Tuesday, December 13, 2011

TINSA November 2011 Spanish Property prices continue to dive, sharply.

The valuation index TINSA fell at an inter-annual rate of 8%. The decline is accelerating and the graph is now starting to look like a classic price crash.

During the property crash in Japan in the 1990's property prices fell 90% from peak. That now seems possible in Spain.

The underlying reasons for the drop in price continue to force prices down:

The awful outlook in the Euro Zone and the wider global economy.
Spain's debt crisis, and corresponding austerity measures continue to suck money out of the economy.
The continued bad press of unresolved property abuse cases. (Hopefully the new PP government will offer some solutions to this).

The demographics of the buyers during the boom years is on the wane. Are there enough buyers to replace those who move on beyond this life?
Poor housing markets internationally mean there is less people buying and doing so with less money.
Increased repossessions continue.
Loan availability is in decline.
Banks have slashed their prices to keep pace with the decline.
The scale of unemployment in Spain continues to rise toward revolutionary levels.

There are a lot of negative feedback loops in this horrendous death spiral.

2012 could well be the apocalypse for the Spanish Property Market.

Wednesday, October 19, 2011

TINSA August 2011

With Spain posting falling employment figures, and the fear of another recession on Spain's already beleaguered property market is diving fast.

They continued advice of this blogger is to rent unless you can find a real bargain.

Spanish Property prices are declining at a faster rate than they were ayear ago.

The government has announced that they will be launching another Spanish Property Roadshow. Their last effort was dismal and attracted

Until Spain can resolve the problems experienced by some foreign buyers, such efforts will only be seen as a poor PR exercise. The government should stick to creating a system in which buyers can have confidence. Pressure groups are quite rightly expressing legitimate greviances, if the ministers wish to help the property market, then they should listen to these people and resolve their problems.

It makes an estate agent's job very difficult when people are worried about the horror stories they have read in the press and online.

The banks and politicians have to realise that they aren't estate agents. They aren't very good at selling houses.

When will things start to get better? When will prices stabilize?

The philosophical/psychological answer, is that in a market that is based largely on confidence is that things will only level off, when people don't think prices can fall any further.

Spanish Property VAT (IVA) reduced from 8% to 4%

In an attempt to jump start the Spanish property market, the ministry for housing has halved the tax on new homes from 8% to 4%.

The reduction in IVA only applies to new properties. The transfer tax for second hand properties remains at 7%.

This is a clear policy U-turn from the government, last year an ill-judged and vain attempt to increase the tax take from property transactions the government raised IVA from 7% to 8%.

The reduction is a temporary measure and will last until December 2011.

Whilst this will have some effect on shifting the  it may have the unintended consequence of driving down prices in the second hand market.

TINSA July 2011

Some more optimistic commentators have been suggesting since the start of the house price crash, that the end is nigh. The end of the crash that is. These soothsayers of blue horizons perpetually churn out articles proclaiming they have second guessed the market and now is the time to buy.

The latest figures compiled by TINSA suggest nothing of the sort.

Download the July 2011 TINSA report.

The drop in property prices is, if anything, currently accelerating. That is to say that house prices in Spain are falling faster than previously and the general advice to potential buyers out there is to continue to wait.

Saturday, July 16, 2011

TINSA June 2011

TINSA reports that Spanish property prices are heading downward at an interannual rate of -6.6%

Spanish property prices continue on there downward journey, with no signs of slowing up. The downward trajectory is a sustained year on year trend that shows no signs of abaiting. The reasons for the continued decline are much the same as they were this time last year.

  • A glut of new properties still unsold.
  • General malaise across other property market's
  • Property scandals not resolved.
  • Unemployment still very high (20+%)
  • Instability in the Eurozone.
  • Poor outlook for Spain
A failing property market is also a negative feedback loop:

Prices are failing, so it's therefore not a good time to buy, since you can purchase in the future for less money. This in itself puts further downward pressure on the property market.

