Spanish Nightmare

[88Crash]

its a massive mess out there and its only going to get worse as the problems have not really been addressed but the can has been kicked down the street a little further, the problem the Spanish will have is by doing this to their main customers, the brits is they ruin the market for selling more garbage to them as they also do by condeming a load of already constructed and paid for buildings owned by the brits on the costas, along with being part of the expensive euro zone its going to be a long time before the mess on the costas is cleaned up and it will take a lot of pain ..

At the moment if you want to have a hope in selling anything you have to chop the price in half and even then it probably isnt cheap enough ...

http://www.solhomeseekers.com/listing-drastically-reduced-villa-for-sale-in-paraiso-estepona-costa-del-sol-1010.html

I think some of the Spanish Costa properties are more or less unsaleable and the effect on UK - I'm not too sure, but it must be hundreds of thousands - I'm not suggesting today, but over the next few years this will have a effect, plus all the Brits returning from places like Spain will be a bit of an extra tax burden, especially the older ones that need expensive medical care and/or nursing homes

[Agentimmo]

Lots of good comments on these pages.

Can I just ask that they Pay Back Their Debt?

Simple. Easy to understand.

If they crash and burn (although I hope they don't), then the papers should run a follow up article as a warning to the rest of the debt-laden sheeple.

[Agentimmo]

I think some of the Spanish Costa properties are more or less unsaleable and the effect on UK - I'm not too sure, but it must be hundreds of thousands - I'm not suggesting today, but over the next few years this will have a effect, plus all the Brits returning from places like Spain will be a bit of an extra tax burden, especially the older ones that need expensive medical care and/or nursing homes

No they are not. My wife's Spanish grandmother bought a 1 bed flat in the mid-70s on the costas. Cost about a year of her hubbies v. modest salary and she saved for years to buy.

Rampant HPI and speculation has pushed prices to these current crazy heights.

If the sellers in this article are looking for a buyer, they can reduce the price. If they meet the market, then there will ALWAYS be a buyer.

In the area where the old lady bought, prices for 1 beds are about 5 times the local salary. This suggests they still have some way to fall.....

<edited for stats>

Edited November 29, 2010 by Agentimmo

[88Crash]

No they are not. My wife's Spanish grandmother bought a 1 bed flat in the mid-70s on the costas. Cost about a year of her hubbies v. modest salary and she saved for years to buy.

Rampant HPI and speculation has pushed prices to these current crazy heights.

If the sellers in this article are looking for a buyer, they can reduce the price. If they meet the market, then there will ALWAYS be a buyer.

In the area where the old lady bought, prices for 1 beds are about 5 times the local salary. This suggests they still have some way to fall.....

<edited for stats>

The good old days when many Spanish properties were bought with cash!

Without trying to be too pedantic, I did say “more or less” i.e. a place bought for 100K may sell for 25K but most of the time either the owner paid cash, but would rather slit their wrists then take a 75K drop or the mortgage outstanding is so much, they simply can’t sell for 25K

[stormymonday_2011]

its a massive mess out there and its only going to get worse as the problems have not really been addressed but the can has been kicked down the street a little further, the problem the Spanish will have is by doing this to their main customers, the brits is they ruin the market for selling more garbage to them as they also do by condeming a load of already constructed and paid for buildings owned by the brits on the costas, along with being part of the expensive euro zone its going to be a long time before the mess on the costas is cleaned up and it will take a lot of pain ..

At the moment if you want to have a hope in selling anything you have to chop the price in half and even then it probably isnt cheap enough ...

http://www.solhomeseekers.com/listing-drastically-reduced-villa-for-sale-in-paraiso-estepona-costa-del-sol-1010.html

+1

As I mentioned earlier there are rumoured to be 1.4 million unsold properties in Spain. The British were one of the main markets this real estate was sold into so while it may seem a cool idea to screw the deadbeats in this article by foreclosing on their UK property you are probably going to get a lot of blowback in the form of lost sales later on

Unless the Indians/Chinese can be convinced of the joys of Benidorm and its ilk then the Spanish property market is doomed.

Edited November 29, 2010 by realcrookswearsuits

[winkie]

+1

As I mentioned earlier there are rumoured to be 1.4 million unsold properties in Spain. The British were one of the main markets this real estate was sold into so while it may seem a cool idea to screw the deadbeats in this article by foreclosing on their UK property you are probably going to get a lot of blowback in the form of lost sales later on

Unless the Indians/Chinese can be convinced of the joys of Benidorm and its ilk then the Spanish property market is doomed.

The costas have been ruined by concrete....it would do them a favour to knock a lot of it down and start again...town planning is not something that they put much thought into.

