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Spain In Trouble As 2nd Home Purchasers Begin To Disappear


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http://www.bloomberg.com/apps/news?pid=206...refer=exclusive

Spanish Property Slowdown May Hurt Covered-Bond Sales (Update1)

By Charles Penty and Sebastian Boyd

Sept. 29 (Bloomberg) -- Sales of bonds backed by home mortgages in Spain may drop for the first time in five years as prices of apartments in Madrid and villas on the Costa del Sol rise at the slowest pace since 2001.
Banks in Europe's fifth-largest economy probably will reduce sales of bonds to finance mortgages by 23 percent next year to 50 billion euros ($63 billion), said Avelino Abellas, a capital markets director in Madrid at Calyon, the biggest underwriter of Spanish debt last year. The banks raised 59 billion euros this year with so-called covered bonds, debt backed by mortgages and guaranteed by the seller, almost as much as in all of 2005 and the most in Europe, according to data compiled by Bloomberg...../
Holiday Homes
Declining purchases of second homes by U.K. and German citizens is causing the slowdown in Spain. Foreigners reduced their investments in Spain by 21 percent last year to about 400 million euros a month, according to the latest figures from the Bank of Spain.

Debt ceiling being reached everywhere?

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Guest Charlie The Tramp

Holiday Homes

Declining purchases of second homes by U.K. and German citizens is causing the slowdown in Spain. Foreigners reduced their investments in Spain by 21 percent last year to about 400 million euros a month, according to the latest figures from the Bank of Spain. [/indent]

According to a mate who has owned in Spain the past 20 years, he says this year many Brits, Germans, and Irish where he is are desperate to sell and get out. I don`t know about the Germans but with the Brits and Irish could be MEW gone wrong, that great idea of letting it out to repay the loan has not materialised due to the glut of properties and not enough punters.

I can see a lot of desperate sellers there in the future as people still buying are going for the new builds as my local Holiday Property Shop is pushing for all it`s worth. They even accosted me with a 20% reduction in price on some new apartments in Spain.

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According to a mate who has owned in Spain the past 20 years, he says this year many Brits, Germans, and Irish where he is are desperate to sell and get out. I don`t know about the Germans but with the Brits and Irish could be MEW gone wrong, that great idea of letting it out to repay the loan has not materialised due to the glut of properties and not enough punters.

I can see a lot of desperate sellers there in the future as people still buying are going for the new builds as my local Holiday Property Shop is pushing for all it`s worth. They even accosted me with a 20% reduction in price on some new apartments in Spain.

Depends where in Spain you are. The Costa Blanca is Dead on its feet, parts of the Costa Del Sol are overpriced but where I am resales are going in a matter of weeks and a friend of mine tried to book an inspection visit (not recommended but he believes in them) and they have told him they are booked until after Xmas !!!!. Of course lull in 2004/05 UK property market had a slight effect on numbers (Still 400 million euros a month isnt too bad) but still about third best year ever and with the UK property boom of 2006 I expect Spain will be looking at record numbers next year.

To top this all off the Spanish governmentis slashing CGT on non resident owners starting January 2007 (literally halfing it and then some). This will encourage even more people to invest in Spain. Add to this the German effect. This report is misleading as the numbers of German buyers is increasing in Spain. German economy swinging back and the favourite past time of many Germans before the recession hit them was buying 2nd homes in Spain.

Spain is in my opinon a very stable and strong place to invest at the moment. I mean this crash being talked of....I see the most pessemistic stats saying growth of only 4.8% in 2007 (Oh NO!!!!). And if I am not mistaken there is talk of the Euribor rate actually coming down as inflation targets have been met.

All good news B)

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Depends where in Spain you are. The Costa Blanca is Dead on its feet, parts of the Costa Del Sol are overpriced but where I am resales are going in a matter of weeks and a friend of mine tried to book an inspection visit (not recommended but he believes in them) and they have told him they are booked until after Xmas !!!!. Of course lull in 2004/05 UK property market had a slight effect on numbers (Still 400 million euros a month isnt too bad) but still about third best year ever and with the UK property boom of 2006 I expect Spain will be looking at record numbers next year.

To top this all off the Spanish governmentis slashing CGT on non resident owners starting January 2007 (literally halfing it and then some). This will encourage even more people to invest in Spain. Add to this the German effect. This report is misleading as the numbers of German buyers is increasing in Spain. German economy swinging back and the favourite past time of many Germans before the recession hit them was buying 2nd homes in Spain.

Spain is in my opinon a very stable and strong place to invest at the moment. I mean this crash being talked of....I see the most pessemistic stats saying growth of only 4.8% in 2007 (Oh NO!!!!). And if I am not mistaken there is talk of the Euribor rate actually coming down as inflation targets have been met.

All good news B)

Spain is extremely volatile IMO. Its the target of discretionary income and that side of the economic equation is changing rapidly. With the cycle coming around this is no time to be in discretionaries as people are going to have a hard enough time funding their own excesses at home. I can see Spain dropping 50-60% over the course of the next 3-4 years.

