Individuals, banks, countries, etc, all borrowed on the future. Well, the future has arrived and the loans have to be paid back. Problem is the individuals can’t do it, so the banks can’t do it, so the countries can’t do it, and thus ensues the mess we are in. At this stage, only hard work can do it and for that we need working economies, but the stable door is being closed by the banks being required to hold more money as protection against ‘bad times’. Well, those times are now, so really they should be encouraged to do the opposite. The only way out of our predicament is through the investment of labour and capital, or we’ll be in the same mess in 10 years time. Release the funds and have 24-hour ‘work ins’ instead of strikes!
The concealing of falls in value is another factor perpetuating this crisis. If the Spanish banks had accepted true valuations we would have reached the bottom of the market some time ago. As it is, it’s been a long, depressing slide. Now though, the bottom is within sight as the banks are finally having to release properties at prices at which they will sell. Sure, it’s going to reduce the values further, but it will only speed up a natural and necessary process, and reaching the bottom ‘of the valley’ is a prerequisite before you can begin to move on, and up again.
I foresee this bottoming out stage being reached before the end of this year. The next question, then, is: ‘When will prices rise again?’ The best locations and best properties will begin the process and gradually pull the others along behind them. Don’t get me wrong, this recovery is going to take years and won’t reach the previous levels in real inflation-corrected value unless there is a major worldwide economic change. So live with it – the average property is no longer a speculative investment, given the costs of purchase and sale. Buy to occupy and enjoy, like people used to do before the big ‘property speculation boom’.
Campbell D. Ferguson, FRICS, has been advising buyers on what’s real and what’s not for more than ten years on the Costa del Sol and for 40 years throughout the UK and Europe. The Survey Spain Network, arranges valuations, building and structural surveys anywhere in mainland Spain, the Balearic and Canary Islands, and Gibraltar.