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My take on the current property market

My take on the current property market

Old May 25th 2008, 9:51 pm
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Default My take on the current property market

My take on the current property market...
The property market has slowed down and many property agents, on the coast, especially, have closed their doors. Maybe it’s the change in people’s views and that some people are now happier to move inland away from areas where there are so many ex pats an holiday makers, as for some it’s not like living in Spain in some areas?? More than likely we can blame the rate of the euro for much of this! However there are many factors and whatever they are some people are still coming to Spain to live despite this.

There are families that have planned this move for a long time and are so far down the line that is that cliché or is it a TV programme, there really is no going back! So their budget is possibly lower, but they are still coming! I remember when we were planning our move nearly 6 years ago, we were quite close at one stage and I suddenly stopped in my tracks, I was petrified, I thought Oh my god! What are we doing! The thing that got me through this stage was that the alternative…staying put in a country and in a business where we were unhappy, was in fact, so much worse than the apprehension of stepping into the unknown new life that lay ahead of us…. So here we are.
What is really happening though with the property market now in 2008 and what effect it is having on some of us ex pats a few years down the line from when we bought here?

In my opinion and this is just an opinion! Before I get an ear bashing off someone who knows better! I think some of the reasons (forgetting not least all the obvious overbuilding) is that some people who bought a few years ago when prices were much higher are now finding themselves when having to sell on for whatever reason. That they are struggling to obtain a price they have been expecting and that’s if they can get any offers! add to this the state of the euro and it is looking a bit bleak for many. It’s this demand rather than the actual value that sets a price and what someone will pay for a property when demand is high is more often than not a higher price than the actual market value. Because of the demand a few years ago people have too high an expectation of what they can get for their property now. I am not saying it’s the property owners that are at fault as sometimes it’s others who have given them this false hope in the first place. Lets face it if we were told this year we can expect 50,000euros less for example than we could have expected last year, we then feel we have lost it somehow, even if we never really had it in the first place. It happened to us in the UK…twice, we lost once in the property market and we won the next so it’s not something confined to Spain!
Look at statistics. Perhaps it would be wiser to get a proper valuation from a bank, and not always rely on a valuation by a sometimes unqualified person; many people that are giving valuations or opinions, which is what they so often, are, are not often qualified to do so.

A valuation is often only one person's opinion (of course there is a strategy, with a bank valuation, a price on land and buildings but this often alters due to economical climate as well) The true value is what someone will actually pay for your property at that particular time, this is the demand and value theory.

You cannot really say what someone will pay for a property at anytime in the future as there are so many situations that change and alter peoples ideas. The price which can be agreed at the time depends on the way the market is, the individual situation and that of course can change in the course of time depending on many factors not least being the mortgage rates and again the economical climate and in addition the need or wish to sell and at what point and how desperate the need, again to buy or sell?

Many properties that are on the market in this particular area, I cannot speak for other places, have been so for maybe two years or more. Is this because demand is not as high or are they overpriced, or is it a bit of both? Whatever it is prices are coming down! Is it enough? A proper bank valuation to ascertain a more realistic value could stop sellers and buyers from being too disappointed in the long term, when for example, they have an offer or accept and offer, only to then be told by the bank that the valuation is not enough for the mortgage the buyers need! The then potential sale falls down leaving everyone very disheartened. Banks are getting much tighter now, in fairness to them they have to… they don’t really want the properties that owners cannot afford to keep so they reduce their risk and lend less. Low valuations by the bank are especially common with country properties on rustic land.

In addition many people also apply for mortgages with proof of income from their country of origin, so what happens if they move here without that earning potential, what if their current situation changes, what then!!
One of the main reasons people move to Spain is the climate and the cheaper cost of living, there is still a gap between the cost of living here in Spain and that of the UK, but nothing like the gap of the past, and most people especially if they still need to work need to get some equity out of the property that they are selling in their home country to live on here, and so may take a bigger mortgage to cover themselves. This nest egg is still needed whether they are retired or working to be honest as it takes time and a lot of money to set up home in a new country more than your average pension so if you are retired you need to have some savings too.

