Thursday, Jun 07, 2007
Spanish property market grinds to a halt, killed by oversupply
Bloomberg: Ghost Towns Appear in Spain as Decade-Long Boom Ends
Spain built 750,000 houses in 2006; in the same year, Britain built less than 200,000. Average prices have stopped rising, and in the over-built areas prices are falling and ghost towns are appearing (sounds rather like all those new apartments in Liverpool). Just as in the US, large price falls aren't yet being seen because sellers are refusing to cut prices; instead properties just languish on the market for months. "One estate agent was selling nine houses per month; now he's selling one per month." While the economy is still strong and people are still in jobs there is no pressure on sellers. "The problem here is that people have this unshakeable conviction that prices simply cannot fall." Sound familiar?
Posted by drewster @ 08:53 PM (113 views) Add Comment
4 Comments
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1. paul said...
"properties just languish on the market for months"
Well that's actually EAs not doing their jobs too. If a sller comes to an EA and wants their property on the market at an overinflated price the EA should be turning them away, or telling them to rationalize their expectations.
2. Orwell said...
"The abandoned developments are evidence of a housing glut that will lead to Spain's first decline in home prices since at least 1992. The real killer of the housing market is the immense oversupply.
AND THAT HASN'T HAPPENED IN THE UK WITH BTL NEW BUILDS NOW HAS IT?
As prices start to decline...Falling prices may spur higher delinquencies as buyers face difficulty refinancing.
NOT HAPPENING HERE OF COURSE ACCORDING TO THE RECENT FSA REPORT
The average house price...up 107 percent since the same period of 2000.
MM SOUNDS FAMILIAR...
Banks loaned 250 billion euros to developers last year, eight times more than in 1998, and 134.3 billion euros to construction companies, data compiled by the Bank of Spain show.
AND THEY AREN'T LENDING TO OUR LOT AS IF THERE IS NO TOMORROW ARE THEY?
They loaned 544 billion euros to homebuyers, four times the value of mortgages in 1998. Bilbao Bizkaia Kutxa has introduced 50-year mortgages and Banco Bilbao Vizcaya Argentaria SA has started making 40-year mortgages. Bilbao Bizkaia also offers loans up to 100 percent of the appraised value. That means even a modest decline in home values, combined with rising interest rates, may result in higher foreclosures.
MMM ALL TO FAMILIAR AGAIN...
The problem here is that people have this unshakeable conviction that prices simply cannot fall,'' Encinar said.
YOU DON'T SAY?...
Defaults on Spanish home loans in the first quarter were the highest in at least four years
AND HERE ON BTL'S 50% OF REPOSSESSIONS IN SOME POSTCODES...
When rates rise and people who are already up to their eyebrows in debt find they can't pay their mortgages,..
PERHAPS THEY SHOULD HAVE ADVISED SCABBEY ABOUT THIS BEFORE THEY AGREED TO LEND 125% OF VALUE.. AND THE FSA HAVEN'T NOW WOKEN UP HAVE THEY?
Just as developers profited from first-time buyers, they also have benefited from investors who bought property in anticipation prices would rise.
THE OLD PYRAMID SELLING CONJURING TRICK THAT HAS BEEN GOING ON OVER HERE THEN?
We're facing what could be a significant crisis,'' he said in an interview in London. ``All developers are feeling it and I don't know why they don't come out and say it.
WELL YOU SAID IT....
3. Orwell said...
Paul,
Did you see the Spanish equivalent of Mrs. Flange on Trevor MacDonald's tonight programme?
In many cases she wanted well in excess of what she paid and the EA was saying the property would not sell and it did not sell either at auction...
Worth a look...
4. Wage Slave said...
"Spanish home prices have more than doubled since 1998, exceeding growth rates in the U.K. and Ireland, two of Europe's fastest-growing markets."
I thought prices had tripled in the UK since 1997.