TINSA and government house price index shows falling prices

February 2, 2012 – 10:37 am

Tinsa and government index shows property sales in Tenerife and Spain down in 2011

The House Price Index published by the Department of Housing shows house prices falling 6.8pc in 2011, and 19pc since the peak

Last week it was the appraisal company Tinsa’s house price index showing prices down 8pc in 2011. Now it’s the turn of the Government to publish it’s housing price index for 2011, showing a broadly similar decline of 6.8pc over 12 months to the end of December .

Both the Tinsa index and this one show  a double-dip starting at the end of 2010 and price-falls accelerating in the course of 2011.

After adjusting for inflation, Spanish house prices fell 9.6pc in real terms in 2011. So anyone with an inflation proof income (the majority of Spaniards with indefinite labour contracts) saw the real cost of buying a house fall by 10pc last year, or more if you include the 50% reduction in VAT on new homes.

Prices fell the most in Aragon (-10.4pc), Madrid (-8.2pc), Andalucia (-7.8pc) and Catalonia (-7.7pc), and the least in The Basque Region (-3.1pc), Asturias (-2.7pc), and Extremadura (-2.1pc). According to Fernando Encinar, head of research at the  Idealista, “there is no reason to think that anything is going to change in 2012.”

Of course you have to take all the official figures with a large pinch of salt. If the official index shows declines of 6.8pc, the reality was probably something between 10 and 15pc.

Soon to be published, and all that remains to be seen for 2011, is the official House Price Index from the National Statistics Institute, which should come out in the next month or two, and which tends to be used by the international press. Based on past form it will probably understate price declines more than any other index, which partly explains why so many articles in the international press say that Spanish property prices haven’t fallen enough.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , , | Comments (0)

Spanish property hangs on to most of the boom time gains

November 14, 2011 – 9:41 am

Spanish property hangs on to most of the gains from the boom years

Spanish property has managed to hang onto most of the capital gains it made during the boom, at least according to official figures. Other Eurozone countries have fared worse.

During the boom, the only Eurozone countries that experienced higher property price inflation than Spain (+155pc) were Ireland (+172pc) and Malta (+157pc), according to a new report from the European Commission.

Since the bubble burst, Irish property prices have fallen 38pc, and Maltese property prices by 11pc. In Spain, prices are down 22pc, according to the official house price index from the Government (-24pc according to the latest Tinsa index).

That means that Spanish property has managed to hang onto around three quarters of the capital gains it made during the boom, no mean feat given the economic crisis, credit crunch, and collapse in sales (Spanish property sales down 40pc in August alone).

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , | Comments (0)

Significant fall in property prices according to Tinsa.

November 10, 2011 – 9:39 am

Property prices falling in Spain especially by the coast

According to José Manuel Galindo, President fo the APCE builders and developers association, the fall in property prices, has been “significant”.

Prices are now down a total of 26pc in real terms since their peak, says Galindo, taking into account inflation and a reduction in VAT. When it comes to holiday homes on the coast, however, the falls have been more brutal. Prices on the coast have fallen by 32pc, according to Tinsa, and anecdotal evidence suggests it might even be higher than that.

Galindo stressed that many developers cannot afford to reduce prices any further. “Developers can’t sell below the cost of their mortgage, because they no longer have the money to afford the adjustment,” he explained.

 In the long-run, price will fall to affordable levels, regardless of how much builders or banks have to lose in the process.

Turning to the collapse in sales (down 40pc in August alone) Galindo blamed it on the lack of credit and local “purchasing capacity” and pinned his hopes on foreign buyers heping Spain mop up its glut of close to 300,000 unsold new homes on the coast.

He also described the recent Government led road show to promote Spanish property around Europe “rather ineffective”.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , , , , , , , , , | Comments (0)

Euribor rate falls again.

October 17, 2011 – 12:31 pm

Euribor rate falls again affecting property sales in Tenerife

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell for the second month in a row to 2.067pc in September, a percentage fall of -1.4pc on the previous month.

The rise of Euribor seems to have topped out, at least for the time being. With markets still fretting about a European debt crisis, expectations of rising interest rates have fallen, taking the heat off Euribor rates. The European Central Bank has said it has no plans to raise (or cut) the base-rate any further. It now stands at 1.5pc.

The monthly fall will not be much comfort for those with an annually resetting mortgage. Euribor is now 45.6pc higher than it was 12 months ago, meaning repayments on the average mortgage will rise by 480 Euros/year.  It was way too low between 2002 and 2006, sparking off an insane boom in Spanish real estate. It rose in 2007-2008 as other European economies and inflation started to grow too fast , but was slashed in 2009 to head of a depression. It made a feeble attempt to rise again this year, but that has run out of steam with the economy. It is now back around 2pc – way below what it should be in normal times.

