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Spanish Resale Property Prices Down 20%


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The Red de Expertos Inmobiliarios (REI), a trade association for EAs in Spain (not the mickey mouse Brit EAs!) has said that resale property is taking up to 15 months to sell because of the glut of properties on the market and by the end of the year prices for such properties will be down 20%.

http://www.abc.es/20071005/economia-econom...0710050252.html

At one point you had to be a registered professional to sell property in Spain and REI was the professional body for EAs. Since then the market has been deregulated - hence the huge number of fly by night EAs in Spain today - but REI continues to represent the professional end of EAs.

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http://www.gulf-times.com/site/topics/arti...mp;parent_id=26

UK buyers face Spanish housing woes

Published: Friday, 5 October, 2007, 12:35 AM Doha Time

By William Kemble-Diaz

LONDON: A slump in the holiday homes market on Spain’s sun-rich coasts could add to the pressure on Britain’s rattled mortgage industry, which has lent billions of pounds to fund the retirement dreams of UK homeowners.

Squeezed by higher mortgage rates and slowing house prices at home, Britons looking for stop-gap funding would now find it harder to cash in on their place in the sun.

Some fear a vicious circle if Britain’s property market turns nasty - with a surge in second home sales feeding the property glut that is taking hold in Spain.

“It has the potential to feed back on itself as people look to raise money by first selling their second homes, further depressing prices in places like Spain and making it harder to sell,” Tim Drayson, senior international economist at ABN AMRO told Reuters.

After all, Drayson said, that would be a simple reversal of what happened on the way up, where people drew on the rising equity in their UK homes to snap up Mediterranean villas, French gites, and Alpine chalets. UK housing equity withdrawals have been running at around £10-13bn ($20-$27bn) per quarter since the start of 2006, according to Bank of England data.

That is down from a peak of £17bn in mid-2003 when UK interest rates were at a near 50-year low, but still a sizeable source of consumer funding.

The Council of Mortgage Lenders (CML) says there is no precise data to show how much of that released housing equity was used to buy second homes abroad, and cites survey evidence that the vast bulk of it went into home improvements, holidays, and cars or to pay off other debts.

But if only 5 to 10% of the more than £250bn of UK housing equity withdrawals since 2002 was spent on second homes, then £12.5bn to 25bn of British money is tied up in foreign property.

Five to 10% would be a “plausible” assumption, Drayson said, although Jamie Dannhauser, an economist at Lombard Street Research, said this could be an overestimate, because many such purchases are funded directly from savings.

Either way, it is clear that British buying of foreign homes has surged in recent years, that some of that has been funded by Britain’s own housing boom, and that Spain is a preferred location. According to property services firm Savills, there are now 400,000 British-owned second homes located outside of the UK with a total value of £52bn - compared with £7bn in 1994.

Spain’s share of this total has been slipping as new markets open up in eastern Europe, Asia, and Latin America, but at 34% it is still the single biggest foreign location for UK-owned second homes, according to Spanish government data.

Savills said these 140,000 or so British-owned homes were in addition to any primary homes owned by Spain’s bulging coastal community of UK migrants and retirees, which an official census put at 314,000 at the start of 2007 but which is widely thought to be even higher.

Those homes are now caught up in a deteriorating market as years of excess building - Spain has been Europe’s biggest consumer of cement for many years - finally puts paid to the country’s decade-old property boom. – Reuters

Interesting tp see how it will pan out.

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You wont make money buying into over supplied markets anywhere. Buying abroad is a tricky business. I would only ever consider high quality developments in 'under supplied' markets.

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You wont make money buying into over supplied markets anywhere. Buying abroad is a tricky business. I would only ever consider high quality developments in 'under supplied' markets.

As well as speculators, a lot of people buying abroad don't do so to make money. And there is often good reason for markets to be "under supplied" so that is no guarantee of success either.

Two thirds of those who do move abroad come back to the UK within three years - they haven't bought to make money, but to start a new life. For whatever reason they decide or have to come home. That's who will be hit hardest by falls.

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20% down in the 1st year of Great Crash 2 points to the 50-60% drop in all bubble lands as many of us predicted on HPC.co.

