their scrappage scheme.  Even when I bought my first car here with a ford employee discount of 20% & with the exchange rate over 1,5euros = 1 pound, it was still dearer than the identical model in the UK @retail price. I had the salesman in the ford dealer here ,last year trying to sell me a Ranger wildcat @ 28,000+ euros who wouldn't believe me, until I showed him via the internet ,that I could buy 2 in the UK for that price + change & lhd! TV's computers etc; even my daughter, who lived here for 4 years ,comments on how much dearer they are here & my neighbours son ,who delivers produce too the UK weekly, bought his 40" flat screen tv there as it was 1/2 the price of here. Every time he's over there he shops in tescos, sainsburys,etc, & brings it back . He reckons that the majority is far cheaper.

Any agricultural parts & chemical dosing pumps I buy are all cheaper from the UK & the same make.

Possibly where you are there is more competition, here is a Spanish area & although we have a fair range of electrical stores etc,  the prices are more or less the same, High. Even the Spanish neighbours know they are being ripped off, especially the younger ones who, like me, trawl the internet. Perhaps where you are they'll offer discounts on the cars, you won't get one of those round here, nor do they want to take anything in part-ex. 2nd hand dealers are exactly the same.

Hi Roberto, no I don't run any sort of business,I just buy for myself & occasionally for my Spanish neighbours. I recently bought for my car,brake pads, front discs air,oil & fuel filters for 53,41inc vat +30,00 inc vat for del. = 83,41 pounds. The best price I could get for the discs here was online @86,84e with the rest the total would have been191,69e +del. I've just had 4 tyres & a complete exhaust system brought over by a friend for a cost of 397 pounds, the exhaust system alone ,best I could get was 680e+iva. Find me somewhere in Spain that I can buy constant velocity joints for 27,50 e. Alloy wheels, what they want for one I can buy a set of 4 in the UK. 

Cars, well in London early last year you couldn't get in a merc,bmw ,vw or porsche dealers for Germans, ordering lhd, paying in euros  & picking up in Germany.30% + cheaper & that was when the Germans hd their scrappage scheme.  Even when I bought my first car here with a ford employee discount of 20% & with the exchange rate over 1,5euros = 1 pound, it was still dearer than the identical model in the UK @retail price. I had the salesman in the ford dealer here ,last year trying to sell me a Ranger wildcat @ 28,000+ euros who wouldn't believe me, until I showed him via the internet ,that I could buy 2 in the UK for that price + change & lhd! TV's computers etc; even my daughter, who lived here for 4 years ,comments on how much dearer they are here & my neighbours son ,who delivers produce too the UK weekly, bought his 40" flat screen tv there as it was 1/2 the price of here. Every time he's over there he shops in tescos, sainsburys,etc, & brings it back . He reckons that the majority is far cheaper.

Any agricultural parts & chemical dosing pumps I buy are all cheaper from the UK & the same make.

Possibly where you are there is more competition, here is a Spanish area & although we have a fair range of electrical stores etc,  the prices are more or less the same, High. Even the Spanish neighbours know they are being ripped off, especially the younger ones who, like me, trawl the internet. Perhaps where you are they'll offer discounts on the cars, you won't get one of those round here, nor do they want to take anything in part-ex. 2nd hand dealers are exactly the same.

Your last para Techno is correct when saying 'you have to sell for more to make a profit', however as you no doubt know, the completion costs are so much greater not only in Spain and other Euro countries, as compared to the UK's so making that profit becomes so much harder.

Coupled with the fact that Spain has a vast oversupply of property compared to a shortage in the UK, the chance to make profits diminish further in Spain and will remain so until this oversupply is out of the market.

I'm merely trying to make buyers beware of both exhorbitant costs and oversupply in Spain before committing probably for the long term, should they wish to resell one day and return to UK. Unfortunately, no-one knows when prices will start rising again in Spain because of economic difficulties everywhere not least in the UK, so British buyers will not return en-masse until they feel more affluent again as well as getting a better exchange rate. Eurozone buyers may start to return but even without exchange rate problems their own economies are in a mess so they won't buy in numbers for a while.

It makes more sense to me to sell now in Spain if possible and convert euros to sterling, therefore probably not losing financially in sterling terms, then waiting for the rate to flip round before returning again to buy probably what will still be lower priced property on offer but that's a waiting game gamble,  it would also help if Spain reduced it's high completion costs to stimulate the market. 

I've long held that the transfer tax on property in Spain is excessive, and wonder why on earth the Spanish govt. doesn't reduce it temporarily (similar to the increased stamp duty threshold in the UK) but instead, it's going up from 7 to 8% (I think from July) which is really going to help stimulate the market!

