Saturday, Dec 20, 2008
I'm starting to feel rather sorry for these people
Daily Mail: End of the Eldorado dream: A plunging pound and property crash have left thousands of expat Britons on the breadline
All along the coast, from Alicante on the Costa Blanca to Marbella on the Costa del Sol, a very middle-class dream is crumbling. The aim was to escape a life in Britain where crime was rampant, the weather miserable and the cost of living high. Now, in Spain, a legion of pensioners finds itself trapped by rising prices, a property market that has completely collapsed and a pound that has fallen almost 20 per cent against the euro.
Posted by drewster @ 02:36 AM (1062 views) Add Comment
22 Comments
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1. titaniccaptain said...
Its all gone t#ts up really hasnt it...........no where to hide from it........hope none of these people were paying mortgages with their private pensions.........ive just read the article........and some are......oh dear...........I think we will see things turning very nasty next year.....forget the hpc for a moment.........and spare a thought for these poor sods
2. str 2007 said...
Spanish property would've been a good hedge against sterling - if you could sell it !
3. drewster said...
What really annoys me is that these people had saved up for their dream retirements. They weren't benefit scroungers, they didn't have gold-plated pensions, they just followed the rules like they were told and they got badly burnt.
4. Mym said...
"'None of us came to live in Spain without money,' she points out. 'Unlike Britain, which has an open door policy for anyone who arrives without even a penny to their name'"
Ignorant cow. That's total rubbish.
5. beartil2010 said...
Worrying? Heartbreaking. Spare a thought for these poor sods? They are us! Those who have not taken the dole, those who have not wasted money, those who have saved every penny they can. Every single one of them punished by this government. Anyone who saved their money in the UK is being crushed.
Massive unemployment, massive budget deficit, and massive shortfalls in pension funding. No money now and massive taxes for years - decades - if you should be lucky enough to stay in work.
Britain is not so Great any more. This could all turn very, very, very nasty.
6. Eternal Sceptic said...
beartil20. well summarised.What is the point in working when most of your money supports a bloated public sector, the feckless and the workshy. Any attempt to play by the rules has been dashed in a person's face and dreams turned to ashes by the failed pl;icies of this government.If everyonee is made a pauper, revolution will result.
7. Ingermanynow said...
We moved to Germany in 2003, selling our house in UK and building one over here. We are not retired though, but came to give the kids a better quality of life, as we are able to live comfortably on one income here. There are good schools and free etc. However, we gradually moved our income sources into Euros and I cannot for the life of me understand these people living on Euros in Spain, but investing their money (all of it) in pound sterling. It would still be bad enough and hit them hard to take the cut in their pension income, but if they'd invested their money in Euros they would have something to balance things out. As it is, we even moved our ISA investments to Germany in spring as the writing was on the wall.....and I am very glad we did, even if the interest here is lower and not tax-free.
I really, really feel for these people now.
8. techieman said...
i know some people that moved lock stock to France actually. I dont know maybe i know more financially astute people but the reasons they gave me were:
1. The over-valuation of sterling
2. The over-valuation of the UK property mrket,
3. The undervaluation of the Euro and the comparative undervaluation of French property.
Most of them i know moved out PROPERLY - they moved themselves and their assets into Euro-nominated deposits. To be specific i know 4 - one of them has UK pension assets, and had that covered with forward contracts on a lump sum (a hedging strategy).
All this "place in the sun" rubbish is just that. IF you can bank substantial gains and are of working age and can work abroad and thats what you want fine. It brings with it another set of risks and rewards. If you want to retire then you must make sure you have covered the exchange rate risk. [if the pound had appreciated it would have been a different story for them]. So no i dont feel sorry for them , they should weigh up the risks and put things in place to protect them. If they had wanted to gamble then really they might as well have taken a punt on the forex. Some of the figures in the article are a joke - a pension of 600
Euros a mnth before the pound depreciated. Really 600 euros a month???? OK m lifestyle might e considered extravagant by some but i cannot see how bein on 600 Euro a month is anything other than subsistance.
9. a saver said...
Agree with techieman, you need to research properly and hedge against currency moves, especially when retiring abroad.