But right now the problem is not so much the Euribor rate, which is historically low,  it is that banks don’t seem to want to lend at any rate, starving the housing market of credit without which it cannot recover.

New mortgage lending fell 47pc in July (to 29,523) compared to the same month last year, the lowest level recorded since this data series started in 2003.

The average residential mortgage value was €110,604, 9pc down on last year. All of which means less money around to fuel demand for Spanish property, putting further downward pressure on prices.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , , , , , | Comments (0)

Expat savers unlikely to see interest rates rise in the near future.

September 28, 2011 – 2:11 pm

Expats in Tenerife unlikely to see interest rates rise in the near future

Expat British savers are unlikely to see interest rates rising for some time and whatever currency they use face poor growth prospects, according to a leading UK bank.

‘Growth prospects in the UK, Eurozone and US have worsened following a series of poor economic data. This, coupled with low domestically generated inflation in those markets, makes it less likely that central banks will increase interest rates any time soon, says Trevor Williams, economist at Lloyds TSB.

‘In fact, we now forecast that the UK base interest rate will be held at its current, historically low level of 0.5% until the third quarter of 2012. In the UK, the market is becoming less focused on inflation and more pre-occupied with the prospect of weakening growth,’ he explained.

He pointed out that the UK job market, a key indicator of growth, has softened noticeably in recent months and the preferred measure of unemployment stayed at 7.9% in the three months to July, just off its highest rate in 15 years.

Source: ExpatForum.com

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Property, Tenerife, Things to Do | Tagged , , , , , , , , , | Comments (0)

Standard and Poor’s property ratings

May 25, 2011 – 9:58 am

 

Standard and Poor's ratings of Tenerife and Spanish property.

Standard & Poor’s, a ratings agency state that prices  are to continue falling over the next 12-18 months but not dramatically. Transactions  are expected to continue their modest recuperation. They say it will take “several more years to completely absorb the excess supply.”

BBVA, a Spanish bank: Price falls of 10pc on average in 2011, on top of falls of up to 50pc already accumulated on the coast. BBVA say holiday-homes on the coast fell 20pc in value last year.

The Valencian Institute of Economic Research (IVIE): Price falls of 12pc on average in 2011, on top of a fall of 20pc accumulated since 2008. Spain’s chunky glut of homes and rising interest rates will keep prices going down for the time being, argue this Valencian outfit.

Illustrating IVIE’s point about prices falling more in real terms, the ups and downs of prices since 1985, in both nominal and real (inflation adjusted) terms. After inflation, prices are back to where they were in 2003 / 2004, but they still have further to fall.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , | Comments (0)

Annual inflation increases

May 20, 2011 – 8:51 am

Inflation on the rise in Spain and Tenerife.

Two weeks ago the National Statistics Institute predicted that annual inflation would climb to 3.8% in April, the highest rate in almost three years, and two points more than the previous month. On Thursday, while confirming this figure, the Institute commented on the price index, which had been worryingly low for a year and a half, and on more recently when oil prices reached record highs.

The monthly CPI rose 1.2%, the highest since October 2007 and analysts agree that the figures announced last week are worse than expected.

The price spike in March and April was influenced by products relating to leisure and culture, which experienced the biggest rise in two years, and clothing, which has been buoyed by the change of season. Looking at the progress of prices over the past year, energy products, leisure and culture, and food and soft drinks had most influence.

Core inflation, which excludes more volatile products – unprocessed food and energy products – rose four points in April from the previous month to 2.1%. Since the annual rates of these more volatile components have grown less than the rest in the last month, rising inflation has been due to other products that make up the CPI basket. This includes processed food (4.5%) and services (2.2%).

Hopefully this will not impact too much on people visiting Spain and the islands.

Source: Kyero.com

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , | Comments (0)

Increase in holiday home enquiries in Canary Islands

March 31, 2011 – 1:38 pm

Interest in Tenerife property increases

Spring is finally in the air this week here in the chilly old British isles, and it seems UK holidaymakers have summer on their minds, if the latest data from vacation rental website Holiday Lettings is anything to go by. Surprisingly, despite growing media reports of an ‘income squeeze’ due to increasing taxes and inflation, the portal has recorded a 20% year on year increase in holiday home enquiries so far in 2011, with Spain’s Balearic and Canary Islands the big winners amongst sunseekers. 

This is good news for buy to let investors with properties in Spain’s outlying islands, who have no doubt been panicking over the last year with the market collapse on the mainland and virtually no chance of selling their home for a profit. But luckily industry predictions on the resilience of Spain as a holiday destination prompting a recovery in market demand appear to have come true – the Balearic Islands have had the single largest enquiry rate of any destination this year, whilst the Canaries were also popular earlier in the year.

