Spain: Paradise Lost

[arthurwasright]

Too many people believed what they read in the papers. Cast you mind back to 2001/02 following the dot.com bust, the consensus was that you couldn't rely on pensions for a comfortable retirement and that property was the only safe asset class. This was rubbish of course as ALL assets are valued in relation to a market, no asset has an intrinsic worth (other than use value).

The general idea that pensions couldn't be relied upon, state, private, or occupational has now been received wisdom for the past 15 years and has been largely responsible for the misinvestment in property over that time period.

What! not even GGGGGGGGold.....GGGGGGGarry ?

[copydude]

The general idea that pensions couldn't be relied upon, state, private, or occupational has now been received wisdom for the past 15 years and has been largely responsible for the misinvestment in property over that time period.

The misinvestment in property was an idea that was peddled.

I'd agree with the received wisdom about the declining value of pensions and so on.

But this is not the same is being told you can make 50% return blah if you just sign up for this slavebox in Spain or Sofia.

The idea was, if homeowners can become speculators, they will all forget that their wages have not increased in the last ten years. Or that jobs are disappearing everywhere.

Property was mis-sold, end of story. Ramped by endless property porn programmes on the TV. And complete lies from the Government about shortage of housing and pent-up demand.

Western countries have a declining, ageing population with an established trend to smaller families and fewer marriages.

All new-build that wasn't affordable was just Ponzi . . . and hardly surprising it has resulted in ghost towns.

[leftiebeard]

God yeah, I remember the hookers on those roundabouts. My parents just used to laugh it off, but deep down they knew they'd moved to a dump with sunshine.

Horrid place.

When I used to live in Madrid, I remember one evening walking home pretty late, and getting chased by about 50 hookers who were touting their stuff close to the Bernabeu Stadium. There were literally hundreds of them at work.

[Reality Check]

A much worse case is Seseña, a ghost town that was built on scrubland quite a way south of Madrid (near Toledo). I believe 13,500 apartments were due to be built, of which less than 3000 have been sold to private individuals, and about 2000 have apparently been bought by banks (including Banco Santander):

http://www.elpais.com/recorte/20080709elpe...cion_Pocero.jpg

Last week the main constructor pulled out and said they weren't going to complete it.

I rode past a similar massive development just before Guadalahara last weekend on my way back to Madrid after spending a relaxing day at the lake close to Albalate de Zorita. Scary to think who would possibly want to live there! Funny thing was there was a big sign up saying it had been financed by the BBVA. Good advertisement for irresponsible & wreckless financing doomed to fail. My friends say that 1 out of every 4 flats in Madrid are empty. Prices still seem to be totally ludricous compared to salaries there, & that's with 18% unemployment. Something's going to have to give very very soon

D.

[copydude]

A much worse case is Seseña, a ghost town that was built on scrubland quite a way south of Madrid (near Toledo). I believe 13,500 apartments were due to be built, of which less than 3000 have been sold to private individuals, and about 2000 have apparently been bought by banks (including Banco Santander):

http://www.elpais.com/recorte/20080709elpe...cion_Pocero.jpg

Last week the main constructor pulled out and said they weren't going to complete it.

Who did they imagine was going to live in all these places?

What was the business plan?

[Mrs Bear]

I rode past a similar massive development just before Guadalahara last weekend on my way back to Madrid after spending a relaxing day at the lake close to Albalate de Zorita. Scary to think who would possibly want to live there! Funny thing was there was a big sign up saying it had been financed by the BBVA. Good advertisement for irresponsible & wreckless financing doomed to fail. My friends say that 1 out of every 4 flats in Madrid are empty. Prices still seem to be totally ludricous compared to salaries there, & that's with 18% unemployment. Something's going to have to give very very soon

D.

Is there still a plague of pickpockets in Madrid? Despite being warned and thinking I was being careful, I had my purse nicked there while visiting daughter. Around the same time heard of 6 blokes at a Real Madrid match, all of whom had their wallets lifted.

[leftiebeard]

Who did they imagine was going to live in all these places?

What was the business plan?

