Wednesday, October 21, 2009

Various stories seem to be about regarding the start of a recovery, or at least the bottom of the property price crash in Spain.
I have reprinted a report from Reuters below which seems to be eminently sensible.

In my mind, the simple supply and demand basis has to be key to the situation

There is clearly a supply in excess of any demand, certainly at the moment. Up to a million empty homes ?

Demand domestically can only increase in the long run if the Spanish birthrate and hence population increases significantly.
Or if many young Spanish, who live with their families, are suddenly able to afford their own places - which is unlikely.

Demand from overseas buyers, which is generally in the coastal areas, is currently being affected by several factors :-

Problems in the potential buyers' "home" countries - such as the UK.
Availability of finance at home - ie UK buyers had often released equity to buy in Spain
Availability of finance in Spain - currently about 60% is a good deal
Uncertainty surrounding the market and further price falls
Exchange rates - weakness in the pound is a real barrier to UK buyers


MADRID, Sept 30 (Reuters) - Spanish house prices fell at a record rate on the year in the second quarter and economists said prices are unlikely to have hit bottom due to massive stocks and expectations of a prolonged recession.
House prices plunged 7.7 percent year on year in the second quarter, official data showed on Wednesday, marking a year of sliding prices and compared to a previous record 7.6 percent drop between January and March.
Second quarter house prices fell 0.4 percent on a quarter-on-quarter basis compared with a 2.7 percent fall in the first quarter, the National Statistics Institute said.
The price of new homes fell 3.9 percent year-on-year, the second consecutive quarter of falls, while existing house prices fell 11.2 percent, easing from a previous drop of 12.5 in the first quarter, the INE reported.
Expectations of a deep, drawn out recession, an unemployment rate more than double the European average and new-home stock piles which rival much larger economies mean the property market will remain in a slump for some time, analysts said.
'Just through the laws of supply and demand, I can't believe the drop in house values has reached a bottom yet,' said economist at Renta4 Natalia Aguirre.
The government estimates there is a stock of around a million new unsold homes in Spain, similar to that reported in the United States which has a population more than six times the size.
OVERVALUED HOMES
Real estate values have been hit by sliding mortgage lending, which dropped 33.9 percent in July, and house sales, 20.3 percent lower in the same month year on year.
Before the property market crash, the Bank of Spain had warned that the boom in the housing sector, fuelled by cheap credit, had left property 20-30 percent overvalued.
Spain's economy is expected to contract 3.6 percent this year and the government doesn't expect quarter-on-quarter growth before the second quarter next year.
Meanwhile, banks are tightening lending conditions, stung by rising bad loans and deteriorating asset quality.
'The state of the economy and worsening financing conditions mean further, and deeper, price falls can be expected in the next few quarters,' said consultant at international financial analysts AFI Maria Romero.
The failure by the banks to pass on record low reference rates to borrowers will also help dampen the recovery in the housing market, Romero said.
The Bank of Spain said on Wednesday the average interest rate offered by banks to acquire homes in July stood at 3.07 percent. The reference Euribor rate in comparison was 1.4 percent in the same month.

Monday, October 12, 2009

Some signs of recovery ?

Had one of our banks on the phone the other day asking for some mortgage business !

After months of them turning most things down, and the favourite word being "no" - is this a sign of things turning around ?

A willingness to lend is one thing - actually having mortgage products that anyone wants or needs is another.

I hope it was worth it.................

To the lowlife scum that broke into my house in Malaga and nicked all the leather furniture - I hope you all die nasty, slow, horrible deaths.

Seriously, how much do they think they will get for a leather suite and a fridge freezer ?

The furniture was all 2+ years old and not in new condition by any means

What will they get - 200 euros - 300 ?

What's more annoying is the damage to the window that they made to get in, and the hassle to me of getting it all fixed and replacing the furniture.

Bastards. End of rant