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Spain is extremely volatile IMO. Its the target of discretionary income and that side of the economic equation is changing rapidly. With the cycle coming around this is no time to be in discretionaries as people are going to have a hard enough time funding their own excesses at home. I can see Spain dropping 50-60% over the course of the next 3-4 years.

I dont think you quite understand, Spain is underpinned by many people who have retired and either live there full time or just in the Winter. This isnt your Credit Card, spend now pay later brigade. Of course a few holiday homes will hit the market but as the baby boomers begin to retire (and they are just reaching that golden age) the actual UK economic downturn you refer to will encourage more people to sell up and release their equity and escape the drab recession hit UK for sunnier and cheaper climes.

I think you also fail to put into the equation the fact that the now retiring generation were the very first people to holiday abroad en masse. Up until now the people who were being targetted by Spain were the people more likely to want to stay within the UK. This generation of retirees are adventurous and looking to retire abroad. They will be encouraged to do so even more as the recession kicks in.

Add to this the slashing of CGT and the growth in German investors plus the recent UK "mini boom" and its likely knock on effect plus also a likely cut in euribor rates as inflation drops, good rate of euro against the pound.....mmmmm I predict a Spanish boom in 2007. Seriously and I am very bearish about the UK market.

Oh yes and forgot to add that all important factor ...immigration. No better way to fight it than to become an immigrant yourself.

Edited by adibrown
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The Spanish property market certainly will need some underpinning (bad pun intended). Last year there were 715,000 housing starts in Spain compared with 225,000 in Britain, yet the UK has a population one third larger than Spain's. As with all bubbles, when the speculative money dries up the bubble will burst.

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The Spanish property market certainly will need some underpinning (bad pun intended). Last year there were 715,000 housing starts in Spain compared with 225,000 in Britain, yet the UK has a population one third larger than Spain's. As with all bubbles, when the speculative money dries up the bubble will burst.

But it isn't speculative money thats the point.

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But it isn't speculative money thats the point.

Well, it isn't speculative money if you don't believe that there's a bubble in Spanish property - everyone's entitled to their opinion. Spanish house prices rose 173% from 1997 to 2006 - that's enough of a bubble indicator, never mind warnings from the OECD, IMF, etc.

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Well, it isn't speculative money if you don't believe that there's a bubble in Spanish property - everyone's entitled to their opinion. Spanish house prices rose 173% from 1997 to 2006 - that's enough of a bubble indicator, never mind warnings from the OECD, IMF, etc.

I guess many people on the overseas forum are "attached" to some country real estate and they have problems realising that the buble is going to burst everywhere now that USA is already fried up.

Edited by catara
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Any remember that article from the US a while back? Most pollsters when interviewed believed that the US property market was over valued, but not in their own local. No siree, in their own neighbourhood things were just fine, the market was crashing about their ears, but that was a national problem. In their area, (that they had selected with care as opposed to just somehow ending up in), house prices were not only keeping up, but increasing year on year :)

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Guest Charlie The Tramp

Any remember that article from the US a while back? Most pollsters when interviewed believed that the US property market was over valued, but not in their own local. No siree, in their own neighbourhood things were just fine, the market was crashing about their ears, but that was a national problem. In their area, (that they had selected with care as opposed to just somehow ending up in), house prices were not only keeping up, but increasing year on year :)

It`s posts like this make my day or night as in this case. ;) Thank you CL

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I explained to you in full detail why the spanish market will crash. Is it so hard to understand? You keep repeating the same arguments, as dogbox does for Morocco.

Sorry I must have missed that. Was that the false information you gave about Euribor increasing in weeks. Alternatively it may have been the wrong fact you mentioned about the numbers of German buyers falling.

Please tell me in full detail why you think Spain will crash and then we can argue this factually and in context. I am quite happy to discuss your viewpoint. So far it has been hot air.

Also I think I have worked out what drives you. You mention you are looking to buy in the Spanish Canary Islands......of course after the market crashes. So like we all do on this site regarding the UK we talk ourselves into believing it will happen and then we start trying to talk everyone else into believing it will happen. I have no doubts that very much like the UK some parts of Spain are overpriced and prices in those areas will readjust.

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In the vast majority of places on the Spainish costas you can buy a 2 to 3 year old resale 30% below that of like for like new build.

This is due to distressed seller (many Uk) and weak demand. Things will only get worse over the comming years. Peak to trough falls of 50% minimum.

Stick arround you'll see.

Pablo Silver or Lead?

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Sorry I must have missed that. Was that the false information you gave about Euribor increasing in weeks. Alternatively it may have been the wrong fact you mentioned about the numbers of German buyers falling.

Please tell me in full detail why you think Spain will crash and then we can argue this factually and in context. I am quite happy to discuss your viewpoint. So far it has been hot air.

Also I think I have worked out what drives you. You mention you are looking to buy in the Spanish Canary Islands......of course after the market crashes. So like we all do on this site regarding the UK we talk ourselves into believing it will happen and then we start trying to talk everyone else into believing it will happen. I have no doubts that very much like the UK some parts of Spain are overpriced and prices in those areas will readjust.

Firstly, I do not believe that Euribor is going down, it will go up again at least half a pointnin the next few months. The ECB cannot risk a collapse just because

people want lots of money for houses in Spain.