I actually think that this heavy tax on transfers, plus excessive estate agent fees (in some cases) and developers commissions etc., all conspired to artificially inflate prices during the boom. Not that the boom was unique to Spain, but we definitely saw a case of the Greater Fool theory at play here, where everybody (myself included - guilty as charged) wanted a slice of the cake, and even after all these profit-reducing costs were taken into account, sellers were able to add a sizeable mark-up on because there was always someone else waiting in line to pay even more. The bubble burst, as it had to, and we are now seeing a huge correction. Whether we'll see prices go much lower or not, I have no idea, but I'm fairly confident we won't see prices rising again any time soon.

I think if there are differing opinions here, it's down to the old question of whether buying for "investment" or "lifestyle". If taking the literal meaning of investment, buying an asset purely in order to sell for a financial gain, then buying property anywhere only makes sense in a clearly rising market, which we don't have at the moment. Buying in Spain at any time involves the prohibitive costs as mentioned above, so the market has to be rising at unprecedented rates. Buying in Spain from another country (or vice versa for that matter) only increases the costs, as invariably a lack of familiarity with procedures etc., means one is more dependent on professional "advice" and assistance which comes at a price (I would die if a property purchase cost me 12-14% or an agent tried to charge me 5% for selling!!) Add to that the cost of transferring funds. And finally, if you are transferring funds from one currency to another, buying then selling and transferring back to the original currency, you are not only dabbling in property speculation, but also foreign exchange. That's either a very brave, very knowledgeable or very daft investor!

On the other hand, if making a purely lifestyle purchase, much of this is irrelevant. The costs of buying and selling will always be much the same, and nobody has a clue what exchange rates may do in the long term, so the only criteria to consider really is whether your current personal circumstances permit you to buy at current prices. In this respect, the state of the UK economy probably has more to do with whether Brits will start buying in Spain again time soon. The appeal will always remain the same - after all, the sun shines every day here (ha ha ha!!!)

--------

Gus, I must admit you've got me Googling like mad trying to compare prices! My car is due a service, but we may be going to the UK this summer with it, so perhaps I should wait and do it there? As for new car prices, and as with everything else I'm basing this purely on what I can find online, I wonder if perhaps  the differences you mention are mostly on higher end models? I tried comparing top of the range VW Touregs for example, but the specifications vary so much it makes direct comparisons difficult. On the face of it though, what you say appears to be true. However, a basic Focus in Spain retails at €16,675; in the UK, £17,870. Cheaper here. IKEA ( I know, not everybody's choice) make comparing furniture prices simple, since the ranges are identical - yes, slightly dearer here now. I bought a new PC in December, and researched thoroughly on line. Dell and PC World (PC City in Spain) sell pretty much identical spec models whether buying in the UK or Spain and the prices worked out virtually identical too. I'm looking at buying a 32" Samsung TV - PC City sell it for €444, PC World have virtually the same model for £419 (Cheaper here then by my calculation). Or should I wait and buy it in the UK and bring it back in the car? How much can I get it for there? If I can get it half price, as you suggest, I'll certainly buy two (or more) and flog them back here! It would actually cost us far less to fly Ryanair to the UK and hire a car for the duration, but if I really can make some huge savings on TVs and the like, it may actually pay to go by car. It may finally sway the argument (I want to drive, SWMBO wants to fly!)

Roberto, you are a bear with a great brain methinks, and long posts don't bother you either, however what you said makes a lot of sense.

Investing in Spain is one thing and most probably unwise for some time to come, whereas moving for a lifestyle change is a different matter privided it's for the probable long term. and whoever buys doesn't mind the exhorbitant completion costs and dire exchange rate for Brits.

What does the Spanish Gov't do, shoot itself continually in the foot by raising the transfer tax making it even more expensive?

Hi Roberto,Your post from the other day came to mind in the bar this morning when I picked up a 'Saturn' elect. from y/days La verdad. samsung 42",plasma 479e, Sony 40" ( B/new model ) Lcd 1289E. Checked on net @ home Samsung 425 pounds but theSony I found @ 680 pound !! What 32" are you looking for lcd or plasma, because I 've found some lcd's?s

http://www.amazon.co.uk/Samsung-LE32R87BD-Widescreen-Ready-LCD/dp/B000O14EWA

SortInfo=price-asc&srcid=198&xtor=SEC-11-GOO-[TVs_Generic]&mctag=gg_goog_7904&gclid=CJv4s4Oeu6ACFVAA4wod92NXSw

http://www.cclonline.com/product-info.asp?product_id=32674&tid=frooct

http://www.nextag.co.uk/samsung-32-inch-hd-tv/compare-html

All depends on model. Re, cars I,ve just googled a Ford dealer & found some Focus's for under 15k, basic but as I have found to my cost here the UK spec is superior. Ie they don't all come with abs, it's extra.Plus all the Uk cars have under body protection  which you dont get here ( they say it's not needed .) When I bought my last new one ,8 years ago, the price worked out comparable @ the then exc. rate with the UK. Until I was told that the abs,a/c, front fog lights etc, etc. where all additional costs!!! Don't know whether you'll be able to click straight on the links , you might have to c & paste. sorry.

