willoween

I started a thread looking for a home to buy in Almeria and I thought it would be interesting to find out what other people think about the euro situation and whether now is a good time to buy property.

I am not a market expert by any means but my family have been in the building trade for a few generations so I have a fair idea of how the housing market responds to economic mealtdowns, we actually went totally bust in the early 90s when Thatcher messed with things, we had 5 detached houses in Wales near completion when the market collapsed, the buyers had paid deposits and chosen their own kitchens and bathrooms, overnight interest rates rocketed and the buyers pulled out, we eventually crawled our way back in to business but it took years.

Talking to a friend who has interests in stocks and shares he was talking of naked shares and very big moves within the market. I had sold my shares and was wondering where to place the money, "not back in the stock market" he said, "buy silver and gold coins, 70% silver and 30% gold". He also said that countries such as China will be backing their currency with silver and gold.

The way I see it in the coming months, countries that cannot back up their currency with silver and gold will quite rightly find that currency worthless.

The Euro is devistating for European countries, the likes of Germany have sucked in all of the Euros making them rich and powerful and devistating many areas.

I was recently in the Caja Granda and there was an English couple concerned about their money, "will the bank go bust?" they asked, "oh that will never happen" said the cashier, "I do think leaving the Euro will be best, I think that is what will happen, if we go back to pesatas, your money will just exchange into the new currency automatically."

But how far will the value of the Euro dive before it's exchanged? Just the announcment would cause the Euro to be severely devalued. I would not suggest it is a good idea to leave large amounts of money in Euros over the coming months but the banks have to say otherwise or everyone would panic and draw all the money out creating a worse crisis, especially when we realise that if we all went to draw our money there wouldn't enough money which drives home how massive the problem is.

But property seems an appealing option right now. Already house prices are dropping and over the next 3-4 months these should hit rock bottom. People might be wary in case the price keeps dropping and do not know when to take the plunge. I think there is a good chance anyone buying at the moment will see their investment drop in value after purchase which seems risky, but in the long term there can only be so many outcomes.

I think that Spain, if it cares about it national identity and wants to remain Spanish and not be speaking German or English by the next generation it will have to make a stand and pull out of the euro marketplace, it cannot compete against the larger countries and like big fish eat little fish Spain will be taken over.

Countries are clever, they do not need to go invading countries and bombing like they used to, they gradually take over things by taking control of finances and begining to call the shots, in a similar manner that an abusive controlling partner may attempt to control their spouse.

As for buying a house in Spain, I think that if you are buying at the moment, in the next 3-4 months would be a good time to buy, and in 5 years time, you could be doing really well from your purchase.

That is just one viewpoint and I would be really interested to see what others think about this.

willoween

Lospacoshombre

Hi,
A very interesting topic, and a very interesting post. It is a topic close to my wallet at the moment.

The current crash has given me an opportunity to punch above my weight in Spain, regarding what I can get for my money. I have always wanted to live there but the last 8 years this has been impossible due to ridiculous prices.

I watch and read all the articles and news stories regarding the Euro/Spain/Greece, and as a property speculator in the Uk understand better than most the need to buy at the bottom sell at the top, I have made money in the last 2 recessions from property, enabling me to take early retirement.

Bearing this is mind "is it a good time to buy in Spain?" my gut feeling is yes, as a great believer in "when everyone goes south, YOU go north" I think it is a good time to buy as there are desperate sellers, you may lose another 10% but if you are in it for the long run it does not matter and the lifestyle market from all over Europe will always be there.

The unknown quantities at the mo are "will the Euro survive?" I am hopefully about to seal my deal on a villa and after reading all said articles I feel keeping large sums in Euros in a Spanish bank is very risky, but also I am watching for the pound/euro rate to go in our favour so I get more bang for my buck, but I will only do this when the deal is struck, due to concern over the Euro itself.

The unknown is if the Euro breaks up, will I be left with an overpriced house that would be pence in pesetas, I do not know! My gut feeling as a property "gambler" is the Euro will not break up and if I negotiate hard now I will be ok.


I think it is a risky time, but it was a risky time when I bought houses in the early 90s recession, when you had your problems, that recession made me! (two sides of the same coin).