The Canary Islands offer a value-for-money holiday option for cash-strapped Brits, particularly given the savings they could achieve on holiday rentals versus hotel stays. The recognised saving when renting a property is hitting home with consumers in tough economic times and Spain’s reputation for offering value for money and its longstanding place in the hearts of British holidaymakers are likely to be contributing to its popularity so far this year. Great news for property owners in Tenerife.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , | Comments (1)

Sterling slide against the euro and dollar is halted

February 17, 2011 – 12:18 pm

The sterling exchange rate against the euro affects those making property purchases inTenerife at present.

Sterling struggled for most of the week ahead of the Bank of England’s interest rate decision on Thursday. Recent speculation regarding potential interest rate hikes by the UK central bank saw traders buying into the pound but with low growth levels and inflation expectations indicating an increase in price pressures over the coming months the likelihood of a rate hike has diminished and concerns that premature monetary tightening could risk destabilising the UK recovery.

Economic data from the United Kingdom gave little support to the Pound which was batted around by risk aversion and movements in EUR/USD exchanges. The British Retail Consortium released its retail sales index which indicated sales had bounced back in January after a decline due to poor weather in December.

However, it is thought a rush to beat the VAT increase had contributed to the late push in higher retail spending. RICS house price data showed the pace of price declines eased for a third consecutive month. The data underlined the difficulty faced by the Bank of England in its decision over whether to raise interest rates, similarly a mixed performance in industrial and manufacturing output added to the argument that caution was required to support growth as well as tackling inflation.

The Bank of England rate decision saw the Pound react positively to the announcement and halted the currency’s slide versus the dollar and the euro. The UK central bank kept interest rate on hold at 0.50% and made no changes to its £200bln asset purchase program, as expected.

Expectations are still that the BoE may be forced to raise rates to combat inflation. A view supported by the release of higher than expected PPI inflation figures although late week geo-political tensions rising in Egypt prevented any gains as risk aversion dominated trade.

Clearly the sliding pound against the euro makes a difference for those who are trying  to buy property in Tenerife at present but also for  those who are selling and wish to change the euros back into pounds. The use of a good money exchange company such as Moneycorp will ensure that you get the best exchange rate for whichever currency that you have. The rates from these companies tend to be better than the high street banks. It really does pay to shop around.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , | Comments (0)

Pensioners abandon retirement dream due to sterling weakness

December 14, 2010 – 2:46 pm

The value of Sterling against the Euro is concerning for pensioners

Many UK pensioners are being forced to abandon their dream of retiring abroad because of the weakness of sterling, research has indicated.

Specialist currency brokers said it had seen a 28 per cent jump in the number of retired expats who were selling up and returning to the UK during the past 12 months. The situation  is a result of  a combination of the weakness of sterling, in which most retired expats still receive their pension, and rising inflation.

A spokesman said during the past five years the value of sterling had fluctuated by up to 67 per cent against the currencies in popular retirement destinations, having a dramatic impact on the amount of money people had to live off each month.

For people who have retired in eurozone countries, such as France, Spain and the Canary Islands, exchange rates on a typical monthly transfer of £1,175 have varied by 49 per cent during the past five years, varying from a high of 1,793 euros to a low of just 589 euros.

Pensioners Paul and Cherie Ripley have been trying to sell up and return to the UK from Alicante for the last 18 months, having watched the value of their house fall by 50 per cent in the last six years.

Mr Ripley said: “A combination of the exchange rate and the economic crisis has meant that we have lost a hell of a lot of money. The catch is we can’t really afford to stay and we can’t afford to buy back home. The worry on top is that Spanish death duties are extremely fierce and we, like a lot of people out here, didn’t really investigate these extra costs when moving out here, retirement in the sun was a big draw at the time.”

Pensioners in the US have seen a 53 per cent swing in the number of dollars they get for the same amount, while those in Australia have been the hardest hit, seeing the number of Australian dollars £1,175 buys vary by 67 per cent, ranging from 3,112 Australian dollars to just 1,247 Australian dollars.

To make matters worse, around half of people who retire abroad do not have a state pension that increases each year in line with inflation.

Pensioners who retire to countries such as Australia, New Zealand and South Africa, which do not have a reciprocal social security arrangement with the UK, have the value of their state pension frozen at the date on which they left the UK.  But even those who do have an index-linked state pension may still see it eroded in value over time going forward.

The Government recently announced that the state pension would rise each year in line with inflation, average earnings or 2.5 per cent, whichever is greater. But it is changing the measure of inflation that is used from the Retail Prices Index to the Consumer Prices Index, which tends to be lower.

By Angela | Posted in Economy, General, Health, Holiday, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , | Comments (0)