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Spanish Property Market – Dark Cloud Or Silver Lining?

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Interesting reading i received by email today and thought i would share with you all:

Press Release from Conti Financial Services at http://www.mortgagesoverseas.com/

7 July 2008

Spanish property market – dark cloud or silver lining?

Is David Villa, Euro 2008’s top scorer, the only hot property you’re going to find in Spain these days? Some recent media

reports about the Spanish property market

would suggest so.

Simon Conn, Sales & Marketing Director at Conti Financial Services, the UK’s leading overseas mortgage specialist, comments on the current Spanish property market.

Forty-odd years of hurt came to an end for Spain last month when its football team defeated Germany in the Euro 2008 final. After decades of underachievement, Spain rose against the odds and led the country to victory, with its own David Villa crowned top scorer of the tournament. But what can be said about the nation’s property market? Dogged by scandals, oversupply and plunging prices, is the game over for Spanish property?

If some of the recent headlines are to be believed, you shouldn’t touch the Spanish property market with a bargepole. But I think many of these reports are overstated. I’m not denying that there have been problems, but we must look at the bigger picture.

Scandal and saturation

It’s true that cases of corruption leading to illegal building have made buyers nervous – no-one wants to invest in a property which could have been built without the proper planning permission and may be at risk of being demolished. It’s true as well that there is an oversupply of new builds, especially on the Costa del Sol, and this has made many potential buyers think twice.

Credit crunch

We must also consider the credit crunch in the UK, which means British buyers are less willing to invest in another property, but banks too are less willing to allow them to release equity from their homes to do so. Add to this the strength of the euro, which has resulted in property and euro mortgages becoming more expensive, and you may well wonder if there is any upside to the Spanish property market at all!

Tighter criteria

These factors have resulted in some Spanish lenders reviewing their terms – for example some have recently lowered their loan to value ratios - but this is a precautionary measure and could be seen simply as responsible lending.

My advice

My advice to anyone interested in buying a property in Spain, and those already owning property there is – don’t panic! There are many positive aspects to consider and it’s still the number one choice for many.

Buyer’s market

Despite rising costs, buyers are in a strong position due to the volume of properties on offer. Your chances of negotiating a price reduction are also higher. But it pays to be selective – many so called bargains are being offered at knock-down prices because they’re of poor quality and in poor locations. It may be wise to look at re-sales - that way, you can get references from previous buyers and check any other re-sales being offered on the same development. As a result, you’ll get a much better idea of its true market value.

What credit crunch?

Whilst the credit crunch takes its toll in the UK and US, things are different in Spain, which has never been heavily involved in the sub-prime lending market, and families have not stretched their incomes as much.

Spain still popular

Enquiries received by Conti about Spain indicate that things are still strong – it remains a top destination. There’s no doubt, however, that people are becoming choosier. Demand in some areas – notably the more traditional Costas - has declined, but increased in many others. Current hot spots include areas around the big cities like Barcelona, Madrid, Seville and Valencia. The Balearics and the Canary Islands are still attractive to buyers, especially the more exclusive resorts. And this is good news - attractive developments in desirable locations should consolidate their position in the current market, as buyers become more selective, and emerge even stronger when the market comes up again. Also growing in popularity is the Costa de la Luz, between the Portuguese border and Gibraltar – not least because of its wonderful climate, with the area enjoying more sunshine and less rainfall than the Costa del Sol.

New airport

More good news is that permission has been granted for Murcia’s new airport at Corvera to be built. It’s a popular area which benefits from its Mediterranean climate, with the sun shining more than 300 days a year. The project has been promoted by the regional government in Madrid for many years as an alternative to the existing airport at San Javier which draws about two million mainly-British passengers a year to the region. Budget airlines are rumoured to have expressed ‘strong interest’ in the new airport, due to be completed by 2010, and it will benefit from links to several new motorways.

Conclusion

So, what can we conclude from this mixed bag of factors? The Spanish property market is well established and I’ve always maintained that it should be viewed as a long-term investment. Spain will continue to experience problems in areas that have been exposed to corrupt licensing laws and where there are ‘land grab’ issues. Generally speaking, however, I believe that property will continue to increase in value over the long-term and the country still offers the perfect lifestyle opportunity.

Spain is not a high-risk market.

Conti Financial Services is the UK’s leading overseas mortgage specialist. It provides finance for purchasing holiday homes, investment and retirement properties in more than 45 countries, and re-financing for any purpose in 15 of those countries. For more information, please visit www.mortgagesoverseas.com

Notes to Editors

Conti Financial Services Ltd

Conti Financial Services Limited (CFS Ltd) is the UK's leading provider of overseas mortgages with over 225 different mortgage products and is currently linked to 1,000s of independent financial advisers, mortgage specialists, agents & developers worldwide.

For purchases of property overseas, CFS Ltd provide a complete hand-holding service, advising on the most favourable lending rates in the country of interest, and negotiating competitive loan-to-value (LTV) schemes over timescales to suit the client.

CFS Ltd can negotiate loans in more than 45 countries including Andorra, Anguilla, Antigua, Australia, Azores, Bahamas, Balearics, Barbados, Belize, British Virgin Islands, Bulgaria, Canada, Canary Islands, Cape Verde, Cayman Islands, Czech Republic, Cyprus, Dominican Republic, France, Grenada, Germany, Gozo, Hong Kong, Ireland, Israel, Italy, Jamaica, Madeira, Malta, Monaco, Nevis, New Zealand, Poland, Portugal, St Kitts, St Lucia, St Vincent, Sardinia, Singapore, South Africa, Spain, Switzerland, Trinidad & Tobago, Turkey, Turks & Caicos and the USA (special sterling schemes for Florida).