Business plans? The Spanish don't do business plans! Was always amazed by just how much money flowed into all sorts of Spanish businesses which had next to no chance of making money. There's a heck of a lot of "politics" in Spain; with all sorts of 'deals' being done between Govt, corporations and banks. Profitability is something to think of way down the line....

[Uriah Heap]

If we are talking Paradise Lost, this quote from it comes to mind

"No light, but rather darkness visible Serv'd only to discover sights of woe"

[Markie6]

What you have to remember is that economically we are moving backwards in time to the period before leveraged debt. In UK terms that means dirty streets, knackered football stadiums and endemic strikes and disruption.

In Spanish terms, it means fishing villages and subsistence agriculture.

I started wondering if we were heading for a "life on mars" type future....where we all travel back in time to the 70's or 80's lol

The bottom for the Spanish property market will be more prolonged than ours due to the over supply and I think that Brits care more about the weather when thinking about a move abroad than anything else.

[No Teacher - No Guru]

What! not even GGGGGGGGold.....GGGGGGGarry ?

Gold is just pretty metal, it has no intrinsic value. It's price is determined by market forces - look at gold prices between 1980 and 2000. It's an historical hangover that gold is still prized so highly.

[Trampa501]

I rode past a similar massive development just before Guadalahara last weekend on my way back to Madrid after spending a relaxing day at the lake close to Albalate de Zorita. Scary to think who would possibly want to live there! Funny thing was there was a big sign up saying it had been financed by the BBVA. Good advertisement for irresponsible & wreckless financing doomed to fail. My friends say that 1 out of every 4 flats in Madrid are empty. Prices still seem to be totally ludricous compared to salaries there, & that's with 18% unemployment. Something's going to have to give very very soon

D.

You´d be surprised just how prosperous Madrid is (normally). In my limited experience, it's a better place to find work than the UK. Also, it's often the first place migrants from South America head to when they move to Spain. In the current climate I can imagine how prices in the city itself are still ludicrous, yet in the developments outside of town there are few takers. You have to remember that all the new high speed train lines to other parts of Spain all converge in Madrid (I've not read anywhere that occupancy levels are low; be interesting to see if this happens). If the economy recovers, you can be sure that Madrid (and the jobs market) will boom again, which is why house-sellers are not reducing their prices - they think if they can hold on long enough they can demand their high asking price (does this sound familiar)? Of course if things never recover all bets are off anyway, and we're all stabbing each other to steal a stray turnip.

[Greg Bowman]

That is why I avoid ALL salespeople.

Lucky your employer employs some otherwise how would you get paid? Ignorant comment.

[leftiebeard]

I rode past a similar massive development just before Guadalahara last weekend on my way back to Madrid after spending a relaxing day at the lake close to Albalate de Zorita. Scary to think who would possibly want to live there!

D.

I know, those out of Madrid developments, reached only by the Cercanias network are pretty soulless places. One of the worst seemed to be out in Tres Cantos, to the north of Madrid.

[Trampa501]

I know, those out of Madrid developments, reached only by the Cercanias network are pretty soulless places. One of the worst seemed to be out in Tres Cantos, to the north of Madrid.

For all its faults, people want to live in Madrid, even if their workplace is outside the city, say in somewhere like Alcobendas. At evening rush hour it can be quite strange seeing the queues of people streaming back into Madrid. Having said that, there are some seriously nice places half an hour drive from Madrid and closer to the mountains, but probably unaffordable for most workers.

[LiveAndLetBuy]

Who did they imagine was going to live in all these places?

What was the business plan?

The Spanish love new stuff much more than the Brits. They'll happily pay extra money for a brand new house (even if it's in the middle of a desert) rather than one that's already been lived in. I know plenty of Spanish who proudly own houses on building sites in the middle of nowhere. Also a Spaniard will perhaps buy only two houses in their life - they don't move around so much. So they buy new developments with a view that maybe in 10 years time they'll be living in a brand new suburban paradise. Milton Keynes is the Spanish idea of heaven.