For prospective buyers looking to invest in Spain, unless you find a great bargain, sit on your money and wait. Rent instead.

Tinsa report
Tinsa Report June 2011

Tuesday, April 12, 2011

TINSA April 2011

Unsurprisingly the TINSA index of the Spanish property market indicates that prices are continuing to fall.

Prices have now been falling for continually and consistently for over 3 years and most analysts expect prices to continue to fall throughout 2011.

TINSA suggest that prices are falling at an interannual rate of -3.7% overall:

The breakdown is as follows:

Provincial Capitals and large cities -4.6%
Metropolitan areas -5.3%
Mediterranean coast -5.7
Balearics and Canaries - 3.0%
Other municipalities -1.1%

TINSA estimate that the biggest drop in property values continues to be the coastal areas.

With record unemployment and a swath of properties swamping the markets, there is little to be optimistic about. The conditions that have previously pushed down prices are still acting and will continue to act for the medium term.

Repossessions are at an all time high and interest rates are set to go up. Most mortgages in Spain are based on the Euribor and as their payments increase more people will default on their mortgages forcing the banks to acquire yet more properties.

Many of the properties that have been repossessed by the banks are optimistically priced to say the least, and if the banks are going to move them off their books their will need to be reduced in price. This can only mean more downward pressure on property prices.

The advice to people looking to buy a property in Spain is to wait and consider renting.


Tuesday, April 5, 2011

TINSA March 2011

TINSA property valuations continue to estimate that the Spanish Property Market is in decline. They estimate that Spanish residential property has declined by 4.5%, with the Mediterranean coast showing the steepest price drop at 6.7%

The latest TINSA report can be downloaded here

TINSA market can be broken down into different areas:

  • Balearic Islands / Canary Islands -0.8%
  • Large Cities / Provincial capitals -5.2%
  • Metropolitan areas -5.4%
  • Mediterranean Coast -6.7%
  • Everything else ( Inland / Rural properties) -3.3%

The index indicates that the Canaries and Balearic's Islands are close to the bottom of the curve.

Some analysts have been proclaiming that the price decline has already hit the bottom, however the conditions that have pushed prices downward continue to act, and Spain's wider economic woes continue.

Those looking to buy on the Mediterranean coast should continue to wait or consider renting property until the market hits the bottom.

Those buyers looking for a property in Mallorca, Ibiza, Menorca, should probably start bargain hunting.

Thursday, March 31, 2011

Caja Mediteraneo

Caja Mediteraneo or CAM announced the need to seek bailout funding to the tune of 2.8 Billion Euros.

Following the collapse of a merger agreement,Spanish savings bank Caja Mediterraneo (CAM) declared it would apply for state funds to meet capital requirements.

CAM was due to merge with other cajas, but three of the partners in the state-driven Banco Base merger voted against an association with CAM.

CAM which mainly operates all across Spain, has lent heavily to both property developers as well as domestic mortgages. These loans are not looking as healthy as they once did, given the downward spiral of the property market and unemployment.

Only yesterday in response to the 9Bn bailout of Caja Castilla La Mancha, Pedro Solbes Finance Minister said,
"The cajas are solvent, as is the financial system".

Monday, March 21, 2011

National Speed limit lowered to 110km

The government recently lowered the national speed limit from 120 km/h to 110km/h.

Many people have labelled this a distraction and a revenue raising tactic....

Certainly Spain has more important issues to deal with and this measure is likely to catch driver out and therefore raise more revenue.

The goverment's claim that lowering the speed limit will increase fuel effiency by 15%. Motoring organisations claim that the figure is closer to 5%.

If the government wants people to use less fuel and raise more revenue, why not just increase fuel duty?

Tuesday, February 8, 2011

TINSA February 2011

The Spanish property price valuation index as estimated by TINSA has dropped by an average inter-annual rate of -5%

Download the latest TINSA property price index

The interannual rate of change was steadily decreasing toward the end of 2010, but the downward drive in prices seems to be showing steeper falls once again.

