Posts Tagged ‘Recovery’

 

September 17th, 2009

UK based Almanzora Group says that there are signs that in some sectors the market is improving, after it announced that it has sold properties worth almost €5 million in the Almeria region of south-east Spain in the past three months.

‘Over the years, the property market in Spain has proved to be extremely cyclical, much more so than it is in the UK. This recent market activity suggests that the wheel is turning again, at least for the better quality, more individual, properties in new and progressive upwardly mobile locations,’ said sales and marketing manager, Simon Coaker.

‘Prices have been at their lowest for six years but are bound to start rising again if sales of such properties continue at this level. No matter how great the oversupply of poor quality, mass built apartments, in secondary locations around the old tourism centres, the actual supply of good quality individual properties in relatively new, less developed, locations which are the future of residential tourism in Spain remain in short supply,’ he added.

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July 16th, 2009

Spain’s economy is likely to have shrunk ‘substantially’ less in the second quarter than in the first, though growth will remain negative to the end of the year, the economy secretary was quoted on Monday as saying.

‘We don’t have a precise estimate, but we believe that the fall (in gross domestic product) will be substantially less than in the first quarter,’ Jose Manuel Campa said in an interview with the financial daily Cinco Dias.

‘Until the end of the year we will continue to have negative growth rates, but increasingly smaller ones.’

Spain’s economy shrank 1.9 percent in the first quarter from a quarter earlier, its sharpest contraction in half a century – most acutely felt in the Spanish property market. Savings bank foundation FUNCAS said on Monday the worst may be over.

‘Available data point to a less abrupt contraction in the second quarter than the previous two quarters,’ Funcas said. Talk of economic recovery may be premature, the foundation said.

‘The worst may be over, but that doesn’t mean the economy will recover soon, just that the recession will be less intense,’ Funcas said.

The Spanish economy would shrink by 3.6 percent in 2009 and 0.6 percent in 2010, according to consensus figures published by the foundation on Monday.

The Spanish government has launched one of the world’s largest economic stimulus packages in relative terms which has inflated a ballooning public deficit likely to rise above 10 percent of GDP this year from 3.8 percent in 2008.

Campa reiterated the government’s target to cut the deficit to below 3 percent in 2012 in line with European Union recommendations.

‘It is our commitment to the European Union and we meet our commitments,’ he said. ‘Obviously, it is not easy, but it is feasible.’

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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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April 15th, 2009

An article in ‘El Mundo’, one of Spain’s leading news papers, suggests there may be signs of recovery in the Spanish property market, in one of the first positive articles on the outlook for the market since the crisis began.

“It appears to be the beginning of the end of the worst period for property sales since the crisis began,” says the article. Pointing to encouraging signs that real estate markets may have bottomed out in the US, the UK, and France, the article suggests that Spain may be part of the trend.

The optimism also comes from a new report by Gonzalo Bernardos, a property market expert and professor of economics at the University of Barcelona, who argues that Spanish property market will come back to life this year, after a dismal 2008.

“There are five key reasons for saying that there will be more home sales in 2009 than there were in 2008,” writes Bernardos in his report. “Interest rates are lower; house prices have fallen back to their 2003 levels; banks are lending more; investors are coming back; and many people who were thinking of renting have decided to buy.”

Demand for housing is tempered by the cost of mortgage borrowing. With interest rates declining, Bernardos expects sales to pick up. “There is a fundamental variable,” explains Bernardos. “People buy homes in response to mortgage costs, which have gone from rates of 6.25% in September to 3.25% today. We are talking, in general terms, of a fall in mortgage repayments of 40%.”

There is, however, a flaw in this argument, which the article in El Mundo does not pick up. Euribor – the base rate normally used to calculate mortgage rates in Spain – may have fallen rapidly to historic lows, but the average interest rate charged on new mortgages is actually rising, and credit terms getting tighter, making it more expensive for new borrowers to buy homes. Falling Spanish mortgage rates are only benefiting existing borrowers, who already have a home.

Another positive sign, says the article, is that housing starts picked up in the last quarter of 2008, rising by 7% compared to the previous quarter.

The recovery is already underway, suggests Bernardos, who says that, so far this year “sales have been between 25% and 40% higher than in the same period last year.”

So the market bottomed out in 2008, goes the argument, when house sales fell by 28.8% whilst property prices fell by 5.4%, all according to official figures. On the question of prices, Bernardos doesn’t believe the official figures. “The fall in prices hasn’t been less than 20%, and in some places much more,” says Bernardos.

Another real estate expert cited in the article says that sales rates at new developments have picked up significantly. “In many developments they have sold more in the first quarter of 2009 than in the whole of 2008,” he says, also arguing that “prices have already bottomed out.” “Banks didn’t know where the bottom was, now they do and they are giving 80% mortgages because they feel the market has bottomed out,” he goes on, whilst also warning that “nobody should expect bargains at 50% discounts. That’s not going to happen.”

Whilst Bernardos expects the market to return to life this year, that doesn’t mean he expects prices to start rising soon.

“Sales will start to rise in 2009, whilst prices will stop falling in most places by the end of 2010,” writes Bernardos in his report.

But if Bernardos is right, and prices continue to fall this year, that will encourage people to delay their purchase decision, and reduce the number of sales. The article does not pick any holes in his arguments.

And at no point does the article mention of the second home market, which operates differently to the primary housing market. Given the present state of the economy, with unemployment rising across Europe, it’s not hard to imagine that it may take a while longer for sales of holiday homes to pick up.

Story from Mark Stucklin

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