patrick.net

Why would anyone buy a Spanish property at all? They had a much bigger bubble than the US and the market there isn't even half way to the bottom yet. In all fairness not all of Spain, just all the places you would actually like to live. Not to mention huge unemployment, massive debt, even more massive private and public sector deleveraging. Plus if you actually live there Spanish taxes are huge. Spain would be my dead last choice for buying property in the EU. Buying property in Spain would be catching an entire drawer full of falling knives. Greece isn't going to break up the EU, Spain is.

I have lived in Spain for 8 years and would rather be here than anywhere else in Europe, including my home, England.

The property market has almost bottomed out here, not quite, but very nearly. Prices increased a little and sales by volume also increased in Q4 2011.

Banks have been told to release more from their portfolio, which are the things holding the country to the ground. When the bubble burst banks were left with so many defaulted loans that they had to get public bailouts, like in other EU countries. Billions in bad debt has been covered by the government now with guarantees in place for the future too.

That in mind, you can pick up some real bargains down on the south coast, where I am. I'm talking 5 bed luxury villa, private pool, 10,000 sq meter plot for under half a mil. Five years ago that would have been 2-3 mil easily. Every day I see Reduced, Bargain, Repossession written all over agency windows and banks now also.

It is a mess, there is no denying that, but it's not as bad as you make out, probably from what the media tell you. Spain is likely to fall into another recession this year but it wont be responsible for bringing down the Euro - Greece has already cast that stone. You have to bear in mind that the two are very different. Spain will not do everything the EU tell them, they never have. Spain TOLD the EU what it's deficit target would be for this year, not the other way around. Also bear in mind that Spain is still the number 1 destination for European tourists - over 57million tourists visit Andalucia alone every year. Have you any idea of the revenue that creates? Spain will survive purely because of the weather. 300 days of sun guarantees tourists all year around. Also, there are plenty of "rich and famous" down on the coast and they, along with a surge in Russian interest, will keep the high-end properties selling.

Unemployment - yes, 23% at the moment. Worse though, in Malaga, unemployment of 18-24 yr olds is over 50%.

ThreeBays - yeah, cheaper to rent than buy, mainly because the banks aren't lending at the moment. When you do manage to squeeze a mortgage out of them the interest is crippling.

Fingers crossed!

What? Invest in Spain? with a whopping 23% UE rate? you gotta be really kidding.

http://www.tradingeconomics.com/spain/unemployment-rate

topcoates says

Every day I see Reduced, Bargain, Repossession written all over agency windows and banks now also.

Which means that the bottom is not even close. When that stops and the banks don't own any more houses will be the time to buy.

I'm not against Spain. I have given it serious consideration for retirement, but the taxes are just too high. What I am against is buying in Spain at this time.

Real estate is an "investment" that pays negative dividends in the form of property taxes, maintenance, and insurance. Using leverage makes things worse, since you're paying interest to boot.

You lot never heard of buy-cheap sell-high??

I can show you property here today that is half the price it was three years ago. There is no loss involved in buying a property at that price. If you look back through history there is a recession here around every 10 years but it always comes back. It has always been, and will continue to be, the most popular country for tourists and expats in Europe and we are more than half way into this ten year stretch so technically on the way out, which means prices beginning to rise again.

The trick is to know when the prices are not going to fall any lower and be sure you get the absolute best price. Buy now though and you are likely to make a profit. Depends what you buy for. Buy-to-let is making people plenty of profit here at the moment. Making a profit from Buy-to-live depends on your income and expenditure, and time frame for selling. Each case is different.

Regarding the bank repos, the banks can't shift their stock because they have too much of it. The government has given them strict instructions to sell more and at reduced costs. They don't "own" houses because they wanted to, they have been lumbered with billions in bad debt from people who bought at the price peak and can no longer afford to pay. These toxic debts the banks hold have been causing bank closures/mergers all over the country as the smaller banks suffocate under their bad portfolios, that they don't want.

So where would you guys invest now then? Say for example you had 200,000 of your local currency to invest in property. Where would you put it? I have to say Spain, based on my knowledge of the market here over the past 10 years (although I admit I know little about the market in other countries) . It will bounce back. Greece wont.

Following on, to anyone who reads this, I'm interested in the state of the market where you are.

Are foreclosures still rising? Are banks lending? How do prices compare to 5 years ago? Any info will be appreciated thanks.

bubblesitter mentions the Spanish unemployment rate.

We sent a month in Spain and Portugal in October. While in Barcelona it was announced that the unemployment rate was 21.5 percent.

Given such a number you might think poverty is everywhere and that there are food riots.

It's just not the case. We traveled extensively and the two countries are modern and immaculate. We found nothing that looked like Camden, Flint or Phoenix.

The Barcelona streets were packed when the news came out. They have large pedestrian areas and huge numbers of people were walking, shopping, going to the cafes, etc. It looks like a crowded Fifth Avenue. The people are nicely dressed.

