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 12, 2011
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:
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.
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".
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
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.
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:
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.
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.
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