Posts Tagged ‘buying property in Spain’

 

February 9th, 2010

The number of Brits buying euros for property purchases has increased in the last few days after sterling reached a rate of €1.15 for the first time since August 2008.

Foreign currency brokers have seen a 40% increase in clients buying euros, while new enquiries have shot up by 24%.

“A number of our clients in the market for euros are taking advantage of the improved exchange rate and buying their euros for overseas mortgage payments, property purchases etc now,” World First’s head of private clients, Elisabeth Dobson, told OPP.

“They are delighted to be getting a rate that is up to 12% better than the lows we have seen over the last 17 months. There are a number of clients who will have been holding off on property purchases and overseas investments due to sterling’s weakness against the euro. This rate move will certainly spur people on.”

A run of economic good news from the UK, including a fall in unemployment, rising inflation and an anticipation that the country is out of recession, has helped increase the pound’s strength. Meanwhile, economic problems in Spain and Greece have weakened consumer confidence in the euro.

Not all currency brokers have seen a substantial increase in business. “€1.15 is a bit of psychological barrier but most clients are still waiting for the magic €1.20 number,” Marc Morley-Freer, commercial director at Moneycorp, told OPP. “After the UK election we could see improvements that could push people to make lifestyle purchases – things are too uncertain before then.”

World First’s chief economist Jeremy Cook remains bullish following sterling’s 9% growth over the last year. “I don’t think this run in particular will last because it has happened so quickly, but the pound could be up to around €1.22 by the end of the year,” he told OPP.

Story from OPP

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January 19th, 2010

It may have gone sour for some, but the coverage of the reality faced by second home owners like us omits some important truths. By a Citywire reader.

In the foreground there were sheep grazing on rough, undeveloped grasslands; in the background mountains.

When built, the bungalow would sit at the end of a row of white homes, with a triangle of land that would remain undeveloped at the end. There would be nothing across the road from us apart from a few buildings in the distance and then the mountains beyond that. We had our own part of the Spanish dream, having saved for decades to fulfil it.

Ten years later and everyone now knows how the developers got greedy, the cranes took over, promises were broken and property values plummeted; in some cases bizarre land laws meant that people lost their homes.

That story has been told over and over again. But this is not a piece complaining of the ruthlessness of the Spanish authorities, fraud on the Costas, nor the overzealous developers.

The value of our house has of course dropped and the weak pound has taken its toll. The developers’ broke their promises – high rises now obscure our view of the hills – and this is no sleepy Spanish idyll. But it is a place boasting the best climate in Europe. It remains five minutes from the beach, and provides a sanctuary we are fortunate to enjoy from the bitter grey British winter.

Thanks to Ryanair it is cheap and easy to get to. And while the British influence is increasingly widespread in this part of the world (the Costa Blanca since you ask), speak a little Spanish – and it doesn’t have to be fluent – and the locals will cheerfully speak it back. The pound is weak, but that wont last forever and the Menú del Dia is still a bargain.

The value of our home may have dropped but like most of the Brits with houses in the Med, but this is not our first home and it is not our retirement fund. This is not because we are loaded; far from it, we bought it to enjoy it, which we have many many times.

The newspapers may be full of reports that the dream of owning second homes in Spain is dead, but for the majority of people – at least those who are in it for the lifestyle not a money-making opportunity – it’s alive and well.

That is not to say that people in our situation haven’t been faced with property nightmares, but that over the years the coverage and hype surrounding this has been disproportionate: for the fortunate majority the Spanish property dream is not dead.

Story from Citywire

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November 28th, 2009

I recently read an interesting interview with Mikel Echavarren, head of Irea, a Spanish real estate consultancy, talking about the state of the real estate sector in Spain. As an experienced professional in touch with many different companies in the sector it is worth listening to what he has to say. Here is a selection of comments from his Q&A with Idealista News, the news section of the property portal Idealista.

Do you think there are any good investment opportunities in Spanish real estate today?
I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

So you think there are opportunities in a residential sector because the adjustment has already taken place?
There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.