Regards
Al

Dick Dasterdly

Sound advice.
Likewise, its always worked very well for me with everything from housing and land to livestock.
Jump in when the market is on the bottom and everyone else has cold feet.

willoween

I think you have a very interesting point, though I disagree that Spain will remain in the single currency.

If Spain does remain in the single currency like I said in my previous post they are sure to loose their national identity. I do believe this is the reason for the introduction of the Euro as we move towards globalisation. I have heard on the grapevine the plan is to include Africa in Europe!

Countries operate like corporations, and when a lage corp struggles they are usually taken over or bought out by larger corps. This same principle will happen in Europe, countries which have asked for help so far include Ireland, Portugal, Greece and Spain. I actually put a small amount of money in the Bank Of Greece as that collapsed, the investment is not worth triple, how can this be possible? It's an artificially inflated market, which is a dangerous market.

Personally I do not believe that countries such as Greece and Spain are going to take kindly to being taken over or loosing their national identity. The Greek culture after all is ancient. They will have no option but to pull out. I would say it is close to certain that Greece will pull out, they are saying 1 in 3 chance, if they told the real situation they could not sustain the crisis.
Once one country goes we will see 2, 3, 4, 5 coutries go in quick succession and I believe all of this will happen in 5 months.

It is a concern that a property you bought in Euros being worth pesatas. Is it worth waiting for the pesata? The exchange of £ to pesata is likely to be even better!

In the long run does it really matter? I think that 5 years down the line when the market pops back up you will be in good standing either way.

I agree if you are in it for the long term and the Spanish lifestyle is what you want, things are looking very appealing right now.

missile

Conspiracy theories are rife in this thread. I wonder who you think is behind these plots?

willoween

Conspiricy theory?

I think much of what I said could have been called conspiricy a few years ago or maybe even as recent as a year ago but with the wealth of information available I think to call these points conspiricy would be akin to saying that Christianity is some crazy fringe religion.

The information is out there and is coming from various good sources.

If Africa was to be included in Europe could you contemplate the impact?

Do you think that saying we are moving towards globalisation is conspiricy? World leaders are openly discussing world government and we have been moving towards this for many years, accelerating in the past decade.

I do not believe any individual is plotting anything. Though I think the over all plan of world government could be distructive for individual identity of nations. After all the whole concept of the Eurozone and the single currency is a step towards this. If it works and the people are happy it would thrive, though that is not what we are seeing is it?

I am not trying to discuss conspiricy I am trying to establish what other people think about the European economy and whether people feel that it is a good time to be purchasing property. It is also interesting to discuss ways to protect our interests and investments should this be the case.

I would rather be prepared and nothing happen, than something happen and not be prepared.

willoween

When you are standing there asking what you can buy for 20 worldos I wont scoff and say I told you so I promise!

Leper

This is not the time to buy even if you can get a mortgage. But, there are bargains to be had. We all thought that property could not get cheaper in Ireland, but it did and prices are expected to fall again this year and fast.

Dont buy at the moment unless the place of your dreams is for sale at fiercely reduced prices.

jackytoo

I think both Greece and Spain will stay in the Euro....whilst there is a euro?

My opinion is that prices in Spain have nowhere near bottomed out. It's difficult to get a true picture when there are so many websites with vested interests but if you are there on the ground when they do you will know. 2 years ago estate agents were saying that it was the time to buy but they were wrong then and they are wrong now.

angiescarr

It's fairly easy to do some very rough maths on most properties to see if they will drop in price.

OK lets assume the property you're looking at is in good nick and you like it.

Firstly. Using the size, area and desirability of the property, (knowing crime figures & local amenities can help, as can seeing who's already living there) get an idea of the types of people who will buy there. If more than one group write down these separate groups. Take a guess at the average income of these groups. If the monthly cost of a mortgage on the particular property is more than a third of the monthly average income. Then the price can still fall. If it's way below, check again esp that there's been no recent subsidence or murders in the area for example then you might consider buying!

