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Is the era of 100+% mortgages in Spain over?

A bank linked agent has been informed by Its troubled bank ‘parent’ that on the 30th of November the developments they were marketing, as many others, were passed over to SAREB (Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria – better known as the toxic bank).

During the next few weeks of integration and until they receive further notice from ‘their’ bank or SAREB there will not be any finance available or provided by the new owners of these properties.

So, the period of 100+% mortgages on bank property may be past and a large lump of the property overhang is now frozen until the integration is sorted out and new marketing strategies are in place. It’s going to be an interesting couple of months.

Campbell D. Ferguson, Survey Spain Network of Chartered Surveyors

Where are Spanish property values headed II?

Property overbuild in SpainIndividuals, 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! Continue reading

Property in Spain: When to buy and when to sell?

Spanish townhouse propertyPrices on the Costa del Sol are still drifting down, except for special properties in the best locations. There is still demand and indeed competition for those, which maintain their value. Parallel to this, the banks are under increasing pressure to revalue their stock to realistic levels and to get rid of their property mountain. My opinion is that, unfortunately, they can only do that in bulk by offering prices that are sufficiently adjusted downwards to interest investors/speculators who hope to sell-off the properties as individual units. There are just not enough individuals around wanting to occupy. The original property bubble was inflated by speculation and it’s going to have to be saved by that too. However, the speculators are going to need deep pockets and to wait before getting any return.

Having said that, I do have a client who has bought two whole urbanisations and is selling to Nordic clients, where the economies have not suffered as much and there isn’t so much personal debt. Prices are not cheap, but he is making sure that his buyers are getting quality and above-average services. However, this is a numerically limited market. Russians, Germans and some other Northern Europeans, including the occasional Brit, are the other buyers, along with some Spaniards who have somehow kept or gained sufficient finance for investment. On the larger scale developments there is Arab money being invested for the longer term, so the future of the Costa del Sol is secure and will continue to mature. Continue reading

Record drop in Spanish house prices due to bank pressure

Spanish apartmentsRegarding property in Spain, it has recently been announced that the Spanish banks are being forced to put all their property on the market at realistic prices to get their liquidity in order.

This is perhaps the start of the good news. At last we can see an end to the downward spiral, though it’s some time away and we are not at the foot yet. Everyone has known, but it’s never been formally acknowledged, that the Spanish banks have not valued the property to actual market level. Now they will be forced to do so, either by sale of the property or by having such a quantity of property marketed and sold at low prices that higher valuations cannot be maintained. If they had honestly declared the collapse of assets as it was, in the same way as those banks in Ireland and the UK, then the short-term loss of face would have been substantial, but the long drawn out damage that is currently being felt might not have occurred. Continue reading