Many EAs in the UK have bnroken ranks and openly admitted business is bad and the mainline papers (FT etc) are warning that BTL is finished with the prospects of a massive glut of houses on the market long before winter sets in. What is really the most amazing feature of all of this is that so many are shocked that it is happening. We have had a few weeks now of "soft landing" talk and anyone notice how this has dissappeared now that grim reality can no longer be ignored, or covered up?

Time for Wrongmove to switch sides? Europa must be long gone by now?

Edited by Realistbear
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15 months to sell for those that haven't given up.What they should be saying is that for most resale homes you haven't got a cat in hells chance of selling.

This is sadly the case for many in Spain - particularly those on the Costas and those who moved "inland" from the Costas. You can sell - but only by knocking 30% plus off the asking price.

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This morning the hpc website seems awash with advertising for Polaris World! :blink:

Can anyone help my memory. I thought that the UK TV adverts talked about prices frm 89,500 pounds. The Polaris World pop ups on here are quoting that figure in Euros. Is my brain playing tricks on me or have they fallen 30% in a few weeks?

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Many EAs in the UK have bnroken ranks and openly admitted business is bad and the mainline papers (FT etc) are warning that BTL is finished with the prospects of a massive glut of houses on the market long before winter sets in.

What's supporting prices of (convertable) 3-5bdr properties again? Surely not some latent "potential" as subdivide-and-flip? Oh dear. The market is speaking, and there never was a preference for this.

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slightly over done it me thinks, 300k empty plots !

http://www.direct-auctions.com/EN/123EN.ne...asp?newsid=2894

If only that were true - 300,000 properties completed last year remain unsold. That doesn't include those that came to market before or since that also remain unsold.

To give you some idea of the real problem, in the province of Malaga alone, there are 100,000 empty properties according to The Times.

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Well, reality has bitten at a local estate agents. Lots of property in the windows with "reduced" and the amount the asking prices have dropped by. Some 10K, some 30K - this is city centre stuff. Some 2K - no comment. And they are still building. Well, the sites are being cleared and adverts put up. Most ambitious is a 3 storey development with a swimming pool on top - wouldn't fancy buying/renting below that.

As expected, the stretched are beginning to flog their parking spaces first. Signs go up, and are ripped down by the local competition, also trying to sell their own.

Know of a couple of people having trouble meeting their mortgage commitments - but as the article suggested, I expect these will be helped out by family, so with any luck, only the speculators will get f***ed.

btp

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And they are still building. Well, the sites are being cleared and adverts put up.

It´s interesting that you say they are still building. It may be just in my area, but I´ve noticed quite a few smaller developments lately where the cranes have disappeared and all that is left is an empty shell. There is a massive private villa that was being built in my road where all work seems to have ceased. This place would probably be worth 1m - 1.5m Euros when completed - perhaps the owners have run out of cash.

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It´s interesting that you say they are still building. It may be just in my area, but I´ve noticed quite a few smaller developments lately where the cranes have disappeared and all that is left is an empty shell. There is a massive private villa that was being built in my road where all work seems to have ceased. This place would probably be worth 1m - 1.5m Euros when completed - perhaps the owners have run out of cash.

This is city centre stuff (Barcelona), in a reasonable neighbourhood, so I guess that developers would rather abandon sites out of the centre rather than these. Have to admit some sites out on the outskirts of Hospitalet seem to have been stuck at "shell" stage for some time. Then again, this might be due to a shift towards commercial property development nearby.

Did you see the "Callejeros" on Cuatro a few months back? Seemed to have pretty sad examples of off-plan gone wrong.

btp

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You wont make money buying into over supplied markets anywhere. Buying abroad is a tricky business. I would only ever consider high quality developments in 'under supplied' markets.

Would you accept that ...

Given that in every country there are planning laws of one sort or another and that, therefore, the supply of property for sale is limited by the law

... buying property, as a foreigner:

  • who never intends to live in it

  • who intends to rent it out either as a holiday rental or to local people

  • whose primary reason for buying it is to benefit from capital appreciation

  • whose actions price local people out of the property market because they do not have access to the same level of capital/borrowing as the foreigner

is immoral?

Edited by Lets' get it right
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