Dec 19
SAMPLE PROPERTIES FOR SALE IN SPAIN and MAJORCA
We have over 30,000 Properties Across Spain and its Islands
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Spanish & Mallorca Property Market Report - December 2008
By David Novi
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SAMPLE PROPERTIES FOR SALE IN SPAIN and MAJORCA
We have over 30,000 Properties Across Spain and its Islands
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Spanish & Mallorca Property Market Report - December 2008
By David Novi
The Spanish property market was the European market most likely to crash when the credit crisis hit. Here we examine the ingredients of disaster
With Spain arguably the number one destination for British buyers of foreign residential property - for investment, second homes, or retirement in the sun - it is hardly surprising that there is so much interest in the Spanish property market. Hardly a day goes by without some ‘crisis on the costas’ story in the press, bemoaning the collapse of prices and demand, fully illustrated with images of half-built apartment complexes and swathes of empty sun-drenched villas!
Some interesting facts and figures
• Spanish house price inflation was 5% in 1998, rose to 17.75% in 2004 and slumped to 5% in 2007.
• Property prices increased 2.2 times in real terms between 1996 and 2006.
• Between 2005 and 2007 the interest burden on Spanish mortgages increased by, on average, two thirds.
• Housing investment alone accounted for 8% of GDP in 2006, making the Spanish economy very dependent on the residential property market and associated consumer spending.
• Over 50% of the banking sector’s loan book is associated with real estate.
• The oversupply of unsold new housing units stands at more than 1m.
• Spanish housing starts have risen steadily every year since 1996 - from 250,000 to 700,000 in 2006
• In 2006 the number of housing completions per 1,000 head of population was 15, some 4 - 5 times more than most advanced European nations
Background
Spain’s residential real estate market had been growing at an unprecedented rate, with average prices more than doubling in the last decade. A similarly unprecedented boom in construction saw year-on-year output of more than 650,000 units, and investor interest from both home and abroad. While no-one seemed prepared to call time on this boom, as if afraid to be the one that bailed out too early, the simple statistic of a construction output estimated at nearly one third of the total EU new-build output and an underlying demand of under 400,000 units, should have been enough to sound the warning bells.
The legacy is an estimated 1m unsold new-build properties; developers facing major cash flow problems; individuals with personal debt levels previously unknown in a country where people had always spent only what they had; an economy heavily skewed towards the construction sector; and banks with major bad-debt and liquidity problems, not all associated with the wider international credit crisis. But what is behind this seemingly black picture?
While no property market can operate in isolation of the international economic environment, local peculiarities and structural differences can be very important in influencing the extent, rate and timing of growth or contraction of any particular market. In Spain, these influences, while not all exclusive to the country, have been particularly influential and include:
1. The changeover to the Euro, which pushed up prices generally and, most significantly, drove a huge amount of undeclared or ‘black’ money into the system, much of which went into property.
2. Until recently, a low-interest-rate environment (2% for much of the boom period), due to the centralisation of interest-rate policy within the European Central Bank (ECB).
3. Loosening of bank-lending criteria from the top down - the Bank of Spain lending rules and individual bank-lending policies. The result was a credit boom that boosted both the supply side (construction activity) and demand (retail mortgage lending).
4. Permissive urban planning and a local-government income framework heavily skewed towards activity in the construction sector. The result was poorly controlled development, as local town halls cashed in on taxes arising from new construction.
5. A demand side heavily boosted by the presence of international investors. Spain has long been a favourite destination for foreign investors and second-home buyers. This, coupled with the popularity of ‘buy-to-let’ residential investment among buyers in countries such as the UK, significantly increased the demand for Spanish property during the boom years.
6. A weak approach to pricing and valuation. Historically, valuers and estate agents have had relatively limited input in establishing values for residential property in Spain, with prices generally set by owners and many marketed directly. In many cases, this resulted in over-inflated prices and expectations of growth. While this was not a problem in a rising market, over the last 18 months - with prices at best stable, but in many cases falling - vendors continued to raise or maintain prices, leaving a large percentage of the stock of available properties unsaleable, adding to the sense of stagnation in the market.
The market and the economy today
It’s easy to see why the Spanish real estate market grew so strongly and got into such trouble, but what national and international economic variables are influencing the prospects of the market now?