Secondly, I know very well the situation in Germany as I have close contacts with that country.2

Thirdly, I am interested in buying a house in Spain but not at speculative prices. All the speculators of the world have increased prices to the roof. If the prices do not come down a lot, then I shall simply go as a tourist so I do not really care.

About the price collapse in Spain, I would advice you read in detail at thehousingbubbleblog.com

There you can see that the fundamentals in Spain are identical to the ones in USA. And, as you know, when USA sneezes, Europe gets a cold.

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I drove along the toll road between Malaga airport and Peurto Banus last month. It was like a big, long building site all the way along the coast.

Unless someone is cloning buyers in special tanks, there is vast over supply.

Even La Manga is awash with rats deserting ship, Murcia is getting so over-developed, coastal Spain has been ruined, may as well be Sellafield. Anyone got that image of 'before and after' development of the Costas from space? Scary :(

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Suspect it will crash, a lot of the flats etc out there are second homes and will be the first to go if there is either a housing downturn or a rise in unemployment etc, remember all prices are agreed at the margins, only a small percentage of any market is for sale at any one time maybe 5% and if that satisfies the current buyers then if that increases by say another 5% to 10% for sale then you will have to drop the price big time to get a sale, as for justifying why Spain cant crash, I have read this for everywhere else, every area seems to have a special reason why it alone wont crash.

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Even La Manga is awash with rats deserting ship, Murcia is getting so over-developed, coastal Spain has been ruined, may as well be Sellafield. Anyone got that image of 'before and after' development of the Costas from space? Scary :(

I don't normally listen to pub bores, but one wealthy Arab type had the whole place captivated while I was out in Central London a few months ago. He claimed to own a £££m freehold portfolio in London etc. etc. and was at least a good enough actor look credible about it.

It was rather like the scene in a school playground on Monday morning when a kid arrives and he has got *THAT* toy.

Except that these were grown up, fairly well off, well educated adults.

Anyway, he entertained his audience telling them in a nutshell about how many 'baby boomers' from the EU were set to retire in the next ten years, and how Spain was going to be #1 destination for them to escape our weather etc... Therefore Spanish property was a sure fire bet for the medium term.

Sounds very good. Supply and Demand. Fundamentals etc...

There are a couple of glitches though - the Spanish aren't hung up about their green and pleasant land like our good selves. They are not afraid to throw up a few hundered thousand apartments if demand warrants it and if everybody is chasing the same money it could easily end up in vast oversupply. Then there are intervening variables.

When the Channel Tunnel was being built, it looked like a dead cert. After all who wouldn't want to go to Pairs? Twenty years ago almost all civilisation ended there. Now it is just another city in a vast continent, with a similarly indifferent climate to London. The same thing could easily happen to Spain.

And then there is the fact all the baby boomers haven't actually paid for their pensions..... There are quite a few pension time-bombs waiting to go off!!!

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  • 2 weeks later...

I drove along the toll road between Malaga airport and Peurto Banus last month. It was like a big, long building site all the way along the coast.

Unless someone is cloning buyers in special tanks, there is vast over supply.

My experience exactly tahoma.

I think Adibrown owns shares in one of your tank farms - either that, or sustained significant head injuries as a child.

Maybe wait 'til next year when the crash ripens, and pick up a bargain (for personal use only though, can't rent the buggers!)

I wouldn't pass water over Spanish property right now........

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Well i think the spainish home market is a good place, people want to leave the uk BUt want to stay near it for their kids etc.. they want a cheap place, nice weather and most important of all some where that has easy access to the Uk.

If you look at all those things spain is in the best position.

Jan 2007 the cgt drops from 15% to 6%, lots of people are planning to sell and buy a bigger place next year aka my parents.

For me spain is the place to invest look at the exchange rate british to euro best time me thinks. you could buy 2 homes for the price of one rent both out and earn more than renting one out in the uk thus having a surplus cash flow after you've paid your rent.

In my eyes Britain is falling apart we have no industry, taxes are high, large companies thinking of moving their tax to other lower tax countries. If they do that who do you think will settle the tax bill the normal joe, big stars hardly pay tax they'll start to move abroad.

People cant afford to live in britain anymore there is no future here look at india, major companies are paying out £50k plus benifits to new indian IT grads, compared to £25k here how does that add up. This country is on its last legs, a mate of mine had an interview with an investment company, now the guy that interviewed him was from india, my mate was introduced to the IT staff most were indian grads that have been in this country for 3 years. The main reason they needed another guy, this position was a lower IT grade and they could'nt fill it with an indian so they opted for a english bloke.

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But what about healthcare provision for these people as they get older, and have now left the UK: do they have to fly back over here for NHS treatment?

nope, the uk has an agreement with spain so its free and the spanish version of the nhs is much better according to my parents.

Edited by crash2006
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I thought there was something in place, but I'd also thought I heard that the Spanish were looking to get rid of an agreement precisely because the number of English people they were now having to treat was putting a strain on resources, don't recall where I had heard that though or how true it is - does anyone know?

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  • 439 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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