It's very difficult to reconcile the Spanish unemployment numbers with the way people there actually live. Maybe Topcoates has some insight. Could there be a lot of unreported employment, jobs off the books?

There are certainly discrepancies between official unemployment figures and the actual number.

Many thousands of people in Spain don't register as residents so are not included in figures - they are not officially here.

There is a large number of illegal immigrants in Spain, especially on the south coast, not many miles from Morocco, who ply their trade to the tourists on the beach and around the local bars. Although they are not a drain on fiscal resources (they claim no benefits) they do use the streets, public facilities etc, which cost money to maintain.

However, the "unemployed" don't stand out because benefits in Spain are ridiculously high, based on your most recent salary. For example, if I earned 2,000€ per month and was made redundant, I could receive up to 1000 per month, maybe more, in benefits. I know people here who are taking more than that, and many of these people do other jobs for cash, therefore they are not in a hurry to get a contract and stop receiving benefits. The "black money" market was a lot bigger a few years ago, but it's still here.

It's not a good situation. Many unemployed people here are financially better off than they would be in employment. The government could save billions by reducing benefits. It would add incentive for people to get back to work, something that is missing at the moment. Many people get the benefits approved and then spend six months on the beach while the rest of us pay for their sun cream! There are no checks to ensure you are applying for work, no encouragement, no incentive, just free money.

As for the way people dress, the streets being busy etc, the overall cost of living is very low, far lower than the UK or France, for example. A beer will be 1€ in most Spanish bars, you can eat a tapas lunch for under 5€. A pack of cigarettes costs around 3-4€, cheapest in Europe. Petrol is on the rise, 1.49€ per litre at the moment - expensive, but still 50c p/l less than in France.

"Al Fresco" is also a huge part of Spanish culture - everything is done outside - because they can! If the sun shines, and it always does, the Spanish are outside to eat, to drink, to party - any reason is a good reason!

Unemployment is now over 23% and rising. Rajoy, the PM, expects it to top 25% this year, before it gets better.

topcoates says

You lot never heard of buy-cheap sell-high??

Yup, it already happened. We are now in a "buy cheap, kick yourself later when you realize you could have gotten it much cheaper". Get used to it.

OurBroker says

Given such a number you might think poverty is everywhere and that there are food riots.

It's just not the case. We traveled extensively and the two countries are modern and immaculate. We found nothing that looked like Camden, Flint or Phoenix.

I was all over Spain last year, and I did see problems. The number of half buildings and bridges built was amazing. I remarked to locals a few times that I think Spain has rented all the cranes from Europe. It is a running joke in Spain, how much construction was started with the EU loans and never completed. It was a national make work project that everyone knew would never get additional funding to complete. Now the work is really in taken the half built projects down. More make work projects in a country that is allergic to a full work day. :)

RentingForHalfTheCost says

We are now in a "buy cheap, kick yourself later when you realize you could have gotten it much cheaper". Get used to it.

Yep, there are plenty of people who bought last year and are now kicking themselves. Those that bought in 2006 and 2007 when prices peaked are kicking themselves harder than anyone. They are guaranteed to make a loss!

The siesta, which I assume you refer to in your second comment, is not as common as it used to be. Few companies still allow the two hour lunch break. I used to enjoy that when I arrived in Spain but not any more. Banks, though, still close at 2pm, and I mean close. They don't re-open at 4. They are only open from 8am - 2pm and not many, if any, open on Saturdays.

The work ethic is sadly lacking amongst most Spaniards.

topcoates says

The trick is to know when the prices are not going to fall any lower and be sure you get the absolute best price.

I still haven't heard any reason why the prices are not going to fall any lower.

Why is this a good deal? How does it compare with a 770-ft condo on the Florida cost. somewhere in the countryside, outside Miami?
170kE is about 221k$.

http://www.marbella-resales.com/marbella-property/5891340000/2-bed-Apartment-Reserva-de-Marbella.html

Ref: MFSPH474 Price: 170.000EUR Town: Reserva de Marbella
Beds: 2 Baths: 2 Plot: 0m² Built: 77m²
Description

More on Spain today from patrick.net links, expecting more than 12% drop in prices in 2012.

http://www.bloomberg.com/news/2012-04-01/mortgage-column.html

Topcoates, are you still recommending that people buy in Spain !!??

yep. I'm here, in Spain, on the ground, in real-estate. I talk to buyers and sellers every day. I see what people are asking for, how much they are selling for. I deal with banks, lenders, lawyers... every day. You believe the media if you want. See how far that gets you.

New house price report for March 2012 shows prices fell 11.5% year-on-year. Overall prices are on average 28.6% lower than at the peak in 2007.

This shows that prices have not fallen as sharply as the media would have you believe.

What it also shows is that the market was surviving ok by itself until government austerity measures were put in place.

2011-2012 saw an 11.5% fall, which means the cumulative drop over the previous 4 years was only 17.1% - OVER FOUR YEARS! Then in 2011 austerity measures and cuts all over the place and the market drops 11% - no coincidence. Don't blame the bankers, blame the politicians.