Splatt

As far as I'm concerned it's all about yield.
In the UK if you can buy a house and the rental income is 10% of the PP then it's a good deal. Period. When I first got into property you could pick them up with 20%+ yield. Those days are gone.
Yields in some areas of the UK have fallen to 3-4% and investors were banking on just covering the mortgage and making their profit on the asset value, wrong way to invest in property.

In Spain I think a similar valuation method applies, if you can let your house out and receive 10%+ of PP per year then you have a good buy. There is of course the added problem of less holidaymakers in certain areas, but I maintain that yield is always the bottom line.

There is plenty of money sat around waiting to come into the market when most people are at the peak of their doom-mongering. Which may be in the next year or two IMHO.

Ste.

chrisandvee

Its amazing how quickly things have turned around.
This time last year I was working for parador with 100 reps and now I believe they have about 6 reps!
It shows one thing, the Brits look like they are staying away at the minute.

I live in oz now and the housing market is going through a tough time here too.
I have been selling real estate in perth for 6 months now.
In 2006 there were 5000 properties on the market in the perth region.
Today it is 22000 properties, so I hear.
I think the whole world is gonna have some tough times ahead

pete_l

Exactly my view too.
Where I live in the UK there are houses valued for sale at £300k being rented for £1100 pcm - obviously below the cost of the mortgage. In Spain the situation's probably even worse. I have neighbours out there who can't let a €150k house for €400 a month.

However the Beeb aren't exactly blameless in their reporting either. To use terms like "free fall" and "housing crash" when prices have dropped between 3 and 5% is, in my mind irresponsible and sensationalist. It's not just limited to their over-zealous financial reporting. Yesterday, on the chinese earthquakes, they were showing footage of rescue workers walking away from a rescue site in an orderly and controlled fashion (as they'd been ordered to evacuate on rumours of a nearby river bursting it's banks). the commentary from the newsreader was using terms like "fleeing" and "panic". It was obvious from the footage that they were trying to jazz-up the story. I wish they'd leave this style of shrill reporting to the tabloids and just give us the facts about the housing market and a sober, reasoned analysis. Then maybe there'd be fewer people feeling stressed about the situation.

zel

It's a very grim outlook for most of the world mate and won't get any better for at least 3 years I'd imagine.

The more worrying thing about it all is it's going to get massively worse before it gets better. Owners of properties will have to start to get realistic about their true value if they want rid.

Problem is you get the intelligent people who have more than likely already reduced their property to get rid of it and then you get the majority of people, who are the wishful thinkers, who don't reduce and hope for the best.

This group is the problem, because it's just a matter of time before they get more deseperate and start slashing prices, this will been the 'free fall' that people have said will happen.

But in the end of the day, If you're retired in the sun and have a decent nest egg to fall back on if the UKP drops further, no problem.

But if you're not retired living in Spain then it's got to be an extremely worrying affair as let's face it as least when something like this happens in the UK you have got a very basic get out of jail free card, via social services.

But what have you got in Spain? relatively no support what so ever.

The further problem is Spain will not rebound anywhere near as quickly as the UK will, if at all - due to the massive amount of new builds that have happened and are still happening.

On the plus side, young people will soon be able to afford to actually bloody afford to buy a property within the next year or so in both countries, that's got to be good news!

rugbymatt

That's what we are hoping mate, I have spent too many years travelling and being self employed to be able to get a decent mortgage in the UK, and hope that the Spanish prices may level out and allow us to be able to buy something modest.

zel

You and me both mate, at least we had a blast during the years we could appreciate it and don't have to answer to any boss!

It will level out as will the UK purely because it has to, basic economics would show that. I remember a couple of years ago on here there was a post similar that I contributed to and basically said that what I feel would happen, which is basically exactly what is happening now and got branded a scaremonger!

I understand that it's scary for people who have invested in property (not the people buying somewhere to live in) but they have to see that they are one of the contributing factors of why the property markets in both countries, especially the UK are a mess. As they buy up loads of property to let, forcing first time buyers or families needing to upgrade out of the market, then some of them have the nerve to complain and whine about it when the tables are turned.

Just my opinion really.

rugbymatt

I couldn't agree more, I had to sit and listen to a guy in the pub sit and tell me about how easy it was to find somewhere to live and they couldn't understand why I was living where I am.................only for them then to tell me that they had 4 houses in the area that they had bought for an investment.........


