Sunday, Oct 07, 2007
Over 300,000 of the 800,000 units built over past twelve months are empty
Firstrung: Spains empty new build 'plague' reaches epidemic proportions
The Valencia property developer Llanera has become the first high-profile victim of the credit crunch in Spain, declaring insolvency yesterday after failing to meet payments on €748m of debt. The builder was unable to reach agreement with Lehman Brothers and other banks on a refinancing deal, a sign that foreign creditors are no longer willing to underwrite Spain's property market. Almost 800,000 homes were built in Spain last year, leaving a glut of 300,000 properties in the market. The rating agency Moody's said default rates in Spain could jump from 0.37pc to 5.5pc if the economy suffers a hard landing, with an outside risk that values could fall by 20pc.
Posted by converted lurker @ 08:53 PM (705 views) Add Comment
8 Comments
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1. Ihopeitgoeswithabang said...
"arrears would never reach US levels because of Spain's "solidarity" culture"
lol solidarity culture? you mean over here we couldn't give a monkeys if out relatives go to the dogs here! Thats nice!
2. sold 2 rent 1 said...
20%. No way. 60% is more likely followed by a depression and euro exit
3. enuii said...
The level of development in Spain has been excessive to the point of obscenity, not in-tune with the character of Spain, unsympathetic to the character of the towns and villages in which they are built and entirely aimed at foreign second home buyers in the most part. If the second home buyers and speculators stop buying the entire Spanish construction industry will collapse.
4. Bug16 said...
But! But! But! I received a spam email only today telling me I could earn 25k+ buying property in Spain!
5. converted lurker said...
Bravo enuii, love it when someone sums up a situation in its entirity in one sentence ;¬)
6. planning4acrash said...
I'm glad that we did not repeat this mistake and open swathes of Greenbelt to developers and relax design and planning standards in response to M3 money rather than population led demand.
7. maddison said...
If the Spanish property doesn't seriously collapse very soon then I doubt we will see anything spectacular here in the UK.
8. crash bandicoot said...
Madison,
Spanish property prices are supported by the UK housing market. It is the baby-boomers cashing in their UK property and moving to the English ghetto towns that are keeping it going. The reason for the decline in Spain at the moment is the drop in activity here. Once our prices fall Spain will crash and burn. Again supply and demand is a red herring. You only need to sell one or two apparments in a block situated in semi-desert or reclaimed salt marsh to cover your costs with the current prices.