[leicestersq]

They owe 10x joint income (10x GDP), default, go bankrupt, the only option. I sure wouldn't want to service that debt.

They can only go bankrupt if they dont have enough equity and free income to pay these debts. Sounds to me as if they could sell up and pay them, so bankrupcy is not an option.

[Agentimmo]

+1

As I mentioned earlier there are rumoured to be 1.4 million unsold properties in Spain. The British were one of the main markets this real estate was sold into so while it may seem a cool idea to screw the deadbeats in this article by foreclosing on their UK property you are probably going to get a lot of blowback in the form of lost sales later on

Unless the Indians/Chinese can be convinced of the joys of Benidorm and its ilk then the Spanish property market is doomed.

I don't entirely agree with your above analysis. The only way to get the "market" back on a sane and long term sustainable footing IS to screw the deadbeats. ie. let them go bust.

Propping them up only prolongs the agony for everyone.

PS. No need to convince the Indians and Chinese. Just get prices back to historical norms and there will be adequate numbers of buyers from France, UK, Italy, Germany etc who have stayed out of this bubble for the last 10 years

[miko]

I don't entirely agree with your above analysis. The only way to get the "market" back on a sane and long term sustainable footing IS to screw the deadbeats. ie. let them go bust.

Propping them up only prolongs the agony for everyone.

PS. No need to convince the Indians and Chinese. Just get prices back to historical norms and there will be adequate numbers of buyers from France, UK, Italy, Germany etc who have stayed out of this bubble for the last 10 years

Which is catch 22

As the market back on a sane sustainable footing will produce more people or " deadbeats " as the market falls. Ever decreasing circles.

Remeber going on one of those fly and buy tours in 2002 , with all the sales pitch , and lies shoved down your neck for the whole weekend. Went back out about six weeks later and the jump in prices was incrediable. The Spanish developers and banks pushed the bubble and grabbed the U.K. buyers that really could not afford the holiday home in Spain , now it is all blowing up in their faces. We can blame the stupid britts who did not do their sums but neither did the Spanish banks or developers.

[88Crash]

Unless the Indians/Chinese can be convinced of the joys of Benidorm and its ilk then the Spanish property market is doomed.

Its doomed then

[88Crash]

Which is catch 22

As the market back on a sane sustainable footing will produce more people or " deadbeats " as the market falls. Ever decreasing circles.

Remeber going on one of those fly and buy tours in 2002 , with all the sales pitch , and lies shoved down your neck for the whole weekend. Went back out about six weeks later and the jump in prices was incrediable. The Spanish developers and banks pushed the bubble and grabbed the U.K. buyers that really could not afford the holiday home in Spain , now it is all blowing up in their faces. We can blame the stupid britts who did not do their sums but neither did the Spanish banks or developers.

In fairness to some of the Brits that bought into the Spanish dream, it was a nice dream and not driven by speculation

Maybe it was that 2 week holiday that did it, maybe it was watching ‘Place in the Sun’ and certainly there are plenty of Brits that bought as an investment, nothing wrong with that either, but you take your chances, hence the term investment, but I certainly know a few Brits that bought for emotive reasons and sadly for some of them it has turned into a nightmare

Even more so, if they end up losing their Uk homes as a direct result

[Peter Hun]

According to this article 1.4 million homes are unsold in Spain and 280,000 properties are likely to be repossessed this year alone

http://www.moneyweek.com/news-and-charts/economics/eurozone-spain-debt-spanish-bail-out-04713.aspx

Spanish accounting practices force losses to be recognised within 2 years once realised which is a severe disincentive to foreclosure.

http://ftalphaville.ft.com/blog/2010/02/03/140216/bbva-an-exercise-in-spanish-banking-losses/

Given that Spanish banks are more likely to novate a loan (ie ease or extend repayment conditions) rather than call them in the 280,000 repossessions are probably the tip of a huge iceberg of under performing loans that will probably sink the Titanic of the western financial system. The current Irish bailout is just an attempt to delay the catastrophe for a few more months by taking some of the heat off the European debt markets which might delay the flight of capital from Spain

I read on another forum that there are 70% more repossessions than sales in Spain at the moment. Properties are held on the books at full price without any fall so they can hide the loss.

[stormymonday_2011]

I don't entirely agree with your above analysis. The only way to get the "market" back on a sane and long term sustainable footing IS to screw the deadbeats. ie. let them go bust.

Propping them up only prolongs the agony for everyone.

PS. No need to convince the Indians and Chinese. Just get prices back to historical norms and there will be adequate numbers of buyers from France, UK, Italy, Germany etc who have stayed out of this bubble for the last 10 years

As the man said it is Catch 22.