The biggest drops in inter annual valutaion were seen in large cities (-6.5%) and the Meditereaean properties (-8.4%)

This indicates that confidence in property prices across Spain is falling, and that prices are yet to hit the bottom.

The estimated price drops may be due to the banks revising the prcies of their property portfolios that they have respossed from people who have been unable to keep up their mortgage payments.

An increase in the unemployment figures published last month is alos likely to be a contributing factor as more and more people are forced to hand the keys to their properties back to the banks.

Bank Respossesions act as a negaitive feedback into the system, forcing prices down further.

Investors looking to purchase at the bottom of the curv would be best advised to bide their time.

The general message to potential buyers is to continue waiting as property prices continue downwards.

Those looking to move to Spain would be best advised to rent.

Sunday, February 6, 2011

Market report for 2011

Nick Hagan a reporter from adferro asked me 4 questions:
Will we see an ongoing decline in Spanish property prices in 2011 ?

The best data indicates that prices are still falling and will continue to do so throughout 2011. The rate of decline appears to be falling so those looking for the bottom of the market should probably continue to wait.

Will low-rate mortgages continue to be widely available in Spain?

Most analysts are predicting modest rate rises but finance is still relatively cheap and easy.

The easiest way to get finance is to purchase a property from the bank itself, many are offer rent to buy options or low or no deposits. That said bank repossessed properties don't always offer the best value for money.

What should bargain hunters be looking for when searching for Spanish property?

Bargain hunters should be looking for "Pre-repossession distressed property".  This is property that still has equity, where the owner cannot keep up to date with the payments and is in a position where he is forced to sell or give the keys to the bank. These properties often represent the best value for money.

As the banks that have been forced to repossess properties need to liquidate these assests, they will have to reprice their property portfolios. Look out for bank properties that have been significantly reduced in price.

Don't pay the full asking price. It's a buyer's market, make a low offer

More generally, what are your predictions for the Spanish property market in 2011?

I think we will see a modest improvement in the number of transactions as the bargain properties are hovered up.

The conditions that have caused the crisis in Spain are not going away:
  •  Massive unemployment
  • Bank repossessions
  • A huge glut of property on the market
  • The global financial crisis and property crisis continues to exert a downward pressure on prices.

Thursday, January 27, 2011

Spanish court rules that repossession cancels debt

A court in Pamplona, Navara in the North of Spain ruled that reposession of the a debtor's property cleared the debt owed.

Previously a mortage debtor, whose property was reposessed and subsequently sold for less than the debt, continued to owe the remainer.

The bank, BBVA, sued the borrower to reclaim 28,129 euros of debt outstanding on a 71,225 Euro mortage after respossessing the property and then selling it for for 42,895 euros.

The judge ruled it was "morally repellent" that the bank should make additional claims on the borrower. BBVA plan to appeal the decision.

There have even been cases where EEO order have been used to pursue a debtor in another European country.

If the ruling is upheld at appeal, it's likely to encourage more conservative bank valuations, make loan to value ratio lower and make mortgage lending conditions in general tougher.

Tuesday, January 11, 2011

January TINSA 2011

The Spanish Property Market continues it's downward trend for the third concurrent year.

The properties leading the downward trends are those situated in the larger towns and cities and those situated on the Mediterranean costas.

TINSA estimate that prices have seen a year on year fall of 3.9%, with Mediterranean Properties dropping by an estimated 6.8%

The tinsa index can be downloaded here:
TINSA December 2010

2011 is likely to see the banks reprice much of their repossesed stock of property, meaning that prices are likely to continue to fall.

So in the mean time the genral advice is to rent until you find a bargain.

It's possible to rent a three bedroom two bathroon town house in the Port of Mazarron for as little as 500 euros per month