CFS Ltd has teams each specialising in selected countries. Each team consists of mortgage specialists, underwriters and administrators - giving client and lenders consistency whilst dealing with any mortgage application.

Conti Financial Services Limited is an Appointed Representative of Anchor Mortgages Limited, which is authorised by the Financial Services Authority

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"Spain is not a high-risk market."

Hilarious hahaha

"The Spanish property market is well established and I’ve always maintained that it should be viewed as a long-term investment."

The Spanish market is medieval in character and anyone who puts the words "Spanish property" and "investment" in the same sentence is not to be taken seriously.

Who is the writer? A salesman selling a product. It's his job to look for positives even if he is spouting total bull.

I'm just waiting for the latest spammer to join the debate to plug his/her websites.

If I get in before him/her -please give us a break. Try paying for an advert like professionals do. Spamming up these forums makes you look like a real amateur.

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"Spain is not a high-risk market."

Hilarious hahaha

"The Spanish property market is well established and I’ve always maintained that it should be viewed as a long-term investment."

The Spanish market is medieval in character and anyone who puts the words "Spanish property" and "investment" in the same sentence is not to be taken seriously.

Who is the writer? A salesman selling a product. It's his job to look for positives even if he is spouting total bull.

I'm just waiting for the latest spammer to join the debate to plug his/her websites.

If I get in before him/her -please give us a break. Try paying for an advert like professionals do. Spamming up these forums makes you look like a real amateur.

Hi Forestfire

I know from previous posts that you currently rent in Spain after trying to buy there last year but the EA inexplicably raised the price on your dream villa at the last minute.

I believe you have a vested interest in talking the market down in Spain as much as others on here have an interest in talking the market up. Correct me if I am wrong but you like Spain, indeed you love Spain, you covet a little villa by the beach that is your own villa and not rented. You even said in one post:

I would have bitten off your arm for a 3 bed villa on a sandy beach in the CDS

You now find yourself in a position were you have been renting in Spain for over a year waiting for the prices to drop and not just that but you cant sell your house in Lincoln that has been on the market for two years (according to your past posts). What an injustice. The prices aren't going down quick enough for you and to compound it all your losing money on your house in the UK!!!

So you spend your days going on forums and telling people how horrible and corrupt Spain is. You flick through page after page of websites trying to find ammunition. After all the more people you put off the more chance prices will come down and the more likely it will be that you will be able to buy a villa for less when you finally sell that bleedin house in Lincoln and get out of your Spanish rented property.

You see what doesn't cut it for me is this constant digging at Spain yet you choose to rent there. If it was so awful why not rent somewhere else? You are renting after all. Why not rent in France or Italy or Lincoln?

What the most amusing thing about all of this is is that MarkinSpain is doing exactly the same thing. He is also renting in Spain and waiting for prices to drop. He has exactly the same vested interest in coming on here and constantly talking Spain down.

There is no doubt house prices are dropping in Spain as they are in Europe, in fact the whole World. The Spanish Costas are long established and desirable areas to holiday and live. The dangerous areas are Bulgaria/Morocco/Romania/Cape Verde where anything could happen. History has shown us that Spain is and is likely to continue to be a safe long term investment. What Conte wrote simply reflects this common sense economic reality.

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I googled and the first link i read said

http://www.eitb24.com/new/en/B24_105719/po...Spanish-crisis/

"The prime minister finally used the word "crisis" on July 8 as more and more data showed Spain was being pummelled by the collapse of its housing boom, the global credit crunch and soaring fuel prices.

Economy Minister Pedro Solbes last week said Spain faced the most complex crisis in its history after over half a dozen property and construction firms collapsed.

Spain's debt default rate has doubled to 1.5 percent in the past 12 months and analysts see it reaching 4 percent by late 2009 after the heaviest period of borrowing in the country's history.

Unemployment is thought to have reached 10 percent in the second quarter, according to a Reuters poll, and some analysts see it hitting 15 percent by late next year."

Things are not looking so good according to the government.

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I googled and the first link i read said

http://www.eitb24.com/new/en/B24_105719/po...Spanish-crisis/

"The prime minister finally used the word "crisis" on July 8 as more and more data showed Spain was being pummelled by the collapse of its housing boom, the global credit crunch and soaring fuel prices.

Economy Minister Pedro Solbes last week said Spain faced the most complex crisis in its history after over half a dozen property and construction firms collapsed.

Spain's debt default rate has doubled to 1.5 percent in the past 12 months and analysts see it reaching 4 percent by late 2009 after the heaviest period of borrowing in the country's history.

Unemployment is thought to have reached 10 percent in the second quarter, according to a Reuters poll, and some analysts see it hitting 15 percent by late next year."

Things are not looking so good according to the government.

Clever boy.

It's good this internet aint it?

I dont think anybody is denying that a crisis is unfolding across economies Worldwide and in fact Spain is particularly affected on a macro scale due to its exposure to construction. I also believe that too many houses/flats have been built and there is an oversupply in parts of the Costas.

What interests me is the way it affects British people living at the moment in Spain and those looking to buy property in Spain.