The market in Spain is already lot further down the road of price sanity than the UK. Unfortunately this process involves lots of financial losses that are not just going to hit the impecunious borrowers. As I said earlier in this thread that unless this couple have a stash of cash or other assets that can be liquidated and used to pay off their Spanish debts then the Spanish bank looks to be on the wrong end of a £95,000 write down which if repeated hundreds of thousands of times adds up to billions across the whole European banking system. Sooner or later this is going to threaten the very savings of the UK, Italian, French and German savers who might be potential buyers down the road. Getting back to a historical normal market is not going to be easy.

[live in hope]

+1

As I mentioned earlier there are rumoured to be 1.4 million unsold properties in Spain. The British were one of the main markets this real estate was sold into so while it may seem a cool idea to screw the deadbeats in this article by foreclosing on their UK property you are probably going to get a lot of blowback in the form of lost sales later on

Unless the Indians/Chinese can be convinced of the joys of Benidorm and its ilk then the Spanish property market is doomed.

I know of someone, without getting into detail, who is in much deeper than the couple in the mail. Huge place which they renovated from a ruin, all on a mortgage. Up for sale for a million at one time. Also sunk inheritance into land. Nearly also a new build appartment. Had to work in UK over last few years. Wife had enough of it and ******ed off with another bloke. Now she is here with the kids in a council house. He is on dole. Big place rented for now, but how thats managable is beyond me. I assume eventually they will loose everything. Just goes to show how a loving wife can bail out when all the benifits are gone.

[Peter Hun]

As the man said it is Catch 22.

The market in Spain is already lot further down the road of price sanity than the UK. Unfortunately this process involves lots of financial losses that are not just going to hit the impecunious borrowers.

Spain is not a lot further along than the UK. There are several problems with Spain. The government lies about sales prices, the illegal planning nightmare that may result in people losing their homes even though they were (apparently) legally built. The rampant corruption of the legal system, the massive overhang of 1.4-1.6million properties.

Prices should fall to the 25K Euro level for apartments that are nothing more than an occasional holiday home,at that point there maybe interest from poor Brits.

[Agentimmo]

As the man said it is Catch 22.

The market in Spain is already lot further down the road of price sanity than the UK. Unfortunately this process involves lots of financial losses that are not just going to hit the impecunious borrowers. As I said earlier in this thread that unless this couple have a stash of cash or other assets that can be liquidated and used to pay off their Spanish debts then the Spanish bank looks to be on the wrong end of a £95,000 write down which if repeated hundreds of thousands of times adds up to billions across the whole European banking system. Sooner or later this is going to threaten the very savings of the UK, Italian, French and German savers who might be potential buyers down the road. Getting back to a historical normal market is not going to be easy.

Can you explain the above (I'm not being sarcastic, funny etc. Genuine question).

Am I missing something?

If the bank is looking at a £95K writedown, wouldn't it be better to offer it at a price that would attract cash buyers? eg? 40K, 50K, thus halving their loss ?*

Sure, they'd need to find some money from elsewhere to make up the loss, but at least they will have duff "asset" off their balance sheet and everyone could move on.

[Nationalist]

Seems like we have the contagion vector from Spain to the UK established then.

[dryrot]

Can you explain the above (I'm not being sarcastic, funny etc. Genuine question).

Am I missing something?

If the bank is looking at a £95K writedown, wouldn't it be better to offer it at a price that would attract cash buyers? eg? 40K, 50K, thus halving their loss ?*

Sure, they'd need to find some money from elsewhere to make up the loss, but at least they will have duff "asset" off their balance sheet and everyone could move on.

But if the bank can play "Let's Pretend" - that is, let's pretend that the loan is secured against an asset that can be liquidated to settle the debt - then their accounts look OK and all the managers can get their bonuses.

This is the option the EU has taken on all bailouts, and Gordo's attack on savers. It won't work in the long run, but if they can keep the cards wobbling for a few years, the'res then a few years' bonuses!

Who wants to let in reality? Who's paid to be honest?

EDIT: sp

Edited November 29, 2010 by dryrot

[stormymonday_2011]

Spain is not a lot further along than the UK. There are several problems with Spain. The government lies about sales prices, the illegal planning nightmare that may result in people losing their homes even though they were (apparently) legally built. The rampant corruption of the legal system, the massive overhang of 1.4-1.6million properties.

Prices should fall to the 25K Euro level for apartments that are nothing more than an occasional holiday home,at that point there maybe interest from poor Brits.

I will bow to your experience on that matter as I am no expert on the Spanish property market. so its hard for me to tell how overvalued prices are compared to the UK

The officially quoted figures only show an 11% drop in prices from 2007 but Spanish real estate price indexes are rather opaque compared with the UK.

