Friday, Jun 22, 2007
Spain property bubble
GulfNews: Booming real estate may be a ticking time bomb
"Recent news from Spain show the beginning of a possible property correction.Funnily enough, all along, experts were loudly trashing any suggestion of a Spanish bubble. Their sunny-side arguments included very low interest rates, rising real incomes, more households, rising demand from foreigners, high transaction costs that would discourage speculators, fixed supply of property in the short term and the attractiveness of property as a good investment."
Posted by confused76 @ 10:18 AM (171 views) Add Comment
11 Comments
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1. inbreda said...
Would be nice to see a comparison of the early signs of the spanish crash with the current UK situation re: experts talking nonsense, affordability, disposable income etc etc.
I suspect the UK may be on hte edge...
2. dohousescrashinthewoods said...
So, if Middle-Eastern/Russian oil money decides to move out of Chelskigrad and Al-Khnightsbridge..?
3. wage slave said...
Funnily enough, all along, experts were loudly trashing any suggestion of a Spanish bubble. Their sunny-side arguments included very low interest rates, rising real incomes, more households, rising demand from foreigners, high transaction costs that would discourage speculators, fixed supply of property in the short term and the attractiveness of property as a good investment. Rose-tinted glasses must have been in very short supply indeed!
Sounds familiar.
4. Scott said...
No comment.
5. confused76 said...
Inbreda,
UK early signs:
- market performance of lenders
- ... construction companies
- ... REITs
- ... property funds
all of the above have lost between 2% and 15% since jan
6. Benedict said...
The house building statistics are completely different with spain though, 800,000 new homes a year against demand growth less than half that, if we were to embark on such a massive excess of home building then house prices would crash here as well but that's just not on the cards. And there may be fixed supply in the short term which has probably worked well for the first few years while everyone enjoyed the new low interest rates from being part of the EU, but when the long term increase in supply was so far in excess of the increase in demand there was always going to be a tipping point. If the UK ever addressed the long term supply side issues things might tip over here, but that's a long way off.
Plus demand has been dented by very specific screw ups in the spanish market . . . horror stories of entire ghost complexes where they've grossly overestimated demand so that it's passed some event horizon where demand is even lower because the whole complex feels dead and empty, nightmares for investors where developers have just built where they're not allowed to build and people have lost their entire investment . . . on top of the general slowing of global demand with interest rate rises it's no great surprise.
7. dohousescrashinthewoods said...
I am 60-70% sure HPC has started here.
I think papers in other countries will be reporting it before we hear it mentioned inside our closely-spun meeja web.
If even official figures have shown that prices have fallen outside London, AND in more than half of London boroughs, what exactly do we think is happening? Limitless gains? My foot.
Seems the downward trend has hit negative territory and, if the kind of story above is going out to the only people still buying (those throwing money at the less-than-half-of-London-boroughs holding up the national average) then it truly is gave over.
Goodbye Glorious Sunshine, hello Doom Cloud. Mr Bond says 6.5% by next year and rising.
8. tyrellcorporation said...
Mr Trichet has pencilled in another rise at the ECB possibly as early as July. The pain in Ireland, Spain and other super-inflated HPI Euro-zone countries is only going to get worse. With global IRs rising fast the squeeze is already upon us.
I've got a mate who (like so many others) has maxed out on a whopping mortgage in Surrey. It's now at a stage when I daren't mention IRs and the housing market to him as he visibly goes pale and quiet. Poor guy.
Things are still unbelievably rosy for the baby boomers but for 20, 30 and some 40 somethings life is about to get very tough indeed.
9. financial planner said...
"I've got a mate who (like so many others) has maxed out on a whopping mortgage in Surrey. It's now at a stage when I daren't mention IRs and the housing market to him as he visibly goes pale and quiet. Poor guy."
Tyrrell - give me his contact details and I'll do it for you. WUHAHAHAHAHAHAHA!!!!!!!!!!!!
Welcome to shadenfreude. I do want to stick it to those smug b******s who would go on and on and on about how HPs cannot fall, how their property will make them rich etc
10. speculatorone said...
Tyrrell & financial planner
When people are taking out these big mortgages do you think they read or check the part about:-
'Can you afford this if IR are 10%?'
I was thinking about a mortagage late last year and that check scared me off, I thought of my family and decided against it staying in rented.
I think it may prove well worth it soon. The waiting for the HPC is the worse part.
11. sold 2 rent 1 said...
"Things are still unbelievably rosy for the baby boomers but for 20, 30 and some 40 somethings life is about to get very tough indeed."
Baby boomers yet to retire who have all their money tied up in stocks and property will be hit hard too.
Pensioners on fixed incomes will be hammered with inflation.
Teenagers will have their pocket money slashed.
Babys of course don't care about the rising cost of powdered milk and will wear hand-me-down-clothes.