As far as I can see it has very little effect unless you are a) An investor/flipper who gambled on the wrong properties B) A desperate seller, ex pats looking to return due to personal problems/circumstances c) Somebody who requires a large Spanish Mortgage to purchase

In my experience those looking to buy in Spain are mainly cash buyers (retired/cash rich/criminals). Recently a surge in cheap apartments and villas has happened in order to supply a surge in demand by MEW'ers and poor people requiring Euro mortgages. These low quality developments have sprung up in areas such as Murcia, Costa de Luz, Torrevieja, Valencia, Motril etc usually inland and on land that was worth pennies. The well known company driving this is Polaris World who buy up these cheap plots and, build a cheap golf course and then charge silly amounts for flats built around this golf course. No thought is put into the fact that it is scrubland 50 miles inland and the Brits were lambs to the slaughter. These developments will stop and this type of buyer in Spain will cease to exist in two years time. The apartments value will drop to the floor and this type of development will stop.

Anyway what I am trying to say is how will high unemployment affect joe bloggs looking to retire to Spain. In my opinion all of this will make very little difference and the people I am talking to that live out there indicate that very little has chnaged over the past few years. Everything is normal contrary to what you read in the papers....the rioja still flows and the sun still shines.

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What the most amusing thing about all of this is is that MarkinSpain is doing exactly the same thing. He is also renting in Spain and waiting for prices to drop. He has exactly the same vested interest in coming on here and constantly talking Spain down.

Wrong as stated in the other post, I own two properties here outright so I definitely have no interest in prices going down. What is amusing Einstein71 is that you come on here making statements and allegations that are incorrect. You won´t accept that nobody is buying and even those who want to cannot get the finance. You supposedly speak Spanish so take some time to have a look at www.burbuja.info to find out what is really happening.

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There is a world wide problem but there is a massive "but" to that.

Here in Finland although the forestry/paper industry is falling on hard times and one or two construction suppliers are not doing so well there is no sense of doom and gloom and indeed so many firms are still doing well that you have to wonder if a house price correction will ever come. Wages are rising very fast and inflation is highish so maybe no fall in nominal prices will occur? Finns are surprisingly techologically and engineeringly competant. Porsche boxsters and caymans are made here until 2011? And then a hybrid electric sports car will be made at the same factory. Many firms here are world leaders in their various areas be it lifts or cranes or cruise ship systems and only with a population of 5 million

Norway and Sweden are doing ok. The Baltics and denmark are not doing well. Poland is doing ok. Germany Ok but slowing. France is beginning to struggle. Russia has high inflation and has to reign that in and that is what is saving many parts of Europe so far.

As you go further south or to Ireland or west it gets worse

Spain appears to be a total basket case right now - only the USA seems worse in the west. Without ECB support in exchange for Spanish and other european mortgages there would be more or less no lending in Spain now. And nothing is getting better. So the least developed most indebted most bubbled countries are in for plenty more pain.

European rates are still rising. And somewhat ominously. There is no way to spin this to sound good as it will only get worse before it gets better.

Arguably Spain is just ahead of the pack and that kind of pain awaits most of us? Even so it seems clear that Spain is in a pretty bad mess right now.

The scary aspect of this is that money is becoming harder and harder to come by in a general sense and with high inflation there is no way to avoid higher rates - just none at all. I dont think people grasp that aspect of the current situation. Money was too cheap and now reality has arrived. Bit by bit it is coming.

http://www.bloomberg.com/apps/cbuilder?ticker1=EUSOC:IND

If 500,000 brits have property in Spain and similar numbers i guess come from other northern european countries there are factors at play here that will all work together before this gets any better.

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Your misinterpreting my post.

I quite agree that Spain is economically weak at the moment and unemployment high, lending stopped almost completely and empty flats everywhere in certain developments.

My question is how does this affect a cash buying retiree looking to move to Spain? Only in a positive way in my opinion. More choice, more likely to get an offer accepted, higher return on savings etc. It only becomes an issue if you decide to return to the UK within a few years of emigrating to Spain. This affects about 1 in 20 (beer mat calculation).

The day to day living is no different to 2, 3, 5, 10 years ago. OK so the investors have fled, the MEW'ing masses have disappeared but these people only really came on the scene in 2001/2002. In a mad 5 years Spain went building crazy and it will take some years for it to recover but I have no doubt it will, but that is just my opinion.

What is complex about the over building is that when you take a closer look you realise that it is only certain types of developments. Certain areas have it bad and those that are struggling to sell are doing so en masse in some cases within communities built to attract investors/flippers or poorer people. So there are issues in Albox and Torrevieja for example that were marketed to the UK poor (via expos in places like Hull, Leeds, Stoke, Cardiff) and many mortgaged/mew'ed to purchase. Inland areas of Costa Blanca and Costa Almeria as well as Costa De Luz. Although a cash rich retiree can pick up bargains in these areas now as distressed buyers are plentiful the unfortunate reality is that your cash rich retiree will not find these places desirable.

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Wrong as stated in the other post, I own two properties here outright so I definitely have no interest in prices going down. What is amusing Einstein71 is that you come on here making statements and allegations that are incorrect. You won´t accept that nobody is buying and even those who want to cannot get the finance. You supposedly speak Spanish so take some time to have a look at www.burbuja.info to find out what is really happening.

I'll accept that volume of sales has decreased by about 70%. This is all the flippers/investors and MEW'ers that have now disappeared along with the cheap credit. A certain type of development was being built for these people and that development has now stopped almost completely. This is great news for those living or moving to Spain to live. That is my point. If you are investing abroad stay away from Spain, if you are looking to retire somewhere now is just as good a time as any to do so. Good amount of property and possible bargains.