This article suggests that 20-30% falls may be nearer the mark

http://www.forexcrunch.com/spanish-house-prices-may-be-lower-than-thought-problem-for-banks/

I am just making a stab at the potential losses using the Daily Mail story as a guide and it certainly is not a pretty picture.

The forexcrunch article suggest that Spanish banks are already sitting on 60 billion EUR of property losses without any write downs so my ball park figure based on just one case was not that far out. If your predictions are correct than that sum may have to be multiplied a number of times over

Anyway it does not really change the point I am trying to make. There are huge losses sitting on the Spanish banks books just waiting for true price discovery to take place. When that happens it is not going to be a happy day for the European banking system.

Edited November 29, 2010 by realcrookswearsuits

[88Crash]

not a lot.suckers and their moeny etc.I genreally never waste time on people who are that stupid,but you'd be amazed at the lack of basic market savvy on the part of msot people.

Sadly I am no longer amazed, in fact it seems quite predictable or....maybe I'm just getting old and cynical?

[88Crash]

Just goes to show how a loving wife can bail out when all the benifits are gone.

Wish you'd given me that advice a few years back

[The Masked Tulip]

Wish you'd given me that advice a few years back

You know how to get your own back don't you? Have a sex-change and then seduce your ex in a lesbian burst of passion before taking her to the cleaners. Works every time!

[stormymonday_2011]

Can you explain the above (I'm not being sarcastic, funny etc. Genuine question).

Am I missing something?

If the bank is looking at a £95K writedown, wouldn't it be better to offer it at a price that would attract cash buyers? eg? 40K, 50K, thus halving their loss ?*

Sure, they'd need to find some money from elsewhere to make up the loss, but at least they will have duff "asset" off their balance sheet and everyone could move on.

The problem is that the banks have so many duff assets that the losses would wipe out their capital base. There may be nothing else to offset against the liabilities as many of the smaller Spanish banks appear to be hugely overexposed to the property market , just like their UK and Irish bretheren. You can put this down to a financial and political system that preferred to speculate in asset inflation rather than invest in productive capacity. The assets WILL be written down eventually but that is going to cause losses to bank shareholders, bond holders and possibly depositors if institutions go completely to the wall. With regard to UK savers you just have to check out the exposure of certain UK banks to Ireland and Spain to realise the sums at stake. Many Brits brought Spanish properties on the back of loans from UK banks denominated in sterling (well the more sane ones did anyway) so our banking system is in this game first hand. Of course we are not alone in that respect as German banks are well in the hole in Spain too.

[retz]

Property in Spain now requires a new type of document, these are being made 'ultra-rare' by the local authorities. It pretty much says that the house you are living is 'legal'. I know of British couples paying thousands of pounds to various authorities to get them this piece of paper saying their house is legit.

Pretty much what happened was people went over there and started sticking houses up in the 'Campo' (rural countryside), these were illegal, and for a while they were allowed to get away with it, however all being equal people are naturally greedy so they built extensions and other houses on the land they had legally brought (without proper permission you can't build on any land regardless of whether you have 5 or 500 hectares). The law is that you can build on any land where an existing structure exists - but you can only build something as big as or smaller than the original dwelling (oh and it has to be listed as a dwelling in the first place).

Eventually the Government says 'That is it, we've had enough' and went around tearing down these new homes. Near my parents they literally sent in armed Swat teams to arrest a British couple who had built their house on National park land. They also tore down the place they were living in.

For anyone interested, thanks to this new requirement a large proportion of houses that were built by Spanish people are actually illegal. My parents home for instance is legally built, or is it? Nobody actually seems to know, not the local council or the provincial council.

The only ones who know are the folks in Barcelona, and every time you visit them they merely shrug and say 'Mañana'. (You quickly learn in Spain that this word means 'a couple of weeks' instead of tomorrow).

The Police and civil service have recently taken 5% pay cuts across the board, so no one really has any incentive to do anything, although when I went last time they had policemen with guns on the roundabouts raiding pretty much every lorry/truck that went by.

Grocery prices have gone up, as has petrol and other consumables, on the plus side booze is still quite cheap. The Spanish authorities know how to keep their people happy, they have a law where most restaurants have to serve a 'menu del dias' which cannot be more than about 10 - 12 euro and a lot of the time they give free wine.

Theft has also gone up, quite a few British people living in communities (Brits love other Brits it seems) have been robbed and their houses vandalised.

Edited November 29, 2010 by retz

[Van]

FFS, I say they've dug made their bed, now they have to lie in it.

Buying up foreign homes and driving up the prices in Marbella way above what locals can sensibly afford was one of the great crimes of the UK property bubble. Now it's payback time.

Well it's a two way street. What comes around goes around. I will not shed too many tears.