Hey Georgia, don't you think you should quote the source of that article? Oh no, you can't, you might get banned!

On the subject of the exhorbitant transfer tax and other associated costs of purchasing property in Spain, the following extract from an article originally published in the FT caught my eye and made me chuckle (and with my comments added in colour):

"If you buy an average house in the UK – for, say, £225,000 – you'll pay £2,250 (1%) in stamp duty.

On top of all the other costs of moving (estate agency fees, removal costs, lawyers, the usual 50 trips to B&Q and so on), that's an enormous amount of money for the average family to come up with. but buttons to what you have to stump up in Spain, which is the main reason why there used to be so much black money sloshing around in property deals here. But stamp duty goes up exponentially as you move up the property ladder. Buy a reasonable house in the south for anything over £500,000 and your stamp duty alone will come to £20,000 (4%). That's not much below the national average wage.

Stamp duty is a rotten tax – largely because it is paid out of money you will already have paid income or capital gains tax on. True, but then the same can be said of inheritance tax, road tax and even VAT. There's no "fair" tax.

I hate double taxation. House buyers also have the regular irritation of knowing that, while they are busy begging banks and parents to hand over the extra cash to pay the tax, house sellers are often banking a profit they've done nothing to earn (unless they bought their house at the wrong point over the past few years, of course). Or unless they are seeking to buy another property with the proceeds, which is normally the case, which will have increased in price just the same as the one they bought originally.

But stamp duty is also one of the biggest barriers we have in the UK to labour mobility. Somehow I doubt that; more likely the lack of jobs? If you want to own rather than rent (for the above reasons), you simply can't afford to buy and sell a house more than once or twice in a lifetime – not if you want to have a pension as well as a home. That's a big deal when unemployment is high and likely to head higher soon.

So, stamp duty should go. However, it clearly can't go without being replaced with some other tax – not with the public finances as fragile as they are today. What should the new tax be? That's an easy one. Capital gains tax on the sale of primary homes.

Not only will this raise a bit of money, but it isn't easy to argue with: it is a tax on unearned income and one you don't have to pay if you don't make money. Again, this makes no sense whatsoever if you are selling in order to move to where the jobs are, and need to buy another property that has increased in price along with yours. I just don't see how this is anything other than the same tax by a different name - unless the idea is to prevent house prices rising at all. Then maybe nobody would bother buying in the first place because the traditional British desire to own your own home would dissolve. Bit like Germany then?

With a bit of luck, it might also change the general perception that making heavily leveraged bets on house prices is a kind of tax-free saving. Then, perhaps, we might see a more balanced savings culture.

There is a problem with all this of course: it isn't likely to be popular. I suggested it to a senior politician this week. He told me it would make any party unelectable.

But whoever gets into government next is going to be so unpopular as to be unelectable anyway (once they've got into the swing of spending cuts), so it might be nice to think that they would do a few things that would be good for us all in the long term rather than good for them in the short term.

I think that dumping stamp duty for capital gains tax might be one of those things. Now all we need is a government with the guts to give it  a go".

Gus, yes, the problem comparing many things is the varying specifications. IKEA is perhaps the only place where a sofa is a sofa! The TV I was looking at was the Samsung LE32B530, because it's on offer at PC City (Spain). Trouble is, PC World (UK) don't stock the exact same model. What's the difference - they have an LE32B350 - maybe it's just the type of plug it comes with? maybe it's just a deliberate marketing ploy in order to thwart such comparisons? Anyway, searching online suppliers both in Spain and UK, rather than just well known retailers such as PC City / World, I came up with the LE32B530 at €385 in Spain or £379 in the UK. Again, perhaps the higher end models have bigger differences? One thing I have noticed with audio visual equipment, there seems to be vastly more choice in the UK (which makes it much harder for a small-brained bear to make a decision)

There's no doubt some things are cheaper now in the UK (due to the ex-rate), but let's face it, cars, sofas and even TVs are not items that one can really bring back on the plane, so unless you are travelling to the UK by car anyway, most of the savings are not significant enough to be particularly relevant. The car parts are interesting though - maybe you've found a niche market?

 They are selling quite quickly around Gran Alacant but I think there is a fair discount being given off the asking price in a lot of deals