Spain has been building beyond demand for some years now. What is happening at the moment is the greedy developers are getting a beating, for some, ,perhaps most, a fatal beating. Lessons will be learnt and construction will almost stop completely...possibly below demand. For me, a homeowner in Spain this is great news and I can only see things improving. As developers die off new builds stop flooding the market and resales in good areas/developments become more desirable.

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I'll accept that volume of sales has decreased by about 70%. [snip]

Spain has been building beyond demand for some years now. What is happening at the moment is the greedy developers are getting a beating, for some, ,perhaps most, a fatal beating. Lessons will be learnt and construction will almost stop completely...possibly below demand. For me, a homeowner in Spain this is great news and I can only see things improving. As developers die off new builds stop flooding the market and resales in good areas/developments become more desirable.

If spain is overbuilt then most construction activity will centre on renovation of existing stock as demand requires it. So already a considerable amount of previous economic activity is no longer required and will not be required for years and years to come.

The unknown here is the degree of price fall that will be necessary to restablish a normal market. Since there is a world wide dynamic at work here then the ability of overseas buyers to move to Spain will be reduced also. Meanwhile all of the debt remains in the economy and that too will take years to work thru. Seems like a lot of headaches and some good reasons to expect further price falls.

What about social stability and so forth? One moment Spain is rocketed into a consumer society and the next it is plunging back to a simpler by gone era - or so it seems from the outside. From an outsiders viewpoint these things take a while to come visible and clear as to what happens next. Better to wait for stability before investing would be my view. It will take a while to play out so what is the hurry?

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If spain is overbuilt then most construction activity will centre on renovation of existing stock as demand requires it. So already a considerable amount of previous economic activity is no longer required and will not be required for years and years to come.

The unknown here is the degree of price fall that will be necessary to restablish a normal market. Since there is a world wide dynamic at work here then the ability of overseas buyers to move to Spain will be reduced also. Meanwhile all of the debt remains in the economy and that too will take years to work thru. Seems like a lot of headaches and some good reasons to expect further price falls.

What about social stability and so forth? One moment Spain is rocketed into a consumer society and the next it is plunging back to a simpler by gone era - or so it seems from the outside. From an outsiders viewpoint these things take a while to come visible and clear as to what happens next. Better to wait for stability before investing would be my view. It will take a while to play out so what is the hurry?

I think I agreed that the construction industry and developers are in dire straits, no doubt about this. For those retiring to Spain the reduction in new builds is a huge positive. If anything the construction boom was a real pain for those either with property already or those looking to buy. As you rightly state the industry will now stop building and simply try and offload developments in progress. It may be that developers will have to work harder on pre existing developments to try and attract buyers....shoddy quality and half finished amenities will no longer cut it. By reducing building work in fact by stopping it dead you also reduce the negative effects that came with it such as increased traffic, overburdened local amenities, overcrowded beaches, resentment by locals, dust, dirt and general destruction of local landscape/countryside etc.

The social effects in my opinion will be unnoticeable. I certainly didn't notice too much change in my local community during 2001-2007 so doubt that I will notice much change in the coming years. Time moves very slowly in Spain. People still shop in markets and enjoy the simple pleasures in life. I remember getting my laptop out in 2002 and attracting a crowd of locals. These people dont MEW most of them don't even have mortgages they still live in houses passed down from generations. Costa Almeria where my house is is primarily a farming region, it grows a lot of avocados, tomatoes, aubergines, peppers etc for a Western market that demands these products all year round. As food prices increase the local people if anything will feel possibly slightly richer. The local construction industry uses a lot of contracted Eastern European labour and my sources tell me that as the work drys up these guys are heading home. The local economy may lose some money but the labourers were sending most of their money home and very little was spent in town.

The biggest effect I felt on the local community was an increase in Brits which hopefully will now slow right down.

I fully agree about not hurrying into anything. There are a lot of poor developments in Spain and quite a few desperate Estate Agents/Shysters (some visit this site). Spain is great if you choose the right area and what might be my right area might not be your right area and so just have fun findng it. Rent for a time and visit places by yourself (without any annoying EA or Selling agent). It isnt the right time to be investing in property anywhere in the World so if you are looking to make a quick buck then look at another commodity. If you are looking for a nice retirement home, you have cash and you have spent time looking and are 100% then I dont see the harm in making a cheeky offer but Im sure others will say just keep on renting.

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Hello Einstein71.

Thank you for taking the trouble to go through all of my previous posts. I would like to put you straight on a couple of assumptions that you have made about me.

Firstly, I have sold my house in Lincoln -thank you very much for your concern though.

Secondly, I can't be bothered to go through all my posts, but I am pretty certain that the "arm biting" post was tongue in cheek.

Thirdly, I am not looking to buy in Spain any more -in fact I am moving away in the near future.

Therefore it will not affect my personal finances whatever happens to the Spanish market. All I can say is what a stroke of luck I had that all of my attempts to buy came to nothing. Had I bought I would be looking to lose several hundred thousand Euros, say 3 years down the road, or however long it takes on average to sell in Spain these days.

I have nothing to gain by talking down the Spanish market, only personal satisfaction if I help better inform a single person from making a naive purchase. By seeking to belittle my posts it is clear that you have a vested interest in promoting the Spanish property market. I don't envy you -that must be such hard work these days

Here's an article I found the other day, just in case anyone was thinking of buying in Spain in the foreseeable future:

http://www.surinenglish.com/20080724/news/...0807241301.html

Spain has no desire to improve it's image and put the corruption behind it.

They will keep grabbing land, knocking down expat villas and swindling British people of their life savings for the foreseeable future. Why? Because there is no justice.