The "business plan" is an attempt to fix prices. The main developers in Spain operate a cartel and fix prices between themselves, and they work in conjunction with the banks. Together they try to control any price reductions so the market doesn't collapse. To prevent too many developers from going bust in the current environment, and to keep prices high, it appears that the Spanish banks have been prepared to buy up excess housing stock from the developers. Most importantly this helps keep all this bad debt off their books. For now.

I think the Spanish in general have been too used to currency devaluations from the peseta days. They traditionally expected their high house prices and mortgages de devalue along with the currency whenever things got sticky. However it doesn't necessarily work like that with the euro.

[Giordano Bruno]

Gold is just pretty metal, it has no intrinsic value. It's price is determined by market forces - look at gold prices between 1980 and 2000. It's an historical hangover that gold is still prized so highly.

Gold has uses because it is especially non-corrosive and good at conducting electricity. So it is used in electronics and dentistry.

[LiveAndLetBuy]

For all its faults, people want to live in Madrid, even if their workplace is outside the city, say in somewhere like Alcobendas. At evening rush hour it can be quite strange seeing the queues of people streaming back into Madrid. Having said that, there are some seriously nice places half an hour drive from Madrid and closer to the mountains, but probably unaffordable for most workers.

My wife works in Alcobendas, but we live in south Madrid. If you live outside Madrid you have the chance of living in a large house with a garden. If you live in Madrid you have to settle for a flat, but you can readily access the best nightlife in Europe. We chose the latter.

[Jason]

Someone on here posted a link to youtube showing a car journey filming the half built tower blocks. It went on for miles and miles...

[Number79]

I do wish all those on this forum who think the UK is a sh*thole would just b*gger off.

And shut the door behind them.

And yes, I have lived abroad, for 15 years.

get a grip woman

[3 Men In A Boat]

That is why I avoid ALL salespeople.

Pathetic comment.

I guess you live in a cave then

[No Teacher - No Guru]

Gold has uses because it is especially non-corrosive and good at conducting electricity. So it is used in electronics and dentistry.

As I said in my previous post, there is no intrinsic value, apart from it's use value. Gold can be a useful metal in some applications, but its high price is a product of cultural/historical factors that arose from it's rarity/ non-corrosive properties, i.e. it's use as currency in early societies/ adornment of high caste members of such societies.

All values are created by human interaction and are meaningless when not considered in that context.

[3 Men In A Boat]

I do wish all those on this forum who think the UK is a sh*thole would just b*gger off.

And shut the door behind them.

And yes, I have lived abroad, for 15 years.

Now thats what I call irony

[righttoleech]

Pathetic comment.

I guess you live in a cave then

I am sure that 'salespeople' here means those that try to persuade you to buy something you don't need......including for example overpriced property at the height of a boom. They are happy to make 1% on a decision that may bankrupt the buyer.......and the scum that phone you from abroad offering you mortgages and asking personal questions in the manner of a US immigration official.

[eric pebble]

That last scene sums up the property market right now perfectly

The buyer puts in an offer below what the seller wants. The seller holds firm because they paid such and such for it.

The buyer walks away because they know there will be a cheap one round the corner.

The seller is p*ssed off but ultimately through their own stupidity will continue to chase the market down.

Oh Hamish are you watching?

[Number79]

As I said in my previous post, there is no intrinsic value, apart from it's use value. Gold can be a useful metal in some applications, but its high price is a product of cultural/historical factors that arose from it's rarity/ non-corrosive properties, i.e. it's use as currency in early societies/ adornment of high caste members of such societies.

All values are created by human interaction and are meaningless when not considered in that context.

gold is still a currency, a worldwide currency. Gold is the stable currency that all fiat currencies move up or down in relation to.

You see gold as a commodity with no intrinsic value driven by market forces, explain why it can not be viewed as a currency in its own right. It increases with value (in fiat terms) with fear as people dump their currency for this safe haven currency, not unlike exchange rates between say the dollar and pound. It increases with inflation as fiat is debased. It decreases when fear has gone and markets thrive because a fiat currency is stronger but it doesn't fall in all currencies - only in dollar terms - like a currency itself.