Expat Forum For People Moving Overseas And Living Abroad banner
Status
Not open for further replies.
1 - 20 of 32 Posts

·
Registered
Joined
·
27 Posts
Discussion Starter · #1 ·
Ouch !!

Real estate sector "bankrupt" says Spanish Mortgage Association | Spanish Property Insight Blog

“The real estate sector is bankrupt”. That is the claim made yesterday by Mr. Santos González Sánchez, President of the Spanish Mortgage Association (AHE), speaking on behalf of Spain’s mortgage lenders. This has serious implications for the Spanish banking sector and the wider economy.

Spanish developers had a combined debt of 324 billion Euros in the third quarter of 2009, the equivalent of around 30% of Spanish GDP, according to figures from the Bank of Spain. The interest bill alone is around 15 billion Euros a year, which developers cannot hope to pay.

With property prices falling, the banks are increasingly reluctant to swap debt for property. They are said to be ready to turn off the taps and refuse developers more credit, fearing that it could become a downward spiral.

More than 50% of the debt was used to buy land, for which there is now no market. “Whilst those plots of land are not properly valued, the financial system can’t start afresh, and won’t be able to finance new homes,” Mr. González told the Spanish press.

“The viability of the property sector is in question and it is putting the financial sector in danger,” warns Mr. González, who called on “someone” like the banks, the Government, or the Bank of Spain to take a lead in tackling the problem. All of them are said to be aware of the danger, but all of them are looking the other way.

“Bad Bank” solution

The solution lies in creating a “bad bank” where all the toxic real estate loans can be dumped, freeing the banks from their bad debts and enabling them to start lending again, argues the AHE.

Worst of all, the situation with the developers is pushing up the cost of credit for the whole Spanish economy, through lower bank credit ratings, argue the AHE. “The developers’ debts affect the credit ratings of the financial institutions, with all the consequences that has for a sector that still hasn’t fully recovered its liquidity. The financial system will have to explain how long it can bear this situation,” said Mr. González.

This serves to remind us that, on the whole, the Spanish property sector is far from out of the woods, and the longer the problem drags on, the more damage it does to the Spanish economy.
 

·
Registered
Joined
·
1,412 Posts
And this arrives in parallel to the warning that the Euro zone needs to address the disasterous positions in Greece, Italy, Spain and Portugal. "Roubini cree que España es una 'amenaza inminente' mayor que Grecia". It will be interesting to see if the northern european rich say "Who cares" or if they see the longer implications and are willing to help.

Can't wait for the French and Germans to suggest a Mediterranean Euro :D

Hopefully these things will atlast wake up the spanish people and lead to a general strike. Sadly it won't happen today :mad:.

Anyways the pound is motoring upwards as a consequence and that for sure is not due to good UK news.
 

·
Registered
Joined
·
33,612 Posts
TBH, altho this seems to be almost surprising news, I've often wondered how and why nobody could see this coming when we all know that the Spanish housing market was plummeting and mortgages were/are being foreclosed etc

I dont know about the implications to the EU, but my simplistic view makes me wonder that if Britain and the pound are rising against the euro, property prices slump even more in Spain, is that gonna open the floodgates again for Brits to come over and buy, buy, buy??????

Jo xxx
 

·
Registered
Joined
·
1,412 Posts
I dont know about the implications to the EU, but my simplistic view makes me wonder that if Britain and the pound are rising against the euro, property prices slump even more in Spain, is that gonna open the floodgates again for Brits to come over and buy, buy, buy??????

Jo xxx
That is a good thought Jo. If Germany and France don't help out then I guess the north south divide will grow and having a weekend home on a sunny beach will be within reach of many more people. But the north still needs to fully recover of course.
 

·
Registered
Joined
·
22,399 Posts
That is a good thought Jo. If Germany and France don't help out then I guess the north south divide will grow and having a weekend home on a sunny beach will be within reach of many more people. But the north still needs to fully recover of course.
Eurozone rules prohibit such assistance. I'm not so sure that the rising £ will persuade that many people to buy in Spain although who knows?
Pegging the euro against the German economy is now no longer sustainable. German domestic demand is still weak although German exports are holding up well,. Merkel has problems with her junior coalition partner. So things aren't all rosy in Germany.
I wonder about a resurgence UK buyers in Spain. The £ still is nowhere near its level of three years ago and in spite of what has been said by some I don't regard most of the people who tend to look to Spain for their retirement as truly 'wealthy'. Private sector pensions and investments generally have taken a knock and prospects for good returns on invested capital are in the short and medium terms dire. Plus UK property prices are just creeping up to the levels of two years ago so the downward trend has worked both ways.
Truly wealthy people with surplus capital may not want to invest it in a country with an economy that is likely to take a nose-dive from a position that is already weakened by the burst construction bubble.
If I had loadsamoney I'd be looking further afield than Spain and if I were considering Spain I'd be looking at 'posh' areas where property prices haven't really fallen that much.
 