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Hello Einstein71.

Thank you for taking the trouble to go through all of my previous posts. I would like to put you straight on a couple of assumptions that you have made about me.

No problem. OK thanks, please go ahead.

Firstly, I have sold my house in Lincoln -thank you very much for your concern though.

Oh thats good news, glad to hear it.

Secondly, I can't be bothered to go through all my posts, but I am pretty certain that the "arm biting" post was tongue in cheek.

Oh OK. You mentioned you would have bitten my arm off for a 3 bed villa for £200k because where you are in CDS you would have to pay £500k. I took this as a desire to buy a villa in Spain. My mistake.

Thirdly, I am not looking to buy in Spain any more -in fact I am moving away in the near future.

Yes you have been renting there for a while now. If you dont like it after all that time then that is probably a good idea. Some people love it , some people hate it.

Therefore it will not affect my personal finances whatever happens to the Spanish market. All I can say is what a stroke of luck I had that all of my attempts to buy came to nothing. Had I bought I would be looking to lose several hundred thousand Euros, say 3 years down the road, or however long it takes on average to sell in Spain these days.

If you had bought the right place you might not have turned bitter, and instead have been looking forward to a fun, relaxing..sometimes challenging life in Spain. Instead it sounds like you are in an unsettled state of flux, no longer happy in Spain, looking to move somewhere else. I only know my area but I dont see any major price drops, some areas I see the drops you talk about but then only in certain developments. Prices may drop, people may lose money but if they decide to move back to the UK prices will have dropped also over there and if they look to buy in Spain again then those losses are inconsequential. The only losers are those looking to buy in Spain for investment...>I wouldnt do this anywhere at the moment.

I have nothing to gain by talking down the Spanish market, only personal satisfaction if I help better inform a single person from making a naive purchase.

As a person who attempted to buy but failed and now holds a bitter and twisted view of Spain I would say you are not the most balanced commentator on such matters. Unfortunately the hundreds of thousands that happily succeeded in obtaining a slice of Spain have very little time to sit on their computers offering an alternate view of living in Spain.

By seeking to belittle my posts it is clear that you have a vested interest in promoting the Spanish property market. I don't envy you -that must be such hard work these days

I thought that forums were about expressing different opinions. Your posts are from one end of the spectrum and this forum is indeed heavily weighted from that end. I bought a villa in Spain many years ago for cash, that is my vested interest. My gripe is that people come on here and talk about corruption, destruction, doom and gloom but with little more ammo than a link through to a website where a disgruntled minority of expats let rip or a corrupt mayor is charged. My experiences are far from this and my house in Spain has bought me nothing but great joy. The people I know out there actually hope this smear campaign continues because it means smaller queues in the Mercadona and a few spare seats at the local Tapas Bar. I though would also like to be responsible for just one person taking what is said with a pinch of salt and going to Spain and thinking for themselves. Talk to the people you meet and hear what the MAJORITY of people have to say that live out there.

Here's an article I found the other day, just in case anyone was thinking of buying in Spain in the foreseeable future:

http://www.surinenglish.com/20080724/news/...0807241301.html

Ahhh I did wonder where the obligotary link to some negative news story was. Read my post above.

Spain has no desire to improve it's image and put the corruption behind it.

They will keep grabbing land, knocking down expat villas and swindling British people of their life savings for the foreseeable future. Why? Because there is no justice.

Absolute unfounded tosh. Do you know how many expat villas have been knocked down in the past 10 years? How many expats have been directly affected by Land Grab Laws? How many British people have had life savings swindled?

If you can give me figures then I will believe you. I would estimate the answer is less than 50 for each question.

Edited by Einstein71

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Einstein

Dispite all of your protestations you seem to have some kind of axe to grind here.

Spain like many places seems to have been in a complete state of denial or they have hidden the difficulties they are now going to face as they prepare for the slowdown or want to maintain confidance. It is not just construction as you seem to want to believe. Construction like car production creates a mass of service and production flows in an economy. The cafes the pubs the shops the population itself. All live one way or another based on construction or they will be seriously impacted via its demise. Construction sits on top of a massive pyramid of activity. Take away the top and the next layer down has no economic justification. You mentioned the foreign construction workers who will go home, well they live in newly constructed buildings as do many others who have no economic basis for being in spain other than for construction created spending. It is not just construction spending that will dissapear but a whole system of support for such a massive building program. Meanwhile whole areas have been build and there will be nobody to want to carry on living in them as their economies run down.

No doubt there must be wonderful places to live in Spain but for many difficult times are ahead and it seems a bit unnecessary to me to make out that this is not going to be the case. Perhaps you and your friends will be entirely immune from the troubles and you can benefit from having cheaper house cleaners and better service in restaurants but for many it will not be so kind to them.

You began by poking fun at me that i provided a link that said the government was recognising difficult times ahead and you poke fun at others who provide links.

I am not sure why you felt a need to ridicule me. Evidently you agreed with me later on in other posts and seemed to want to point out continually that you agreed with me so what was the issue?

My issue is that you are wanting to portray buisiness as usual in Spain when all the signals are anything but.

By all means ridicule me again, but what exactly is your point here?

If you say all is well then obviously people are going to point out that all is not well and this will continue ad nauseum and instead of no publicity for spains difficulties there will be endless links to spains difficulties and all driven by your desire to say its a great place to live. How about some links to support that view?