Yay! Buy to let, what a good idea!

zel

Not anymore I heard on the radio back from Dover that a lot of the banks in the UK have pulled the plug on buy to let mortgages now to!

To be honest, I know we live in a free society but if I were the government I would tax the living daylights out of people who own more than 2 properties so to make owning more not viable.

But they wouldn't do that would they, because the market would be more stable and thus they would make less out of stamp duties!!! Makes me sick the lot of it tbh.

The vast majority of my friends of my age can not afford to buy in the town we all work in, even tho we're all on vastly above normally wage. ARGH!

Don't get me started!

rugbymatt

A couple of years back I went to a friends Mortgage advisor, he has a "knack" at getting anyone a mortgage, for a price.

He spent about an hour looking over my books, and my finances and he said while on paper I would easily get a mortgage there was no way he could get me one.....
Not only was the area I was looking into buying WAY out of my price range but I was also self employed so a massive risk.
The thing that pissed me off the most was that if I was paying a thousand quid a month for rent at the time, how could I not afford a mortgage of 750 a month!


And all of this turmoil and hardship is thriving under a labour gov!

zel

Yup, it's not just us self employed people, I mean I could have gotten a self-cert mortgage and bought a shed in London, but I knew that even if I rented for 4 years I would lose less as it was obvious to any man, beast or goat we were heading into a recession period even back then.

What drives me mad is *ALL* my mates who live and work in London, we ALL get paid vastly over the average wage for a Londoner yet we would be living on bread and dripping if we bought a 1bed hellhole.

One guy was bought a place in SOUTHAMPTON and commutes to the City every day, it's insanity!

On the plus side tho a friend in Denia has emailed me a property his friend has for rent up for €800 a month, said he would give it to me for €500 - things must be slow!

rugbymatt

Yeah funnily enough I have had loads of comeback from agents in Spain about renting, and one even said that the client would take a sensible offer!!!

Bloody hell!

scampicat

We have a house in England and one in Spain, both modest terraced houses, both paid for.

The house in England we have owned for over thirty years and will probably never sell it. So obviously any house price fluctuations are irrelevant to this property.

The Spanish house...well, we paid 51,000 euros for it back in 2003 and have probably spent another 10,000 euros doing it up. We could probably get 100,000 euros now if we were to sell it.

We will sell it at some point in the future - maybe in two years, maybe not for another fifteen years. So I don't think it will owe us anything.

Anyway, we've always said that if absolutely necessary we could just walk away - we'll still have had our time in Spain and if we hadn't have bought it we'd have to have rented somewhere. If we keep it ten years it won't have cost us a huge sight more than renting, even if we get NOTHING back.

However those with large mortgages are in a different position and I think they will be well advised to sit the market out in both countries and sell at a later date.

Ideally, when we do come to sell the Spanish house I'd like there to be a slump in the UK market at the same time as there is a rise in the Spanish one, so that we can take our cash and buy somewhere nice on the coast in the UK. But that is purely selfish.

Mitzyboy

But what you have to understand is that this IS part and parcel of owning property. Just as in the same way my investments took a plunge earlier in the year. I wan't happy of course, but I have to assume as history shows, that they will bounce back. And they have.

Investing in property was an alternative to pension funds initially because pension funds were performing badly. As they say in the trade, the value of your investment can go up and down ...... and thats absolutely no different with an investment property. These things have to be accepted and factored in.

WHY??? And if you apply that premise then why not on more than one property. They are investing for their future in a positive way so that when they retire they will be able to support themselves without being a burden to others.

That being said, the only time I owned two properties was before we moved here and I had one here and one in the UK. I sold the UK house when we moved, but we just bought another property in the UK this month, £24k under the original asking price. I have no guilty conscience. Its a means to an end.

People have been landowners and property owners for hunderds and hundreds of years. Nothings changed.

rugbymatt

Capitalist scum!

jackytoo

No expert but prices don't seem to have dropped in the UK. Not in the areas I know. My Nephew has just sold a house in Kent within 1 week and for more than the asking price.

They don't seem to have fallen on the CDS either. Many say reduced but they were on for inflated prices anyway. Sure they will fall though as there are bound to be some distress sales. I don't think the market will pick up here for 5 years or more, too much overbuilding, it's different in the UK.