• Demand and availability of credit
There are a number of long-term demand-side considerations, which, on the surface, remain reasonably positive. The underlying domestic demand for housing remains strong, with a shortage of supply of affordable homes, despite the over 1m units of new-build property sitting on the shelf awaiting buyers. At the same time, population growth, most of it the result of immigration, is also bolstering underlying demand.
That said, wanting or needing to buy is not the same as being able to buy. The most obvious problem is the credit crisis and the severe restrictions on bank lending generally, and on mortgage lending specifically. These restrictions started to take demand out of the market in the autumn of 2007 and have been tightening ever since. The full effect is only now starting to feed through to the wider market.
• Supply
The depth of any supply-side crisis (and thus how much impact there will be on prices) depends on a number of factors, including the extent to which developers can reduce output; whether they need to cut prices aggressively in the face of liquidity problems; how long banks maintain a squeeze on credit/lending, and policies to deregulate the private rental sector, encouraging owners to lease their properties, thus reducing supply
• Affordability
It is estimated that the average household in Spain allocates 46% of net income to meet mortgage repayments, compared with only 31% in 2003. (Lenders normally seek a ratio of between 30 - 35% indicating how the risk burden has shifted for the banks and their exposure to bad debts has increased). Mortgage interest rates have continued to rise (particularly problematical in a market where the vast majority of households have variable-rate loans reviewed annually) with the end June 2008 Euribor figure (the main reference rate for Spanish mortgages) standing at a record 5.4%, its highest level since it came into being back in 2000. With the ECB making inflation its priority, rates seem unlikely to fall for some time to come and, along with pressure on employment levels, we are likely to see a significant increase in mortgage default levels in the coming months.
Thus, while demand may appear to exist, it is questionable how much will be converted into real transactions in the months ahead. For buyers from outside the Euro zone, e.g. the UK and USA, the recent strength of the European currency has pushed prices up by around 15% over the last six to eight months and, although this trend is likely to reverse during late 2008 and 2009, it is still a real issue effecting some buying decisions today.
• Consumer confidence
There is no doubt that, domestically, the Spanish consumer is experiencing a crisis of confidence. Evidence of consumer activity across sectors indicates that caution is the name of the game. This is only likely to worsen in the months ahead, as property owners face increasing repayments and other economic problems take a grip, particularly unemployment.
Associated with the issue of consumer confidence will be the ability of the government to tackle Spain’s over-reliance on the construction sector, by boosting investment and employment in new economic areas such as technology and R& D, where Spain has a poor record compared with other advanced European nations, and general levels of productivity, where again, historically, Spain has not performed well.
Market outlook and conclusions
Many of these variables affecting the market appear to have greater downside risks than upside potential, leading to the conclusion that uncertainty will be around for a long time. While some variables may improve in the short to medium term (weakening of the Euro, interest rate cuts etc), others look likely to continue well into the next decade (falling levels of unemployment, general economy weakness, the credit crisis, etc)
It would seem likely, therefore, that the housing sector will remain very weak for the next 18 months, before some stability, at best, returns around 2010 - 2012, while a more sustained recovery will need to wait until post-2012. Since price adjustments have only recently kicked in, they are likely to continue on a downward trend, both in real and nominal terms, for another 18 months. At a national level, it is quite possible that real prices will fall by up to 20% (inflationary erosion and actual price reductions).
Regionally, while it is unlikely that any area will escape the downturn, it is very probable that there will be quite significant differences in performance. Coastal regions, such as the Costa Blanca and Costa del Sol, where much of the unsustainable construction boom and investor demand was focused, along with inland towns and cities where construction was encouraged by local town halls and local-level demand has dried up, are likely to suffer most.
Niche markets such as the Balearic Islands, where planning has been relatively controlled, and where demand was much more lifestyle- than investor-based, are likely to perform better, although price weaknesses will still be found.
David Novi is founding Partner of Mallorca property agents, Novi Property Mallorca http://www.novipropertymallorca.com - Mallorca Chartered Surveyors, Mallorca Real Estate Search and The Mallorca Mortgage Business.
David specialises in advising private and corporate clients on all aspects of buying property in Mallorca including investment appraisal, property and site finding, development project management and funding and is a member of the RICS (Royal Institution of Chartered Surveyors).
David also writes articles on the Mallorca and Spanish property markets offering clients a detailed insight into market conditions generally and the attractiveness of individual investment opportunities. The Mallorca Property News web site displays a selection of these publications.
