The Pain In Spain
Once the centre of the European property and holiday home market it seems as though Spain is going though a very difficult time at the moment. Rising debt, rising unemployment and a whole host of issues in the building industry have come together to kill the property market stone dead, but are things really as bad as they sound?
The thread brings a few interesting points into the equation, not least the fact that there are thousands of unsold properties in the region. This has led to problems in the estate agency industry with more businesses than ever closing their doors, thereby reducing the potential sales teams when the market picks up. The Spanish government are also reported to have increased the country’s debt to over £300 billion, a move which will have an impact upon government spending in the immediate future.
On a more upbeat note there are a few posters suggesting that a number of developments are up for sale at a fraction of the original selling prices and there does seem to be some interest. However, the Spanish property market seems to be making a bad name for itself at the moment with many investors being left with partly finished properties as substantial numbers of construction companies hit financial trouble – in line with the sector in the UK.
There is a mixed feeling as to whether the Spanish property market has bottomed out but it would seem unlikely we will see any major recovery until the European and Worldwide economies start to improve.
Summary
Like so many property markets around the world Spain is struggling to recapture the heydays of years gone by. Once the only market which British holiday makers and property investors were prepared to look at it seems that the emergence of other markets in Europe, together with the ongoing credit crunch, has brought the Spanish property market to a halt. There are also concerns that the growing number of unfinished developments will see future investors showing extra caution at what is being seen by some as a throwback to the earlier days of the market when the property sector was dogged by unfinished properties and bad investment advice.
The thousands of unsold properties and the dying estate agency sector is a major concern for investors now and in the short term. There were a number of comments on the post about property developments being sold for a fraction of the original price in order to bring in funds as well as a number of construction companies going into administration and bankruptcy. Interestingly we may well be seeing the ‘panic selling’ scenario which is often the first stage of a recovery and could mark the bottom of the market – or near bottom.
Like so many investment markets it is often the time to look again when EVERYBODY is saying the market has further to fall. How many times have we seen property markets fall just as EVERYBODY is saying it is time to buy?
Spain will always be a very important market to the UK expat community and while the currency exchange rate is not helping in the short term there is no doubt that some investors are on the prowl for value investments at distressed prices. Spain is an interesting market and one worth keeping a very close eye upon.
You have got to be kidding me………thousands of unsold units??????? Try upwards of 2 million by the end of 2008. The Spanish economy gets the booby prize for the world,right now anyway. It will probably be the first of several economies to completely melt down. You can look for a recovery in Spanish real estate in about…..20 years.
this market is the worlds weakest. Ive never seen anywhere so overbuilt. 80 percent of the property is junk which people only bought or was only built in hope to have price increases.
This will be worse than the U S A.
Very interesting read… With some very tough comments. I'm curious to see how everything rolls out. Justin your comment about it being worse than the USA is surely not far fetched but how did you get to it?
You are quite right in many points of your comment. However, I find a curious sentence in it "dying estate agency sector", you say. I have to recognise this fact is not totally bad, I mean none will be able to calculate the huge damage that non-professional and dishonest estate agencies have made to hour image, to the whole housing market in Spain. Now the issue is getting the correct path to buy a house, I have much clear many Spanish and English associated estate agencies were not the perfect one at all… Regards.
The European property is very interesting. Comments ot his topic is very hard.
who killed the sale
the spainish with their laws no property quality of title
ok go back to a donkey for transport instead of a mers or bmw
enjoy your life paco
but people will not invest without securtiy
C, Justin and robert. by viewing your comments, I can plainly see that you have no clue as to whats going on–much less, in what direction is the spanish property market going. I hope nobody really paid attention to your comments. Then again, they are so obviously naive, they're not really worth commenting on. I have been consistently making money on my investments in spain, and at the moment, get calls from potential buyers almost every day–just sold a property at a very good profit last month. I only wish I had bought more properties to sell. Obviously, to make money in any property market, you have to do your research, and look at the local demand. It is true that the market slowed down for a while–mainly because banks were not giving out mortgages. Now this situation has changed, and the market is moving, once again. It is true though, that those investors that bought vacation properties without doing their homework, will have to keep them, or cut their prices considerably. But then again, if you invest in overseas property without researching every aspect, youre bound for trouble. And this type of investor, sure reminds me of your comments..
Real Estate in Portugal did not fall as much as Spain as market is much more stable because demand has always been bigger then offer.