Edited by aliveandkicking

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Dispite all of your protestations you seem to have some kind of axe to grind here

No axe to grind, just putting forwards an opinion which doesn't fit well with many on this forum. I have had personal ties now with Spain for close to 14 years and although I don't get to go out there as often as I would like I am in constant contact with lots and lots of people who do live out there. What annoys me is this constant reference to Spain as if it is on the edge of some doomsday event. You also get lots of people talking of land grab and villa demolition as if it is a daily occurence. In 14 years I have never known anyone to be affected by any of this.

Spain like many places seems to have been in a complete state of denial or they have hidden the difficulties they are now going to face as they prepare for the slowdown or want to maintain confidance.

I take it you live out there and see this denial or is it just hearsay? I think Spain is much more open to what is happening with housing and the economy than the UK. The Spanish government has been quite openly discussing difficulties with a degree of honesty missing in UK politics.

It is not just construction as you seem to want to believe. Construction like car production creates a mass of service and production flows in an economy. The cafes the pubs the shops the population itself. All live one way or another based on construction or they will be seriously impacted via its demise. Construction sits on top of a massive pyramid of activity.

Not where my house is. I seriously don't know how many times I have to repeat this but way before construction became a huge industry I visited Spain and the same amount of cafes, shops and restaurants existed as they do today. There was one place that was seen as a bit overpriced but that closed down about 3 years ago. A cheap "Menu del Dia" restaurant charges 5 euros for lunch and 8 for dinner...wine included. Food is quality and rich and poor dine together. In times of boom the rich still dine in these places and in times of recession they will continue to dine there. Life goes on.

Come 6pm the boats come into the harbour and the fish market comes alive. A kilo of gambas roja costs just a euro and will last you a few days. This isn't peasant food and again the clamour for a kilo comes from rich elegant madridlenos on holiday as well as poor sun shrivelled widows. This routine will be unaffected.

Construction labourers in my region (unlike many I can only discuss what I know well) live in a town called Cuevas or hamlets inland were they eat Iahne (a stew) or mamaliga (cornmeal) and very rarely venture out. Some of the labourers Tapas Bars in these areas may be affected but they were generally no go areas and a bit rough. You might find the brothels doing a little less business and the Tabac store. In these cases I agree that the loss will filter down but the very essence, the culture, the music, the food, the beach, the fiestas, the rugged landscape will remain untouched. I think that is what it is difficult to relay to people who assimilate events in Spain with a society on a par with that in the UK. They really are poles apart. Many of the Spanish I know still have TV's that were built before remotes were invented. There evenings are spent sat around a table enjoying food a bit of music and a jug of wine. They dont have wine bars, french restaurants, designer shops, Carribean holidays, Waitrose, private schools etc. If you halved the average income of these guys their day to day activity would remain pretty much the same.

I cannot predict the future but I know that the things I most enjoy about my house in Spain are free and unlikely to be affected in any way by the economic problems in Spain. I cant talk for everyone and I am sure some young Spanish who invested or bought into over priced developments will go bankrupt and that is unfortunate but that is investment risk. Going and living in Spain will be from my experience and knowledge almost entirely unaffected by events.

You began by poking fun at me that i provided a link that said the government was recognising difficult times ahead and you poke fun at others who provide links.

I dont poke fun I simply go back to the fundamental argument "what effect will this have on cash buyers in Spain?". Providing links stating that Spain has stopped lending and IR's will go up but need to be dropped etc is simply great news for cash rich ex pats. Links that lead to articles about one off corruption charges or Mr Bloggs and his struggle against Spanish Bureaucracy are often used as evidence of widespread corruption or ex pat unhappiness.

I am not sure why you felt a need to ridicule me. Evidently you agreed with me later on in other posts and seemed to want to point out continually that you agreed with me so what was the issue?

If I agree with you I will say I agree with you. Most of your points are valid and I agree with what you are saying. I have to say you appear very switched on about most things. I will disagree with things I disagree with. I dont think I ridicule you any more than I get ridiculed by others on this forum. It is possibly light hearted banter akin to prime ministers question time.

My issue is that you are wanting to portray buisiness as usual in Spain when all the signals are anything but.

I have constantly made clear in my posts that I believe the Spanish economy to be far from healthy and in a bad way. I think for Mr Smith in his villa by the sea it is very much business as usual. On a macro scale I dont think it is very stable. Im ot sure how this will affect my friends and is at the moment having nothing but positive affects.

By all means ridicule me again, but what exactly is your point here?

Im not ridiculing just disagreeing. My view is that the only Brits affected by all of this debarcle are those that took out huge euro mortgages, those that want to sell and those that bought property for investment. I and my friends bought somewhere to live/holiday and paid cash and as a result are if anything positively affected by everything you mention in this forum that is happening to Spain. We are representative of the majority of UK buyers/residents in Spain.

If you say all is well then obviously people are going to point out that all is not well and this will continue ad nauseum and instead of no publicity for spains difficulties there will be endless links to spains difficulties and all driven by your desire to say its a great place to live. How about some links to support that view?

Why do I have to support my view? I am the primary evidence, all you can provide is secondary and in some cases tertiary evidence. I own a house in Spain, I lived there for a number of years, I speak the language and have probably more than 50 good friends that I have collected in my years of living in that area. These friends stay in touch weekly. I am discussing the effects on people like me. I am not debating the wider economic situation. The best link I could offer would be one linking back to all my posts on Spain.

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Einstein, please spare me the amateur psychiatry. You've made a number of assumptions about me that are wrong, and it appears that you've been wide of the mark with other forum members too.

You can of course continue with the personal slants -that's your choice -I don't take offense but prefer myself to stick to the subject matter.