Before moving to Mallorca David was Managing Director of Thames gateway property investors and developers, Tilfen Land. He can be contacted on novipropertymallorca.com
Article Source: http://EzineArticles.com/?expert=David_Novi
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Fiestas in Spain - Squashed Tomatoes and Jumping Devils
By Alan Liptrot
Fiestas take place throughout the year in various parts of Spain. The ones in small villages are certainly worth a visit, but if you want to experience something truly spectacular, try one of these;
SEMANA SANTA
Easter week in Spain is something to behold. Processions take place every day across the country, culminating with ‘the big one’ on Good Friday, when members of the various brotherhoods carry huge floats through the streets until the early hours of the morning. The most impressive ones are to be found in Cordoba, Granada, Malaga and Seville.
THE RUNNING OF THE BULLS
Known locally as San Fermin, the patron saint of Pamplona, this week long celebration begins on July 7th. Each morning the runners gather at 8am at the start of the route named ‘Cuesta de Santo Domingo’ and through song, ask San Fermin to protect them during the Bull Run. A rocket signals the release of the first bull, followed by another one when the last bull has left the corral and entered the streets of Pamplona. A third rocket tells us that the bulls have reached the ‘Plaza de Toros and a fourth indicates that the bulls are in their pens and the run is over.
LA TOMATINA
Surely the craziest fiesta on the planet. On the last Wednesday of each August in Bunol near Valencia, thirty thousand visitors join the nine thousand residents for a food fight, or to be more precise, a squashed tomato fight. The event begins when someone has successfully retrieved a ham from atop a large greasy pole. More than one hundred thousand tomatoes are thrown in just over one hour. Those taking part in the event are advised to wear safety goggles. The fiesta was banned under Franco but returned during the 70’s after his death. Don’t forget to take a change of clothes.
CHRISTMAS AND NEW YEAR
For the Spanish, Christmas is a time to be spent with the family. New Year’s Eve however is celebrated across Spain with huge parties organised by the various town councils. At midnight, a grape eaten with each stroke of the clock will bring good luck for the coming year. After that you can enjoy music and dancing until the early hours of the morning.
THE FALLAS FESTIVAL
Valencia hosts the Fallas Festival in mid March. This week long extravaganza of bonfires and fireworks is quite possibly one of the loudest in Spain and that’s saying a lot. Over two million tourists make their way to the city to watch the giant papier-mache Fallas, which are made in the image of famous people and characters from all walks of life, burnt at the end of the festivities, whilst worried fire-fighters stand by. The figures, which are made during the previous twelve months, are displayed in the city during the week, before they are burned amid a frenzy of noise and heat.
THE BABY JUMPING FESTIVAL
Yes, you read that properly. The El Colacho baby jumping festival takes place in Castrillo de Murcia in the foothills of the Cantabrian Mountains every May. All newborns from the previous twelve months are eligible to be leapt over by a man dressed as the Devil, and consequently purged of evil. If you get to the town during the week before the Baby Jumping, you may have the dubious pleasure of being terrorised by one of the two individuals who go around with their truncheons and whips at ready. Then on the Sunday, the babies are laid out on the ground ready for the Devil, who has been hiding in the church, to leap forth and hurdle the infants before disappearing into the distance.
Hopefully, this will have whetted your appetite for a visit to a Spanish fiesta. Whether you opt for a large fiesta or the more intimate village celebration, the common denominator is fun. This is just a small sample of the fiestas that take place around Spain. It’s up to you; do you fancy being chased by a bull, being pelted by a soggy tomato or seeing the Devil himself leaping over innocent babies. You must admit, there’s quite a choice, and every one promises be a memorable experience. Buen Viaje! and hasta pronto.
The Author is the founder of yourholidayrentals.com providing worldwide holiday accommodation The original article, along with other interesting articles can be found at yourholidayrentals.com/inspiration/
Article Source: EzineArticles.com/?expert=Alan_Liptrot
Spanish Tourism Stable
October 2008
October 24th, 2008
Some 47 million tourists have visited Spain in the first nine months of 2008, a figure that has remained largely unchanged (-0.9%) y-o-y, according to the Ministry of Tourism and Trade.
Despite the slight drop in visitor numbers since September last year, figures of tourist activity in September itself show a drop of 5.9% down to 5.7 million last month, suggesting that economic conditions are starting to have an affect on tourism.