At the moment you can find fantastic opportunities in the market with a lower risk as stability in Portugal is bigger. Have a look at the link (http://property-villa-cascais-portugal.blogspot.com/)
I belive the Spanish property market is overvalued. It is a bubble.
Joanna Abdoh, Barcelona
Thank you for your candid description of the real estate market in Spain. Here in the US – the Florida real estate market has been suffering a slow sales. Some parts of Florida are doing better than others but with unemployment rising many people are deeply concerned.
Everybody seems to forget that Spain has been through this before, with property developments mothballed for years. Yes the property market in Spain is very difficult, yes many buyers have been "ripped off" by real estate agents and developers with poor quality projects, yes we are in a worldwide economic crisis, made worse in Spain as so much of its income comes from property and tourism. However as the place has the benefit of sunshine and a relaxed lifestyle it will always be a favourite with the Brits and investors with money to spare, just when it will pick up is the question on many peoples minds and no one knows, least of all the so called experts who got everyone in this ess in the first place. Spain is still a great place to live and will reemerge as a leader in the property market when it overcomes its problems
Spain Madrid was the centre of the European property and holiday home market and Spain is going though a very difficult time at the moment. Huge debt, rising unemployment and a whole host of issues in the real estate industry have come together to undermine the property market stone dead… Joanna Abdoh Madrid Spain re
Spain is totally overvalued JoannJoanna Abdoh MadridS
Hi, just reading all these comments on Spain. I surf there quite a bit at a place called Costa de la Luz. It's great surfing and has a steady flow of likeminded turists. A few pals of mine and me are thinking about investing in a timber lodge home in a place called Atlantic Parks (I read about it in one of this sites forums) maybe investment hasn't stopped altogether but we have to change the way we do it. Atlantic Parks (you can find if you google them). They are offering fractional ownership which seems to me to be the way forward as you can then holiday in your investment! Any views on fractional ownership?
Spain Madrid was the centre of the European property and holiday home market and Spain is going though a very difficult time at the moment. Huge debt, rising unemployment and a whole host of issues in the real estate industry have come together to undermine the property market stone dead… Joanna Abdoh Madrid Spain
Spain Madrid …..Huge debt, rising unemployment and a whole host of issues in the real estate industry have come together to undermine the property market dead… Joanna Abdoh Madrid Spain
The real estte market has really been taking a hit everywhere is Spain and rest of Europe. Is is a very difficult time.
We have our villa for sale, at less than we bought it 3 years ago, and after spending €30,000 on improving it
Where else could you buy a 3/4 bed villa with own pool and spa, underbuild, mature gardens,large roof terrace, aircon,central heating, 5 minutes from the beach,etc etc,for €250,000 ?
This property back in the uk would be worth over £350,000,but without the sunshine and relaxed lifestyle
I know people are having to drastically reduce the price of their properties,but i for one will not.
If i was in the uk now i would fight tooth and nail to move abroad ,and spain is the sensible option.
If you can afford to hang onto your property here in spain,do so for as long as you can,things will be back to normal soon.
Terry, it would be interesting to hear did you manage to sell your villa after som much time since your posting.
If it is still available (not sold), would you please indicate the internet site where it could be found.
I am looking for a villa to purchase and would be very interested in your informatiom.
HMmmmm what a mix of views; better add mine to the debate quick before the market changes again.
Is there a problem in Spain – Oh yeah indeed there is, a big obvious one; but its not limited to Spain as we all now know only too well. HOWEVER, and this is a big however – Not all property is effected and those that pay attention when buying and select the right areas can still thrive. * Remember this situation is a temp one, thing will come back around and those that buy cheap (quality at low price and in the right area) will, eventually, make a killing.
I only deal in 5-star resorts (mainly golf or private beach resorts) which are large scale commercial projects, with serious backing and support. I have found that as you are part of not only a housing community, but also a business / tourism structure, your investment is far more secure.
In this kind of situation you retain value and interest in your property over a far longer period, and crucially have the support of the site entire development behind you. Something you simply don’t get when buying a stand alone private villa in the sticks; dealing with Spanish solicitors / builders etc without any knowledge of what’s going on.
Things are slow in Spain (and the rest of the world) but i am still selling these resort based units (buy-to-let) and there certainly seems to be no sign of this changing in the near future; far from the norm via real estates and private builds.
J.
PS: I accept that not all areas are the same. I cover Costa Del Sol & Murcia.
My sister lives in Spain, and she said the market is as dead as can be. Few there have any optimism about things turning around in the next 2 years.