I have lived in Spain for over five years. I do think that it is a good place to holiday, but living here is quite different to spending a few weeks in the sun every now and then.

Spain may be a good place to retire for some, but anyone considering this should take a number of things into consideration. For example, you have to add on 10% to the price of purchase to allow for taxes and other costs. Many agents charge commissions at a far higher level than the UK, and it is often said that in order to not make a loss, prices need to rise 25% from the time you purchased to when you sell. Also bear in mind that when your offspring come to sell your estate, the average time it takes to sell in Spain is over 3 years -that could be quite a headache for whoever is left with the property.

You may rubbish my link -but this is what is shows -On his watch, as Mayor of Marbella, Roca looked on as billions of Euros were laundered on the Costa del Sol. This money was the proceeds of drugs, prostitution and people trafficking. Not only did he look on, he shared in the proceeds. He was found guilty and sentenced to 1 year. He will probably serve far less. This says everything about the Spanish justice.

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I take it you live out there and see this denial or is it just hearsay? I think Spain is much more open to what is happening with housing and the economy than the UK. The Spanish government has been quite openly discussing difficulties with a degree of honesty missing in UK politics.

I arrived at that because from an outsiders viewpoint spain has been grappling with some serious economic issues related to bank lending as a result of the credit crisis. The initial view was that Spains banks were fine and had close relationships in the same way the Nordic banks functioned (I am in Finland) and were able to carry on lending even though the credit markets had seized up. It then transpired that Spanish banks were taking mortgages to the ECB in a somewhat scary manner. My interest in all of this is that who else is doing this and will it arrive here? Obviously this all gets hidden from public view. So to find out more i went for evidence on the ground that something was amiss in Spain and i was bombarded with stories that construction spending was falling.

Then you said that all was well which seemed to fly in the face of all that i was reading.

I then went and searched 'Spanish Crisis' and the first link i found reported:

--------------------"

Spanish PM's hits its lowest level {popularity) in Spanish crisis

07/21/2008

until two weeks ago, Zapatero dismissed the possibility of an economic crisis and accused the Popular Party of being unpatriotic when they suggested such a risk in the run up to the March 8 vote.

The prime minister finally used the word "crisis" on July 8 as more and more data showed Spain was being pummelled by the collapse of its housing boom, the global credit crunch and soaring fuel prices.

Economy Minister Pedro Solbes last week said Spain faced the most complex crisis in its history after over half a dozen property and construction firms collapsed. "

From that i concluded that the PM had been in a state of denial or did not want to create a panic

-----------------------

But you then once again seem to want to ridicule me for my conclusions and make out i am a fool or liar while simultaneously attempting to flatter me that i am not so daft.

Meanwhile i enjoyed your wonderful descriptions of life in spain and were it not so hot here in Finland might be tempted to travel down and enjoy a few Tacos and mingle and make some friends instead of endlessly worrying about the future of life as we know it!

:-)

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Einstein, please spare me the amateur psychiatry. You've made a number of assumptions about me that are wrong, and it appears that you've been wide of the mark with other forum members too.

You can of course continue with the personal slants -that's your choice -I don't take offense but prefer myself to stick to the subject matter.

I think it is important to understand where somebody is coming from to understand why they are arriving at certain conclusions. You often find on these forums that certain events have led people to post about things. I make assumptions and then people correct me but in the process we find out about that person in a little more detail. So for instance now we find out you have lived in Spain for 5 years which is a fair length of time. You tell us you rent so we can assume that you could have left Spain at any point within that 5 years but have chosen not to. So what confuses me is you then post a link to show how corrupt and unjust Spain is!! You have had 5 years to leave if you didn't like it.

I have lived in Spain for over five years. I do think that it is a good place to holiday, but living here is quite different to spending a few weeks in the sun every now and then.

But again you have lived there for over 5 years!!! I dont get what you are saying, you cant be saying it isnt great to live in Spain otherwise you would have left within a year. To live somewhere for over 5 years you must think it is a pretty cool place to live.

Spain may be a good place to retire for some, but anyone considering this should take a number of things into consideration. For example, you have to add on 10% to the price of purchase to allow for taxes and other costs. Many agents charge commissions at a far higher level than the UK, and it is often said that in order to not make a loss, prices need to rise 25% from the time you purchased to when you sell. Also bear in mind that when your offspring come to sell your estate, the average time it takes to sell in Spain is over 3 years -that could be quite a headache for whoever is left with the property.

Yes, dont buy in Spain if you want to turn a quick profit, fully agree. You have also forgotten to add Spanish Capital Gains Tax on any profit, if you make any. Again the average selling time is dependent on where your house/apartment is situated. A 2 bed apartment overlooking Puerto Banus harbour is going to go within a day, a 3 bed finca in the middle of nowhere is going to take years. This is why advice on picking the right place/area to buy in is essential.

You may rubbish my link -but this is what is shows -On his watch, as Mayor of Marbella, Roca looked on as billions of Euros were laundered on the Costa del Sol. This money was the proceeds of drugs, prostitution and people trafficking. Not only did he look on, he shared in the proceeds. He was found guilty and sentenced to 1 year. He will probably serve far less. This says everything about the Spanish justice.

My point is how does this affect your average punter. You obviously have no problem with it because we now know you have been renting in Spain for over 5 years. It hasnt affected me or all the people I know. What relevance does it really have?

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But you then once again seem to want to ridicule me for my conclusions and make out i am a fool or liar while simultaneously attempting to flatter me that i am not so daft.

If thats the way it came across I can only apologise, it wasn't meant to.