·
Registered
Joined
·
681 Posts
TBH, altho this seems to be almost surprising news, I've often wondered how and why nobody could see this coming when we all know that the Spanish housing market was plummeting and mortgages were/are being foreclosed etc

I dont know about the implications to the EU, but my simplistic view makes me wonder that if Britain and the pound are rising against the euro, property prices slump even more in Spain, is that gonna open the floodgates again for Brits to come over and buy, buy, buy??????

Jo xxx
Gonna be a long time before or if that happens,
The UK recession has only just bottomed out,(we hope),and it will be a very long and slow climb back.
Finance is still fairly tight and the exchange rate is still not good and needs to improve quite a bit yet.
Punters are also well versed on the illegal properties fiasco,so many will er on the side of extreme caution.
Even if the Spanish property slumps further, I cant see any floodgates opening,...more like a slow trickle methinks,... for a good while anyway.
 

·
Registered
Joined
·
22,399 Posts
Gonna be a long time before or if that happens,
The UK recession has only just bottomed out,(we hope),and it will be a very long and slow climb back.
Finance is still fairly tight and the exchange rate is still not good and needs to improve quite a bit yet.
Punters are also well versed on the illegal properties fiasco,so many will er on the side of extreme caution.
Even if the Spanish property slumps further, I cant see any floodgates opening,...more like a slow trickle methinks,... for a good while anyway.
Agreed! It would be interesting to know how many Brits are trying to sell up and go back to the UK. A fairly well-heeled friend with a substantial property here plus one rented property has put her house on the market.She does realise that she may wait for years to sell as her property is in the zone between the lower/middle market end and the top price bracket.
It's these wealthier 'middle-class 'people who imo may consider other destinations for their second homes in future.
 

·
Registered
Joined
·
195 Posts
TBH,

my simplistic view makes me wonder that if Britain and the pound are rising against the euro, property prices slump even more in Spain, is that gonna open the floodgates again for Brits to come over and buy, buy, buy??????

Jo xxx
Why Jo, So that i a few months time they are told " sorry, your house is going to be bulldozed into the ground"? I dont think so.
 

·
Registered
Joined
·
22,399 Posts
Why Jo, So that i a few months time they are told " sorry, your house is going to be bulldozed into the ground"? I dont think so.
That's a slight exaggeration, mickeybob:) Hundreds of thousands have bought with no problems whatsoever. Without wishing to reopen a previous discussion;)
a number of people who bought these mainly less expensive properties knew they were cutting corners, to say the least. Others were genuinely deceived or ignorant of the legal requirements. Future buyers will hopefully learn from the plight of these unfortunates.
On another subject: The Economist ran a piece about Ireland's economy, to the effect that Ireland's recession has come to an end. GDP rose by 0.3% in Q3 of 2009 and unemployment figures beginning to steady if not fall. Added to this the public finances in better shape than expected with the 2009 deficit being around 620 million euros less than expected.
So....are you all cracking open the Guiness?:)
 

·
Registered
Joined
·
195 Posts
On another subject: The Economist ran a piece about Ireland's economy, to the effect that Ireland's recession has come to an end. GDP rose by 0.3% in Q3 of 2009 and unemployment figures beginning to steady if not fall. Added to this the public finances in better shape than expected with the 2009 deficit being around 620 million euros less than expected.
So....are you all cracking open the Guiness?:)
No Bl***y way :eek: are we cracking open the black stuff, I thought you knew better than belive what you read in the papers. Unemployment has eased over the last month or two, but our "Celtic Tiger" was also fed on a diet of a building
boom. The Government have just cut Public sector wages for the third time in just over a year. Today is the last working day for 1200 Special needs assistants, as they have been made redundent. There is also a review body reporting in March about how many more SNA's to sack this year. Emigration is up, that is why unempolyment figures have not been so high, Immigration (Legal & outherwise) is down. It was reported in the paper the outher day that the governments statement that there is now light at the end of the tunnel is over optimistic, or as one wag said," that light is the train comming towards us at a bl***y great speed."
So, no celibrations yet.
 