Is it true that if you have a spanish mortgage with a spanish bank the property is 'safe' from any land grabbing entitlements etc?
Unbelievable as it may sound other people’s countries have purposes other than for overseas speculators to use as money generating bases.Spain is a fine example and comments above often reflect this egositic idea that other people’s Nations are fair gane for the rest of us.
By the way the predominent reason for slumps in France and Spain has been the diversion through “discovery” of even cheaper properties in areas of the old USSR which are being flogged off by real “not local” estate predators certainly sometimes with local assistance.
It’s a very ugly position this “globalisation” …”International community” invention which is a component of the introduction of what is now openly called by its mechanics, the “New World Order” of totalitarian government by bankers and in which personal wealth will determine your ability to stay above the new feudalism.
Investments. A beautiful landscape for example as you drive from Portugal to Spian and suddenly arises an ugly set of concrete apartments built so investors can “enjoy the landscape” which their very presence has ruined. These catastrophies were sold on plane tour sales bingesand people paid often very large sums of money for places whose services were sometimes in doubt.Far better buys were available outside these expat lodges.
That doubt about the sustainability and desirability of expat investment appartments went well into Government, even the spanish ambassador in my own country told me of the concern in Spain over these speculation piggy banks of concrete. British in particular were also noticed as being particularly arrogant in contesting local Spanish planning laws, still having that unfortunate belief in their superiority over the French and Spanish…and …a long list of others. Basil Fawlty draws on it in his hysterically amusing Hotel series but Manuel has an excuse,language dififculties whereas Basil well represents the intellectually challenged English view of the world “and don’t mention the war”?
The Ambassador with whom I discussed these issues was concerned, certainly with the “characterless”, and inapropriate blocks of residential investment appartments and we now see a result which was very evident to me and was very predictable in 1995 but he was even more concerned with the lack of services where some were built.People complain, understandably about land being taken by Spanish authority, some illegally, but it is wise to recall that few of us like to see our lands become havens for aliens far wealthier than we are…and unable or unwilling to fit in with local people.Certainly the “local people” can be quite self protective and arrogant and difficult but in part that’s because they like their insularity, like the aristocracies aound the world do, for example.
Certainly a lot of run down property is on the market in Spain but then,it may come as a shock to speculators that Spain doesn’t exist to amuse or annoy us.It is there to support its own people.
Agents there are now very infiltrated with British people, occasionally Dutch. What are called British and dutch agents are typically people with no formal, arms length technical training as ,say, a French agent requires to have or an Australian agent used to be required to have. They simply find and advertise property, usually on the world wide web and provide very little service afterwards. Often enough they have no formal listing but pluck it from someone else and worry about the details later.
Some make quite a point of the need for stringent legal certification in Spain, that’s a good thing. Some notification has filtered out of Spain about problems in some areas with property post-sale, with the authorites claiming or reclaiming land. As in France, rules set and understood by locals have been tested by speculative agents from elsewhere…most with no real estate qualifications other than in their imaginations and unable to find work elsewhere.The locals very often don’t appreciate being taken-over nor having their cultures changed.I recall one village in Southern France where only one Frenchman remained…and his was his holiday house. I suggested they rename it London.
Along this line of conversation you have to be very careful of buying houses renovated by British expats, much is done by unqualified people and elctrical work can be hair-raising, France actually has qute stringent electrical safety which, when mocked by expats, makes those expats feel ok having a tv mechanic run 12 volt rated, singly insulated cables unprotected in walls and behind archtraves and in ceilings, for example.
I am the first to say France for example, where I have a very considerable real estate knowledge and experience, could be brightened up considerably with great local financial benefits and that British expats sometimes do a wonderful job of bringing colour into and around these dull houses but at the same time, France provides a service to its people, lifelong rental for example at affordable rates. Speculators reduce the rental market and increase prices. The idea these places are there for our picking is extremely uncouth. Where some expats make delightful houses others bang up vile apartments sometimes in the middle of nowhere simply to take your money. It is them, not “Spain” who are responsible for ensuing losses and market slumps.
Spain on the other hand has a character of house meeting landscape however I must admit that some of the fincas don’t show any great beauty but then…their job was not to compete on the world stage but to do a job. It’s hardly a pretty stage of personal development to criticise a country with a history of such poverty and appalling inhumanity…often introduced from organisms outside Spain. Ideas to ponder maybe………….?