This is a very rough guide. Obviously there are lots of other variables but if it doesn't pass this test then you can discount that property.

britishbull

Supply and demand is at the core of this. In a proper collapse from peak to bottom the value lost is eighty percent so a half million euro villa will be had for 100,000 euro but that would only go down if there was near zero mortgage availability - not impossible given the state of the banks.

The point of getting out of the euro is devaluation, if the new Spanish currency lost half its value it would be a short term horror but eventually, say seven years later, it would have regained its value, so property as a long term hold would not be a disaster.

The more governments interfere with the market the bigger the bang when it all goes wrong.

The downside to buying property in a near bankrupt country is TAX - both local and national taxes are likely to rise, so you may well find that even on a low income you are heavily taxed and property taxes rise to even more absurd levels than in the UK. You may also end up being targeted by disgruntled locals (I would not like to be a German with a holiday home in Greece!).

Domino

just look at the "successful" UK model, the houses at the bottom end are getting cheaper and cheaper, being snapped up by hyperactive buy-to-letters who are able to get mortgages.
the houses at the top end are losing perhaps 20% but still going for silly sums. I can never see a €500,000 house going for £100,000 unless it is falling down, not even the Spanish banks would sell a property for the value of the land it stands on, because that is also a variable.

Spain has its own North/South divide the same as the UK, just that to some extent it is reversed. Many Spanish, like Brits, have high expectation of the value of their property, usually unsustainable.

.

bigglesworth

Too many Black Swan events at the moment to be sure Willoween.

I am not sure what you mean by Thatcher. Ironically she was long gone by the early 90s, having seen the policy she most opposed - the ERM- collapse and, despite her vindication, our subsequent exit from the ERM is widely credited as the foundation for Britain's recovery in the 90s. Short term pain, but as you suggest would be the case with the collapse of the Euro - long term gain again.

But the problem is evaluating what you are paying for what you buy? if your income is still sterling based, there is already a mismatch between capital outlay and future running costs. If you add in to the mix a possible collapse of the currency in which you bought, and its re-valuation according to criteria none of us know, and can probably only guess at, then it is beginning to make the 3.30 at Haydock Park look like a sure thing.

There is also a huge overhang of unsold, sometimes only partially built, property. Even if prices stabilise, buyers still have to be found for all of those. And most of those buyers will want mortgages. Given the level of corporate refinancing due across Europe over the next three years (let alone what most European Governments need to borrow to finance their deficits) I really cannot see a bounce happening in a very long time. The difference between the bounce-back of the 90s and now is that then the UK was almost alone in it's troubles. Now most of the West is suffocating from 10 to 15 years of binge borrowing by Governments and individuals, and even the Far East is sputtering.

Lospacoshombre

Hi All,
Just picking up on a few points made, the euro, which I have always been opposed to, was introduced helping create this artificial boom in asset prices. The honeymoon period which lasted 8 years was false and led the latins to have silly low interest rates (Something they have never had with tin pot, corrupt semi banana republic govts) which further inflated the bubble.

The REAL effect of the Euro is the homogenisation of Europe so all the south would "catch up" with their northern european counterparts. This does not take into account the total opposite way of thinking the latin countries have compared to us northern europeans. This is why I was always opposed to it, Spain,Greece, and Italy are all different cultures to ours and they should celebrate it. After all this has always been one of the attractions of these nations to us northerners. I love their culture and feel so sorry that now they are having to give it all up to become efficient, law abiding regulation junkies, like us in the north.
Viva la siesta, when that goes we will know that Spain is becoming like the UK and Germany etc.

Sometimes with my northern head on I get frustrated when things do not happen as you expect or as promised, then I remind myself this is why I love it!! its different.

The Spanish are now paying the price of subscribing to the Euro, and their heritage and culture will be homogenised as the price. I would love them to leave and go back to the days when Spain was unique, but sadly they have sipped from the poison chalice and are in it for the long haul..

Good luck to them, they will need it!

Regards
Al

Dick Dasterdly

Nice post, again, lospacos, always been of the same opinion myself ,and how it never appeared as obvious to those involved, as the noses on their faces that it was always going to be a non-starter, I will never quite comprehend.

Now they're all stranded up sh!t creek without a paddle and flapping about like drunken sparrows wondering which way to go next.

None so blind.......