·
Registered
Joined
·
22,399 Posts
No Bl***y way :eek: are we cracking open the black stuff, I thought you knew better than belive what you read in the papers. .
Depends on which paper you read.:) Data presented by 'The Economist' is usually reliable as opposed to tabloids such as the UK 'Daily Mail' which has done much to misrepresent the situation regarding illegal builds in Spain.
I think that most Governments the world over are faced with the need to make deep cuts in public spending. There will inevitably be hurt.
The public sector in the UK has accounted for over half the jobs created in the past decade and although I have myself worked in that sector I feel that as these public sector jobs are paid for by revenue from taxes etc largely from the private sector it's time for a long cool look at what the state should be doing and what could be left to private enterprise.
I'm interested in franchising by Government of public sector provision as is the practice in Canada, France and Sweden.
Business where possible Government where necessary would be my slogan.
 

·
Registered
Joined
·
3,133 Posts
Is that how the media are dipicting these demolitions?? Its not quite that simple

Jo xxx
It never is!! We do have friends living in Spain who are trying to re-mortgage so they can fund their son on a course, and are being told that there is no way because of the current upheaval with 'legal' houses being reposessed.
 

·
Registered
Joined
·
22,399 Posts
It never is!! We do have friends living in Spain who are trying to re-mortgage so they can fund their son on a course, and are being told that there is no way because of the current upheaval with 'legal' houses being reposessed.
Do you mean repossessed rather than demolished? If the former, it's unfair but understandable from a commercial point of view as so many people are -again according to the media;) -having problems repaying mortgages taken out on properties at the height of the boom and which are now in negative equity.
As for 'legal' houses being demolished -even the Daily Mail is now recognising these as illegal builds. It would be sad if this misrepresenting of the situation is having these knock-on effects.
 

·
Registered
Joined
·
3,133 Posts
Do you mean repossessed rather than demolished? If the former, it's unfair but understandable from a commercial point of view as so many people are -again according to the media;) -having problems repaying mortgages taken out on properties at the height of the boom and which are now in negative equity.
As for 'legal' houses being demolished -even the Daily Mail is now recognising these as illegal builds. It would be sad if this misrepresenting of the situation is having these knock-on effects.
It is a kind of repossession, isn't it? And regardless - theirs is a legal build (they believe), but the bank still won't remortgage because of the current situation. And it's got nothing to do with their inability to pay - currently they don't have a mortgage!
 

·
Registered
Joined
·
22,399 Posts
It is a kind of repossession, isn't it? And regardless - theirs is a legal build (they believe), but the bank still won't remortgage because of the current situation. And it's got nothing to do with their inability to pay - currently they don't have a mortgage!
Well, demolition is the ultimate repossession -nothing to possess!:D
From what I've read, Spanish banks are currently facing a situation where they are exposed to enormous loans made to property developers whose collateral is much diminished because of the fall in real estate prices. I guess they are reluctant to grant new loans, even to customers with incomes sufficient to make repayments.
The situation in the UK was similar until recently - banks are reluctant to lend to individuals or business. From what I have heard recently in connection with a property transaction -a house sold within twenty-four hours of being placed on the market -funds are being released, albeit slowly.
 

·
Registered
Joined
·
33,612 Posts
It never is!! We do have friends living in Spain who are trying to re-mortgage so they can fund their son on a course, and are being told that there is no way because of the current upheaval with 'legal' houses being reposessed.

Wel exactly the same thing has happened to us on our UK house. We used to have a mortgage, never failed payments, had an exemplary track record. My OH wanted to borrow against it at less that a quarter of its value and the bank who we'd previously had our mortgage with, who has our family accounts and my husbands successful business accounts said no - simply cos of the current crisis, banks dont like remortgaging!!!!

Jo xxx
 

·
Registered
Joined
·
22,399 Posts
Wel exactly the same thing has happened to us on our UK house. We used to have a mortgage, never failed payments, had an exemplary track record. My OH wanted to borrow against it at less that a quarter of its value and the bank who we'd previously had our mortgage with, who has our family accounts and my husbands successful business accounts said no - simply cos of the current crisis, banks dont like remortgaging!!!!

Jo xxx
And the poster states that the people don't have an existing mortgage so they are seeking a loan with the property as collateral. Maybe the fact that there is uncertainty as to the value of property in Spain for the next few months never mind the next ten years or so is also making banks reluctant to lend.
It's probably not enough to believe your house is legal.....you must be 100% sure with all stamps, permissions etc. at hand.
Like you, I believe the best course at the moment and for the foreseeable future may well be to rent......although we never intend to own properties again. Ever.
 
1 - 20 of 32 Posts
Status
Not open for further replies.
Top