While Madrid reported the highest growth in tourist arrivals (7.9%) since September 2007, the Cataluna region registered the most visitors, recording 11.6 million tourists by the start of Q4 2008. This was followed by the Balearic Islands with 9.1 million, the Canary Islands with 6.9 million and Andalucia which recorded 6.8 million tourists. Andalucia is now the country’s fourth most popular tourist destination and received 802,000 tourists in September (38% which came from Britain).
The primary tourism markets across the entire country were German, French, UK and Scandinavian citizens.
Some 8.1 million German tourists have visited Spain so far this year, an increase of 0.5%, with the Balearic Islands the preferred destination. German visitor numbers grew there by 3.5% y-o-y.
French tourism numbers were strong in all locations apart from Cataluna. Some 6.8 million French tourists visited Spain, showing positive growth, particularly across Andalucia.
Although not releasing a total number of British tourists to the country, the report suggests that visitor numbers have dropped by -1.1%, however at least 4 million have travelled to Spain so far this year. The regions of Madrid and Cataluna were the only exceptions to the general decline shown across the Canaries (-13.5%), Andalucia (-9.4%), Valencia (-5.1%) and the Balearics (-4.9%).
Tourists from the Nordic countries were grouped as a whole and numbers have grown significantly in Valencia (7.2%) and the Canary Islands.
The survey also revealed that the majority of holidaymakers in Spain (65.6%) visited without package deals, revealing a drop of 4.7% from last year. The number of tourists who travelled by air was up 2.2% in the first nine months of the year, while those who arrived by road was down 12.7%.
Story from OPP (registration required)
Courtesy: Villas in Spain | Story from OPP (registration | news.kyero.com
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Finance and the Spanish Property Market
By Mark Flanighan
We hear it every day about how property prices have dived and how repossessions are at their highest for years as the so called credit crunch continues to bite us all. But when you look at other countries throughout Europe you see a picture that may be much worse that the UK.
Take Spain for instance that in recent years has relied on foreign investment in second homes from Northern European countries and has seen a high increase in property prices, with the huge demand to have a second home in the sun. The result has seen developments all over Spain which maybe on hindsight has been a bit too optimistic, to go on at a continued rate.
To give and idea of the size of challenge with Spanish property here are some statistics:
Last Year 40% of all real estate agents closed
Property prices are expected to drop by 20% by 2009. (Many believe they already have)
Inflation is now running at 5.1%, compared with the UK at 3.8%
Spanish house sales dropped by over 34% this summer compared to last summer
New mortgages fell by 40%, compared to last year.
It is harder to determine house prices in Spain that other countries due to the process where the true value of a home is not declared at purchase to avoid paying tax on the purchase. Although a legal process it is very common, to the point that most solicitors offer this process.
It is not hard to understand that as many people are finding it harder to afford their first home, and so buying that second home is no longer an option. Even those who would have stretched their budgets, safe in the knowledge that the increase in the property price would be worth the risk, are now more humble about and return from an investment in Spain.
The Finance Minister for Spain has now admitted that they are facing their worse economic crisis ever with the property collapse, many others wonder how Spain ever thought the bubble would continue for ever and questioning why no contingency plan was put in place, or that a reduction in new properties was not planned earlier, at least giving a good chance of ready built homes maintaining their prices.
It is predicted that this current credit crunch will affect Spanish home prices until at least 2010, so new ideas are being considered to try and kick start the mortgage market again, although at this time nothing has been announced.
Although many can see the benefit to kick starting the mortgage industry and there are genuine potential borrowers who want to buy a family home rather than a second one, there are some who would question buying any property where there is no forecast of that homes value increasing, with even the possibility of negative equity.
So it is possible that the absence of mortgage may be protecting some people from buying a property that will just decrease in value, adding more pressure to an already difficult situation.
Of course the bolt on financial organizations are also feeling the squeeze. As homes remain unsold, so do the potential second home insurance policies that would normally be bought to project the investment. The credit card purchase for furniture and other essentials will also remain in the wallet and not deliver interest for banks and organizations.
Property like oil affects our spending habits, so until some confidence is regained, expect money pinching few years.
Mark is webmaster for Second Home Insurance and Spanish Holiday Rental.