Has the price of housing and land touched bottom?
House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. We work with close to 28 property companies that have been restructured, and you see that valuations are down 30% in 2 years, and then banks buy those assets with discounts of 10-15% off valuations.

Do you think there is any residential property that will never sell?
What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrials, parts of Almeria, Murcia and Alicante. There is an overdose of land that will lie in the warehouses of banks for many years. On the other hand, the stock of finished property will be absorbed sooner.

Is there any real demand for housing at the moment?
Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.

How does one get the Spanish property sector to recover?
The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

Story from Idealista News

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November 6th, 2009

The government of Andalucia, or Junta, announced yesterday a subsidy of 1 billion Euros to help liquidate the region’s property glut estimated at around 70,000 newly-built homes.

Like the ‘cash-for-clunkers’ programme used to subsidise car sales, public money will now be showered on house-hunters in Andalucia. But second home buyers can stay in their seats as the scheme only applies to local residents buying main homes. Even so, it could benefit foreigners living in Andalucia, and help lift the market out of its slump, which might lift prices for all types of property.

How it works
The way it works is developers participating in the scheme have to offer their property for sale at mortgage cost, wiping out their margins and giving a discount of 20%. Participating banks, for their part, will loan 100% interest only for the first 3 years. Starting in the fourth year the Junta will offer loans to subsidise mortgage payments for up to 5 years and a maximum of 15,000 Euros. As a result, buyers will save as much as 40% over 8 years, according to calculations by the Junta.

More conditions: The offer stands until the end of 2010, the properties must be newly- built, and the mortgage no greater than 245,000 Euros, the price limit for social housing. Mortgages must be 100% LTV, up to 30 years, charging an interest rate of Euribor +1%

Read the fine print, though, and the Junta isn’t being so generous. In year 9 mortgage lenders have to reimburse the subsidy to the Junta and add it onto the outstanding mortgage, so the borrower pays in the end. Nevertheless, thanks to inflation, buyers will probably have to pay back less, in real terms, than they borrow. Many people expect inflation to take off in the next few years.

Criticisms
You could argue that it is morally questionable for the government to be spending 1 billion Euros subsidising home buyers when there are so many other more needy causes. And isn’t this is just a wheeze to get buyers to pay inflated prices for homes today whilst transferring the burden of payment onto tax payers in the future? Wouldn’t it be cheaper, and cause less economic distortion, just to drop prices today to a level that people can afford without crucifying themselves on a 30 year mortgage subsidised by the government?

Story by: Mark Stucklin

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October 14th, 2009

Britain has been designated the worst place to live in Europe, compared with nine other major countries, despite the fact that Brits earn by far the highest wages.

Life in sun-soaked Spain, where people retire earlier and live longer, was judged to be the best by researchers at uSwitch.com in the latest European Quality of Life index.

Earning 35,730 pounds ($56,410) a year on average, Brits are 10,000 pounds ($15,790) richer than their European neighbors, but that doesn’t translate into an easier life and they are getting a “raw deal” researchers concluded.

Shoppers in Britain pay higher prices for fuel, food, alcohol and cigarettes and receive poorer healthcare and education, the survey found.

“There is more to good living than money and this report shows why so many Brits are giving up on the UK and heading to France and Spain,” said Ann Robinson, Director of Consumer Policy at uSwitch.com.

“We have lost all sense of balance between wealth and well-being,” she said.

British workers toil three years longer and die two years younger than their French counterparts.

The Spanish enjoy 2,665 hours of sunshine a year, compared with just 1,397 in Ireland and they pay five percent less taxes than their light-deprived Irish cousins.

The 10 major countries surveyed were ranked in the following order from best to worst quality of life: France, Spain, Denmark, the Netherlands, Germany, Poland, Italy, Sweden, Ireland and Britain.

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September 17th, 2009

Mortgage specialist Conti is convinced that for UK overseas property investors, traditional locations will emerge victorious from the global market downturn. According to the firm, investors are sticking to ‘proven’ locations as revealed in its latest ‘hot spots’ report.