My brother (aged 55) didn't do that, he just got fed up with the UK and withing a few months had sold up here and bought in Spain. He was phenomenally lucky with his timing, sold his house at the top of the UK market (May 2007) and converted the proceeds while the pound was still overvalued. Nevertheless, he was on the phone weeks later begging rellies to send him cash. He's doing odd-jobs at the moment but that could dry up the way things are in Spain and God knows what he will do when he's retirement age. Knowing him he will probably find himself a rich widow.
10. jack c said...
techieman - I would firmly expect that the people you know (friends, colleagues etc...) will be financially astute (this is purely based upon my observations of your regular posings over the years on this site - ie you have previously stated that you are a "trader" - FTSE 100, Dax etc.. and I have no reason to assume you infact trade apples and oranges from a stall in the east end subsequently swapping pineapple tops for triangle tops and that an elliott wave refers to your hair style - LOL). You are clearly operating at a completely different level and thus have a different perspective of the situation. I know a couple who packed up and went to Spain permanently 2 years ago - it was all a done deal by the time they sought my professional opinion on matters - they are now being forced back to the UK. The layman only recognises the alternative (worst) scenarios after the event.
Other condiderations/implications on moving abroad (I could list more)
Serious illness & disability
Incapacity
Long term care
Medical expenses
Premature Death of one or both partners (leaving surviving partner without sufficient income)
Wills in UK & Will in say Spain
Dual Inheritance Tax liability
11. nopensionnohouse said...
I find it sad too but what would the devils advocate say?
He would say that Spanish locals have been priced out of their local housing scene because of all these foreigners with money!
Just a thought. Someone always has to loose for someone else to win!
12. mountain goat said...
The only thing they suffer now is a devaluation of their pension which is paid out in Pounds. These people bought properties in Spain with a strong Pound to begin with, in that respect they have done ok. If they bought at the top of the Spanish housing bubble then the same applies to people who bought in the UK in the past few years. They shouldn't have believed the hype. Why should I feel sorry for these people who helped put prices out of reach of so many locals as Nopensionnohouse points out?
13. it_is_going_with_a_bang said...
If things had worked out better for them what do you think they would say?
I don't wish poverty on anyone but they made a life choice and it is as simple as that. The next time they go to a ballot box they need to remember who made it such a lovely experience.
14. drewster said...
No locals were priced out. Spain is different because their looser planning laws allowed developers to build massive apartment blocks all down the coast (think Benidorm). Some 800,000 new houses & flats were built every year during the boom!
The places popular with British retirees tend to be quiet coastal towns with few local jobs. By contrast the Spaniards prefer to live in Madrid or Barcelona because that's where the jobs are. So nobody was priced out.
15. alan said...
Agree with Drewster's early post. These were hard working people, sadly their dream went wrong.
16. paul said...
I know someone who has been stung by the collapse of Med property.
He is very hard working, but was a little to blinkered by his stake in the boom to heed the warnings when he saw them a couple of years ago.
17. mountain goat said...
Drewster - "No locals were priced out."
I think you are wrong. A building and houseprice boom on the coast is going to affect house prices in the rest of the country. Spains bubble and now bust was assisted by foreigners buying holiday homes. Many Brits bought properties in cities too, for example I know of a British BTL "investor" who started here and then carried on in Barcelona.
18. Panda said...
<
'None of us came to live in Spain without money,' she points out. 'Unlike Britain, which has an open door policy for anyone who arrives without even a penny to their name, we knew that if you came to Spain you had to have money to survive.
'We brought our own money with us and we invested it wisely. We bought our own homes and we have never taken a penny from the state. But what is happening now is that we are being buried by economic factors beyond our control. It's really worrying.' >>
How does this make them "better"? We are still paying for people who invested in housing, and it doesn't matter how that money was obtained.
What is constant - is the damage that property investment generates. It is enormous, and spurious (and incorrect) moralising DOES NOT HELP.
19. luckyjim said...
Everything we do in life is a risk. Buy ? Rent ? Move Abroad ? Stay in the UK? Each option is a calculated risk.
So yes these people knew moving abroad was not without risk. I still feel sorry for them.
Working for a outdated company like Woolworths was a risk - should we not feel sorry for shop workers losing their jobs just before Christmas?
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