Article Source: EzineArticles.com/?expert=Mark_Flanighan
Spanish Property - The Buyer’s Checklist
By Robert Griggs
The Costa del Sol has become in recent years, one of the most attractive places in the Mediterranean in which to buy property. With thousands of kilometres of sandy beaches, a laid back and relaxed lifestyle and within easy reach of most of its neighbours in Europe, it’s no wonder that so many people over the years and even still today, are looking to buy Spanish property here, whether to live in, or for investment purposes.
Unfortunately a vast number of buyers seem to leave their brains on the plane or back home when traveling to another country to buy property, many of which have been stung by some of the less than honest agents that have been based on the coast in recent years.
This article has been written in order to help you as the buyer, to understand the purchase process and legal requirements, which you will encounter when buying Spanish property.
Before The Purchase
Find A Reputable Spanish Lawyer - The next quest comes when searching for a reliable and reputable Spanish lawyer. The reason that I say “Spanish” is that you really need a lawyer who is totally versed with the complexities of the Spanish legal system. This you will only find with a Spanish lawyer.
Although there are real estate agents out there who recommend a lawyer to you, this is generally due to the fact that they will gain a commission from the lawyer due to the business relationship that they have. It is important that you do not use a lawyer that is tied to a specific agent. Find an independent lawyer who is going to act in your best interests and hold your hand through the whole process.
Another important aspect of finding a Spanish lawyer is that they can converse well with you in your native language. This will be of obvious benefit when they need to sit down with you and explain the purchase process more detail or keep you informed of any news about your process.
Communication is a vital aspect of buying a property in Spain. If you are unable to converse with your lawyer effectively, this could lead to problems.
Find An Estate Agent - Finding an estate agent on the Costa del Sol is not a difficult assignment. You can find one on almost every street corner. The real problem is finding an agent that will represent your best interests, understand what your requirements and needs are and have a thorough understanding of the market and buying process.
Although there are many aspects to buying a Spanish property, this could be the most important aspect for you and can be the difference between a smooth buying process where your purchase goes through without a hitch or it could spell months or even years of heartache and misery and possibly a total loss of your money.
Although this sounds a bit scary (and it should be), it only serves to highlight what can and what has happened, to many buyers in Spain.
All this can be avoided though by finding the right agent, and size does not matter.
Some of the best agents on the coast you maybe surprised to learn, are the smaller agents. The advantage of using a smaller agent is that you get a more personal service, compared with the bigger real estate companies who tend to treat their clients like a piece of meat. With the smaller agents you are treated on a more personal level with the agent having more time for you, and taking more of an interest in what YOU want.
One way of finding a reputable agent is through word of mouth. Try asking friends and family or the local community, if they have had good experiences with any local estate agents and try and gauge which ones come out on top.
Another way to learn more is to hang out in some of the real estate forums that are focused on the Spanish property market. There are always are number of people who are only too pleased to share their experiences with you.
Which ever agent you choose, make sure that you feel totally confident in their ability to represent your interests and that they have sound knowledge of the Spanish real estate market.
During The Purchase Process
The Preliminary Contract - Once you have found your Spanish property, the next step is to place a formal offer with the vendor showing your intent to purchase the property. A preliminary contract is then drawn up by the lawyer, which means the vendor has to remove the property from the market. The contract that is known as the “Contrato privado de compraventa” and will contain the agreed selling price and other details on the property.
This stage of the process is also when you will need to provide a deposit of between 5 and 10% of the purchase price. This payment is kept in a lawyers bonded account and shows your commitment to buy the property.
The Final Contract - The Escritura de compraventa is the final contract and this is where you pay the final sum of money for the property, including fees minus any deposits already made.
You will then be issued with a public deed for the property which will be witnessed by the notary public. A copy of this deed is then sent to the tax office and to the property registry.
The whole purchase process can take anywhere from a few weeks to a few months and can depend on many factors such as the efficiency of your lawyers and estate agents. It can also depend on the vendor and buyers desire to complete at the earliest opportunity.
Needless to say, during all aspects of the purchase process when buying Spanish property, it is highly recommended that your lawyer is on hand and that they guide and advise you at every single stage.
PGM Property World are a family run real estate agent on the Costa del Sol and have a wide range of resale and off plan Spanish Property on offer. PGM will also assist in every aspect of purchasing property in Spain.
Article Source: EzineArticles.com/?expert=Robert_Griggs
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