Anthony is quite right, this is the beginning of the 'New world Order' and I am certain nothing will ever be the same again. I sincerely hope we will all move towards a more spiritual way of life and that greed, exploitation, and expecting something for nothing will gradually diminish. The bankers can only be in charge if we allow it. By making the love of power and money our idols we have created the situation. If we find the courage we can undo what we have done.
It is greed and selfishness that has created all the property highs and lows, driven the local residents in places like Wales out of the areas they were born in so that some rich outsider can lock their newly aquired 'holiday home' up for 50 weeks of the year (no I am not Welsh).
Europeans did exactly the same to the Canary Islands, only this time the Canarians were forced into mainland Spain or South America and many of those that remained lost their simplistic, contented way of life, whilst the others jumped on the band waggon and became wealthy business people. Now the bubble has burst for them all.
Southern Spain is destined to become a desert due to climate change, golf courses – which divert the natural water course. Yes, they say they recycle the water AFTER it has been built, but the damage is done by the collossal amount of water used in construction and diverting the precious water away from many outlying villages. Add to that the heat generated by millions of cubic yards of concrete everywhere you look and you have a recipe for disaster.
Human beings need to change direction before it is too late. This poor planet has been exploited on the surface, and above and below ground. In a few short years we will be unable to feed the amount of people we have produced. So maybe the price of a house in Spain is the least of our worries.
Just one point, not all Brits are arrogant and live in houses renovated by cowboys! I know many middle class people who live in quietly in Spain, who nurture the land around them and who both respect and integrate with the local people.
Yes about the property details and also for the timeshare and all you can conslut the right person.Thank you.
I have read some of the above posts in which people said that the mortgage on the property in Spain is really safe i just want some more explanation on that because according to my knowledge when a person take a loan against property for definite period of time if the lender doesn't pay off the loan in the specified time period, bank sells the property and recover its amount then how could one say that in the other part of the world property is safe in the hands of the financial institute
Spanish real estate market prices are way too high.
If you’ve been working 12 hours a day in your business and you still haven’t made all the money you were promised, you’re probably feeling very trapped right now.
Given this post is some two years old, the author writes "investors are on the prowl for value investments at distressed prices" Here we are two years down the line and investors certainly are in the market and finding distressed prices. Question is for how long…
The problem is not going to go away in Spain. The days of the average person owning and maintaining a home at home and a home away are never going to be as they were. There is no point in owning a foreign house and having to pay for a years maintainance when you're only going to be there for 4 weeks max. And factor in dropping prices and any sensible person is not going to throw their money away.
Properties don't unbuild themselves and so the oversupply is going to keep prices from rising.
I am very amazed to this person who wrote it. very much in details and the fact that you are telling the reality and straight to the point..
I have found that as you are part of not only a housing community, but also a business / tourism structure, your investment is far more secure.If we find the courage we can undo what we have done.
It is greed and selfishness that has created all the property highs and lows, driven the local residents in places like Wales out of the areas they were born in so that some rich outsider can lock their newly aquired ‘holiday home’ up for 50 weeks of the year (no I am not Welsh).
Europeans did exactly the same to the Canary Islands, only this time the Canarians were forced into mainland Spain or South America and many of those that remained lost their simplistic, contented way of life, whilst the others jumped on the band waggon and became wealthy business people. Now the bubble has burst for them all.Home Insurance
Thank you for the useful information.
very much in details and the fact that you are telling the reality and straight to the point.. Thank you for the useful information
I agree with C Hyland. I was working near Gibraltar in a place called Santa Margherita last week. There are whole hillsides full of vacant property. The same is true when driving through the outskirts of Algeciras.
Hi there, I do think the spanish property market has good potential, and still has not yet reached its full potential, however, the times where estate agents and developers were making superprofits and returns are over and will not come back for a long time. The fundamentals are still sound, a bit shaky though, but sound.
Other property markets have become also attractive, in particular South Africa, with its world class property law and sectional title law have made a safe investment. Property price are at about 20% of the values you pay for a villa in Mallorca.
Mike
The Spanish meltdown. Should we believe what we hear in the news? Only yesterday they were saying that the Spanish Real Estate sector took a surprise upturn in better than predicted sales results. Could this be true, or were the forecasts too low in the first place. Like the article writer I personally do not see nor believe that a positive Real Estate market will return in the near future.
One exception to this would be higher interest rates and inflation. I imagine that once the majority of us are unable to obtain financing and are therefore forced to rent, the values may increase and finally put property ownership out of the reach of many.
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