GCM

It's true the European Central bank has raised interest rates by a quarter of a percent today but come on - that is hardly going to send the market crashing - or am I missing something i.e. are the lenders increasing rates by something more significant?

Mark

ant_samaran

The thing is that there a quite big percentage of Spanish people who is at the moment making just enough money to pay their mortgages and survive. With that 0.25 rise, a mortgage of 120000 euros rises 20 euros per month. Not many mortgages for that amount in Madrid for example (you are looking at around 300000 euros for the smallest of flats so that is a 60 euros rise). I know in England that money is peanuts but for many families in Spain it means being able to eat or not. If the interest rates go up one point you will start having very good offerts in the market as many houses will be put on sale or will be reposesed by the banks.

Wait and see.

Antonio.

Charles_Austin

"Madrid on sale"

That is how some Spanish papers have called to what is going on in Madrid. Have you been there? More "on sale" signs than you have seen in your life. Everybody seems to be aware that the Housing bubble is about to burst and those who have a flat want to sell it now, at the peak of the market. Too many flats and very few people buying anything.

Let´s see what happens.

Charles.

poollounger

Apparently very difficult to sell a property in the SE of England at the moment. Caution everywhere is the word. When I was house hunting in Spain I talked to a Britain based agent who said one should heed the advice of the Telegraph. If one cannot afford the mortgage repayments without letting then one shouldn't go ahead. Letting income should be a useful extra not a necessity.

ant_samaran

A nice article talking about frustrated people who invested all their money in flats and know are trying to rent them to pay their monthly debts. Lots of flats for rent in a few years in Spain and prices going down for sure.

You only need to have a look to the following:

http://www.lasprovincias.es/valencia...L-ECO-257.html

If you are gonna buy property in Spain wait for a few months and save yourself some good money.

Mourinho

Spanish prices are still rising (10.5% 2005) yes will slow considerably in the long established markets , but to say all of Spain will see reductions is ridiculous , you see the ripple effect with new areas being developed and prices rising ,CDL for example , for quality property there will always be a buoyant market , you would be surprised how much wealth is out there, within the next 10 years house prices in Spain will double , not my opinion , that of Price Waterhouse ,

zel

We (pretty much most of the world) have been on the verge of a recession for the past 3-5 years, hence why interest rates have been low around the world to try and cull this.

To a certain extent it has helped but due to interest rates being so low people have also taken on lots of further unsecured debts, IE Loans, Credit Card etc. Not to mention gone property owning mad!

2006/7 is a critical time for western europe interest rates are not raising because we are coming out of the ecomonic slow down they are raising to stop people from getting themselves further into debt and stretching themselves further than they can cope with.

Bankrupty is on a huge increase the past year in western europe, people are not spending as much in the shops as they are taking governments advice to slow down on their spending. After this slows down the property market is next to be hit, people are going to think twice about mortgages when they can only just afford their mortgage now with interest rates "low"

Small time property investers are also thinking twice as they know that if interest rates keep raising, people will buy less property in general thus there will be more property on the market so the supply and demand will reverse, property prices will drop and so will rents. The people who have invested in buy to lets and holiday rentals will have to lower their rents to compete when what they really need is to raise them to cover the mortgages raises.

Then you have the holiday home people, when your government is telling you to watch your debts and outgoings (like most of western europe governments are) the vast majority of people who want a holiday home will do the right thing and wait and see what happens. So even more property sitting around not being sold.

These above groups for the most part (at least the small time investers) will be forced to sell and even more property will flood onto the market, thus reducing prices even further.

Not to mention that especially in Spain the property building growth has been huge since the Brits/Germans/Swedes/ETC have been buying like crazy, as with most bigtime investers who build huge urbanizations these have been paid for and organized years ago and they have no choice other than to go ahead with the builds. So EVEN MORE property on the market.

Let's not forget the price of your property is DIRECTLY effected by supply and demand no matter where you live in the world. If you live in Park Lane or Palma your property prices WILL drop in the next couple of years, they might not drop as much as someone out in the sticks where damand is less, but never the less the property will drop in value.