It is quite upsetting, when I hear some stories and see some results of the effects of families moving over here, just not prepared. It is by no means easy to relocate here but if you have the means and are sensible it really does reap rewards. Whether you live in Spain or the UK or wherever! It doesn’t make a difference where you are, you still need to live your life and for this you need an income. It may be warm and sunny here but it’s not a permanent holiday when you live here and if you treat it as such and are not realistic, you may get a shock sooner than you thought, like many people who aren’t prepared they then find they have nowhere to turn for help. It is so important to be realistic and honest to yourselves because if you are not when the money runs out and you have no means to pay the increasing mortgage payments and then, the really unlucky ones who have to return to their country of origin, because this is the only place they can get help to live. There is no support here like there is in the UK, I often get emails asking can I get this or that benefit, or can I transfer my benefits from the UK to here. Well the short answer is NO under normal circumstances you can’t, if you are not self sufficient then you will have to work very hard unless you are careful in fact even if you are careful, I have never worked so hard in my life as I do here! Plan well ahead and do your research thoroughly.

It has to be a while until the confidence in the property market is restored, helped along by all the bad press and the horror stories it’s not really surprising! If I were setting out now? I would certainly be doing my homework and using the experiences of others who have done the same. Ultimately I help people relocate and I wouldn’t have a job if it weren’t for people still coming and buying property here, so I am not trying to put anyone off, but knowing I had helped people arm themselves the best they can and make them more aware of the pitfalls gives me great satisfaction. Take heart, its not all doom and gloom, look around though and there are hundreds of people here, having a good life, earning a living or retired and happy. It’s a pity though with regards to the bad press but, funny how they never seem to sensationalize the happy stories. With the exception of the euro the turndown has to have started in the heart of the country that first caused the problem, people ex pats and wannabe ex pats have to see evidence of some of the bigger problems being sorted, that make people very nervous of buying here, these problems also effect the market and the amount of people taking the plunge including the massive subject of illegal properties being sold to unsuspecting ex pats. (I feel another topic coming on here). We have brought millions of euros into a country that is now benefiting greatly from all the spending that we do here. Surely this is plain to see to all who live and work here we have created jobs we have made a lot of people in many industries very wealthy and if it is to continue there are many problems to be solved. There are promises that have been made but it will be a while now before many have the confidence to take the plunge and before we see an upturn in the market again. Getting back to the euro for a minute, anyone who is selling and leaving Spain should realize if they hadn’t already that they will get more pounds for their euros at the current rate and so could in fact reassess their situation they may be surprised!

Its a worrying time for many...
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Old May 25th 2008, 10:06 pm
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Default Re: My take on the current property market

Thanks for that input. Its a much discussed subject on here - as I've said before it doesn't bother me too much as I'm here for the long term. There have been price re alignments (as they like to call em nowadays) both here and the UK in the past, but the value comes back eventually

Doesn't help people who are trying to sell or in negative equity I know
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Old May 25th 2008, 10:46 pm
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Default Re: My take on the current property market

One problem with "bank valuations" is that around here they simply take the square metres of build and the square metres of parcela and take a factor for recent house transactions to see if it is more or less right. They take no account of condition or extras or views etc. And in the end, a house is only worth what you can get someone to pay for it, as with everything in this world.
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Old May 25th 2008, 11:01 pm
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Default Re: My take on the current property market

A house is only worth what you can get someone to pay for it
Which is basically what I said in my posting.

You are right they do take the size of the build and land and have a price on each of these but it does depend on where it is and what land it is on, ie rustic or urban as these have very different values and always have done. In my experience just because you have done lots to a house and spent lots of money on it does not necessarily make it worth more, you do that for yourself and if it does make it worth more its a bonus, obviously there are certain improvments taken into consideration but improving does at least make your house more saleable.
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Old May 26th 2008, 1:49 am
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Default Re: My take on the current property market

Why bother what???
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