I do agree with everything you say on the Spanish economy, thats what I keep saying. I think the recent honesty of Spanish politicians is refreshing but gives a clear insight into the scale of the problems. Denial may have been the approach before this by politicians but I think your Spaniard on the street was talking of hard times way before any Brit was. Their exposure to a downturn in construction probably made it more apparent earlier on.

My point is this. How does it affect your Auntie Mabel who is retiring out to Spain at 57 with £300k cash? There is no doubt she should rent for a bit, sound things out, take her time. Apart from a few more places for sale your Auntie is going to see little different from 1995,1997,2002,2005 etc and her life if she moves out there is going to be no different. My point was that, not a major point in the grand scheme of things but just that your 20 odd thousand Brits moving out to Spain every year will see little different. They will be exposed if they decide to come back in the short term so my advice would be for all people looking at Spain...take your time and make sure it is the right move.

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The Spanish market is medieval in character and anyone who puts the words "Spanish property" and "investment" in the same sentence is not to be taken seriously.

I agree ....

Purchase costs = 12% of purchase price.

Selling costs = 5% agency fees PLUS 16-35% capital gains tax

Capital appreciation = negative.

Apartment/townhouse community fees = anything from 100€ per month to 250€ per month FOREVER!

Rental yields = DOWN

Euro vs Sterling = Too strong

where is the investment?

Until the Spanish government reduce the 7% VAT/Transfer tax (yes 7%!!); reduce capital gains tax; regulate notary, mortgage, lawyer and agency fees, even with an under-supply of property in the Spanish market (which we know will take years to happen given the sheer volume of empty properties on the market), investment potential remains shakey. Coupled with some purchasers of property being stung by government fines for paying too little for a property (I know 2 people this has happened to!) even as short a time ago as 3 years, the Spanish property market has been a sure fire way for purchasers to loose a great amount of money. The Costa del Sol is a sea of to let and for sale signs, but since so many of the buyers have enough money to cushion themselves during this downtime, how long will this property stay empty for? Nobody is quite sure if the bottom has fallen out of the market yet, but few have enough courage to test the water. Many of those who do, have found the banks have shut the door on lending. The 110% mortgages of last year have dried up since so many people took the 10%, handed the keys back to the bank and ran (many back to the UK, Eastern Europe, the carribbean, Dubai, Berlin to name a few!)

Town councils greedy enough to take bribes from unscruplous developers in return for illegal building permission have found themselves in jail, but nothing has been done to rectify the problem of the illegally built property. The buck is passed from government department to department and meanwhile the banks won´t lend, estate agencies won´t sell and nobody can shift their properties.

Real estate agents, banks & mortgage lenders, driven by huge commissions, pushed the market forward at an alarming pace. Now its peaked, Marbella is a ghost town. The pensioners are going outside of the eurozone since their pension money equates to less than it did a year ago, the tourists cannot afford to come here and there are fews jobs left for ex-pats and locals alike. Come to Spain and loose your money! But then again, are other overseas destinations any better in the long run? Maybe I´ve become jaded with international property investment. Is anybody other than the developers making real money out of re-selling their property at a profit? Or are these gains just numbers on a compuer screen?

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Some great economic numbers out this week, just for those of you debating the extent of the crisis.

Unemployment up from 9.6% to 10.4% - civil unrest here we come.

Housing permits down 28% Mom, and 58% YoY.

Mortgages down 36%, transactions down 34%.

And in case you forgot, retail sales in June reported down 7.9%.

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Here's a news article for our resident genius

http://www.telegraph.co.uk/global/main.jht....xml&page=1

I know you appreciate these links Einstein. You were saying how Spain's woes have no effect on your average Joe. Here's 1500 families for starters that might possibly disagree with you...

One other thing,will you help me with my own amateur psycho analysis and tell me what other names you post under?

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Here's a news article for our resident genius

http://www.telegraph.co.uk/global/main.jht....xml&page=1

I know you appreciate these links Einstein. You were saying how Spain's woes have no effect on your average Joe. Here's 1500 families for starters that might possibly disagree with you...

One other thing,will you help me with my own amateur psycho analysis and tell me what other names you post under?

Yes this article backs up everything I have been saying. This says it all...

It was right on the golf course with the mountains in the background," says Peter. "The club was to have a swimming pool and a bar; and if we wanted to go to the beach, it was only half an hour away

These are exactly the developments (Cons) that I discussed in my posts. These developments are set to drop by 50%+ in my opinion.

I dont mind repeating myself several times over...I have to do much the same to some of my "slower" staff.

Here we go again but quickly this time.

Thousands of Hectacres of land "30mins from beach". This land is arid and often unusable. Developer comes along and buys land for peanuts. Developer ships in African Grass seed and palm trees. Developer brings in graphics company, brochure produced with idylic images. Marketing company bought in to "sell the dream". All of a sudden a concrete shed in the middle of nowhere is worth 200k euros. Developer builds thousands and cant believe his luck, decides to start creating more of these "developments"....plenty of land available 30mins inland. Developers build hundreds of thousands but stupid Brits stop MEW'ing and "investment dream" disappears. Spain left with thousands of empty flats, developers go bankrupt...some stupid Brits left holding the can!!!! Simple as that.

So you get these developments and places like Torrevieja. Places that are basically crap. I have no sympathy for those who fall for these traps.

FYI Forestfire I was originally Adibrown and then Bugga. Nothing else, no need for psycho analysis. Lost password, change of email, nothing more sinister i'm afraid.

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  • 399 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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