I have a rather close friend who is an economist for one of the biggest finanical institutions in europe and when I asked him his advice about buying a property in Spain in view to move out there his advice was to wait and see what happens.

He did however say that one never knows as the property slowdown in the UK (SE) has started already and will probably be much more aggressive slowdown than most of europe (maybe even a crash) people who are forced to sell their homes in the UK as they can't afford their mortgages may use any equity in the property to move abroad and that could bolster the property market.

Mourinho

Of course there is a slowdown in the rate of which property prices are increasing , 30 % a year which we have seen in previous years is unsustainable , but to talk of crashes is ridiculous , UK market rose 5% in 2005 and prediction is 3% rise in 2006 , Spain will not be too disimiliar , the next interest rate move in UK will be a decrease while in Spain there will be little or no change , my advice to anyone wanting a place in Spain is don't buy for the sake of it but if you find the house of your dreams go for it , if you wait you'll be losing something you can't buy ,time spent enjoying life .

ant_samaran

I really believe that anybody buying property in Spain at the moment is just brain dead. There are many other european countries (Italy, Greece and east european countries) as sunny as Spain and where you can buy a nice property by the sea for about a third of the price of what it would cost in Spain.

Also buying in Spain is just dodgy. Do you know that a large number of properties are built in "illegal" land and are bound to be demolish in the near future? Of course a State agent or a dodgy solicitor won´t tell you this.

Antonio.

GCM

It's true that there are cheaper countries than Spain but then Spain's advantage is that it is a less risky option. There are huge English communities now and many people feel comfortable having access to things they are familiar with i.e. English TV, newspapers, ability to make friends and join clubs and do activities etc.

You do have to be very careful where and what you buy but most property is legal and we only hear about the horror stories which are generally exceptions.

Mark

zel

I note you mention nothing about making sure you can afford it once we (most of the world) starts coming out of this ecomonic slow down and interest rates rise to a "normal" level once again. Remember a mortgage and property is a long term investment. If people are already into their comfort zone in terms of mortgage in my personal opinion it would be absolute madness to buy and hope for the best!

Like I said when there is a mixture of massive bankrupty increases, unemployment levels rising, first time buyers being priced out the market, people having huge unsecure credit debts and what I have mentioned in my first post ANY housing market no matter if it's in europe or mars will go one way and that is downwards.

By the way there may of been a small (in comparison) increase in property value but those figures are for the entire UK. As with anything property related in any country the most expensive places to live get hit first then it's like a ripple effect.

I happen to live in I think it's either the second or third most expensive place to live in London and my nextdoor neighbour has had her house on the market for 4 months and had to take a £45,000 hit on it to get rid of it. Even this time last year it would of sold for the asking price or more (sometimes there's a bidding war) and the sold board would of been up within 2 weeks, if not sold before it officialy went onto the market!

sortedtoo

but most of these other countries are freezing cold in winter - bulgaria cheap/winter cold, same for greece

meseta

temperatures this morning

place time( GMT ) temp ( c )
Sofia 0330 minus 6

Kalamata 0350 +3
Greece

Constanta 0400 minus 2
Romania

Dalaman 0350 +6
Turkey

Malaga 0330 +13


Just for info !

sortedtoo

Just checked myself @9.21 GMT

Malaga 12
Alicante 10
Leeds 6 (where i currently am)

and then those up and coming winter sun home locations
Varna (on the black sea) 0
Dubrovnik (croatia) 3

I'll just fly over to bulgaria this afternoon (wat no flights) to my villa and sip a glass of wine on the balcony overlooking the black sea (0 degrees and actually -6 in the wind chill) !

jaldridge

Actually, I think it's not a bad time to buy in Spain. There are SO many properties for sale that if you are prepared to haggle hard you can really make a huge saving on a property. We know someone who just bought a townhouse for 200K which was advertised at 285K.

I'd approach buying off plan with a bit more caution though...

Lots of people are desperate to sell so it truly is a buyers market.

Just my 2 cents.