France takes first place, accounting for 31% of enquiries received by the company so far this year, but Spain follows on with 22%. A surprising result in view of recent negative press. Enquiries have increased considerably with the countries accounting for 53% of all 2009 enquiries so far, compared with 29% in the same period last year.

Conti’s operations director Clare Nessling says: “British buyers are sticking to the more traditional overseas locations, especially those with history of providing good rental returns. The smart investor is no longer simply looking to where the best bargains for a swift return can be found, but to where security lies for a longer term investment.”

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July 16th, 2009

Results for the 2009 International Survey conducted by primelocation.com show that 70% of visitors to primelocation.com/international are actively looking to buy an overseas property, despite the current economic uncertainty.

Of all respondents, 28% said that they are unaffected by the current economic situation, 22% who had delayed their plans because of the economic climate are now back in the market and hope to find a bargain, while 10% said that they are checking out the market but will not proceed just yet.

Ann Wright, International Business Development Manager for primelocation.com, says ‘This is very clear indication that people have not let go of their dreams of owning a property abroad. Indeed, it is encouraging that people are coming back to the market, possibly because of recent press reports of falling property prices across Europe.’

The primelocation.com 2009 International Survey also monitored the countries the portal’s visitors are most interested in buying in. France took top spot with 25%, Spain came second (16%) and was followed by Italy and Portugal which tied in fourth place with 11% each. The United States, Cyprus, Greece, Switzerland, Turkey, Canada and the UAE took the rest of the top 10 spots.

‘It is interesting to note that over a quarter of all respondents currently own/rent a property in France and interest in the country, which has always been the first choice amongst Brits, has remained fairly stable at 25% since 2008. Spanish property and Portuguese properties have increased in popularity since 2008 as people respond to the reports of falling property prices.’

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June 16th, 2009

Spain had 614,000 new homes sitting unsold at the end of 2008 -lower than most analysts’ estimates- according to the first major housing ministry study, which surveyed or visited 6,810 real estate companies, or around 70 percent of the sector.

The survey is the first attempt by any public or private body to pin down the size of the stock of unsold Spanish property -estimated at over 1 million homes by some economists- using a methodology similar to the respected Royal Institution of Chartered Surveyors (RICS) study of the UK market.

“The survey looks good to me, very representative and well designed,” said Jose Carlos Diez, an economist with Intermoney in Madrid. However, he added the figure was still represented a serious challenge despite being almost half of many estimates.

“You should not lose perspective, the figure is less than expected, but 600,000 homes is still a lot of homes.” At the current rate of sale, the stock will take around three years to be run down while Spain’s housing market -the former motor of economic growth- suffers a hangover after a 10 year boom. In that time prices tripled and huge tracts of the coast in were disfigured by rows of uniform apartment blocs.

In 2007 alone Spain built 690,000 new homes, even though underlying demand is normally less than half that. Now hundreds of builders are going bust every quarter amid a 34 percent dive in sales in the year to date and their assets clog up banks’ asset sheets.

The survey published on Friday also notes that Spain had 627,000 homes in the process of construction at the end of 2008 — 70 percent of them almost finished and 39 percent already sold.

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February 23rd, 2009

The image of the British-dominated Costas in the south of Spain being filled with retirees who have fled the rain and winds of the UK for what we might call an Indian Summer in the autumn of their years, is showing signs of disappearing for good. New research from Banco Halifax Hispania shows that young people are flocking to the Iberian peninsular in increasing numbers in search of a property overseas.

Of the people quizzed by the recent survey, the vast majority who were looking for a property abroad were under retirement age, and 68 per cent of those who wanted to live in Spain were under 65 years of age. At the same time, of those who had already bought a property in the country, 50 per cent were under the age of 35.

This points to a shift in perceptions of the country, as well as in how agents and developers are attracting buyers and residents to the country. It also reflects on how these buyers will influence Spain in the future. Younger generations are more likely to integrate into Spanish communities, and may encourage their children to learn Spanish from an early age.

Halifax Head of European Operations, Ian Smith, commented, “It has long been assumed that only the older generation is buying property in Spain, but this is far from the case, as it is also proving to be a popular location amongst younger age groups.”

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