expatnevergoingback

Back to the real world, courtesy of the Telegraph

http://www.telegraph.co.uk/money/mai...-mostviewedbox

Justlookin

and see thread

Telling it the way it is for a change!

bigglesworth

Hey dont get too downhearted. Although the article is indeed predicting a meltdown in the Spanish property market, it is also forecasting a collapse in the Euro. Som surely the one would balance the other out?

Justlookin

Now thats what I call good news, or is it???

Obviously for those retirees already in Spain and renting it has to be great news but if you own your home in Spain perhaps not so good.

bigglesworth

Sorry - am really talking about retirees or those with some sterling based income. Of course value of house going down is bad news for owners. But if the Euro goes down as well, their monthly sterling income would increase to balance it. Renters earning in Euros would gain on down move in prioperty price, and be unaffected by Euro decline. Renters and retirees with a sterling income would win both sides. And the latter have been badly hit over the last few years with the huge increase in property values and the collapse in sterling against the euro.

The worry has to be that when the Euro falls against the dollar, which it will in my opinion, that it takes Sterling at least part way with it. Which plainly would not be good for any of us.

The other positive aspect is that the enormous growth in public sector debt in the UK is at least partly responsible for the collapse in property values. However this is not unmitigated bad news as the consequence of the growth (net public sector debt 10 years ago was about 370 billion - now it is about 620 billion) is that interest rates will go back up to realistic levels, benefitting retirees and anyone with savings, investments or pensions. Especially as the government is proposing to borrow its way out of trouble. Not good news for the economy in the future, nor those working in the UK.

Rocksport1

So what your saying is. I'm renting at the moment and should leave it awhile before buying? If as suggested the downturn is going to last 3-5 years, how long should I be waiting till I buy?

Sam.

bigglesworth

We are in much the same boat, as we are certainly delaying buying until next year at the earliest (unless something comes along that we think may not be there in a year's time).
Assuming you are buying on mortgage, and/or with a Euro based deposit, then if you are renting, the downturn can only benefit you. There are no certainties in life, but (for example) in the UK property peaks every 15 to 17 years and then typically takes about seven years to regain the previous real highs (often disguised by inflation). It is highly improbable (some might say impossible) that the market will recover in the the short term, so I personally see little risk in waiting one or two years. The Spanish housing market is far more over supplied than the UK, so the downturn can be correspondingly more brutal. The critical difference though is that the Spanish Government seems more alive to the inherent dangers. The big developers who HAVE to sell will do so fairly rapidly (probably within the year) so the number of bargain basement dals coming from them will reduce. The presure on the market will howver remain for some time to come. If you do HAVE to buy, but WANT to buy, then if I were you (and in some respects I am) I would do as several others suggest on the forum -sit tight and make silly offers. Someone may well bite. Even if you wait a year or two, I will be very surpised if prices have gone up at all, and not at all surprised if they have weakend more. So long as your income is in Euros, any change in the exchange rate will not make any difference.

If however, you are sterling based, and lookijmg to buy out of sterling funds, or a sterling income, you need to think very carefully where and when you want your risk to lie. It would certainly be worth talking expert advice if that is the case - and I dont mean one of those supposedly independent financial advisors who only really want to sell you insurance. In the financial advice game, you really do only get what you pay for.
Hope it helps, bear in mind though this is only my opinion.

bigglesworth

Sorry second paragraph, I mean if you don't HAVE to buy, but WANT to buy.
First law of communication, before opening mouth, first engage brain.