Pilar Martínez is the new Director of Architecture, Housing and Land for the national government in Madrid. She takes over a tricky post from Beatriz Corredor, the former Secretary of State for Housing under the Socialist Government.
Her office is part of the Ministry of Public Works and she will report to Ana Pastor, the new Minister in charge of that department. Martínez previously worked as head of housing in Madrid’s municipal government.
People's Party victory in Spain may help property sales in Tenerife
The landslide victory for the People’s Party in Spain’s General Election is hoped to herald an avalanche of change for the country’s property market. The Centre-Right party’s triumph follows elections in Greece, Ireland, Italy and Portugal as Spain becomes the fifth Eurozone country to switch government this year. The real estate industry is now urging the government to act, as thousands of discounted homes across the country remain unsold. Tax cuts and tourism initiatives are two of the measures anticipated by property professionals, as Spain’s appeal to lifestyle buyers remains strong, partially helped by the existing VAT reduction for new homes. “Spain still has arguably the best weather in Europe, is easy to get to and property is relatively cheap,” Spanish agency Mercers commented, while house builders such as Taylor Wimpey have seen success by slashing VAT altogether. Marc Pritchard, Taylor Wimpey’s Sales Manager, comments: “We initiated the NO VAT policy as a way of assisting potential buyers further especially seeing as buyers have executed caution when committing to Spanish property. Indeed, we have seen considerable interest in our VAT free properties since its introduction and with only weeks to go before this rare time-limited opportunity for investors to purchase their dream home in Spain VAT free ends, we are urging property hunters to invest now before it too late.” As with the UK, unemployment is a central component to Spain’s recession, particularly for under-30s, and tax changes by the PP could create jobs as well as stimulate investor interest. In Motril, for example, an ambitious land development was scrapped when the market crashed. But plans have since been changed to a reworked “sporting and marina complex” that could create 1,000 jobs, as Spanish developers look for new ways to encourage investment. The council’s chief architect Juan Fernando Perez Estevez explains to Reuters: “It is something that will attract high-end customers who will need services. And it will be the catalyst for further activity. We’ve got the infrastructure, the motorway, so this is an important development that will attract investment.” Construction has always been a key source of jobs in Spain. At the peak of the housing boom, construction,when the People’s Party (dubbed the “Pro Property Party”) were last in power, 2.8 million people were employed in the building sector, but this has now dropped to 1.4 million – just 7.8 per cent of the working population. With unemployment high, Spaniards cannot afford new homes and banks continue to repossess property. With many seized assets turning sour, banks are losing out on billions of Euros, yet the Bank of Spain accused them in recent months of “holding back” the best properties until house prices have returned to higher levels. Around 600,000 “bottom of the market bargains” are currently available on the market, according to Property in Spain. And so Spain relies on overseas buyers to boost demand. Hopes reside in the new Spanish government, recognised as taking the problem more seriously, to continue selling off land assets in prime locations and encourage foreign investment. If the Eurozone remains stable, Reuters adds, “Spain can rebuild”. Some, including Property in Spain, are looking for immediate solutions: “The new Government has one month to the start of the New Year buying season to come up with enough incentives and safeguards to get more buyers tempted by the genuine bargains and mortgage deals on offer.” As the industry awaits new incentives to clear the large stock of discounted homes, prime Costa property at cheap prices is expected to eventually bring back international buyers to the country’s sunny coasts. According to a forecast from Bankinter last week, Spain’s supply will last for several years, but houses are predicted to become even cheaper for buyers, with prices falling another 6 per cent by 2013. It is a long road to recovery but in time, the PP’s acronym may stand for “Pro Property” once again. “There won’t be any miracles. We never promised any,” said the Prime Minister-elect Mariano Rajoy, who will be sworn into office in December. “But as we have said before, when things are done properly, the results come in.”
Property prices on the rise in parts of Tenerife,Spain and the Canary Isles.
Property prices are starting to rise in some parts of Spain, according to a new report from one of the country’s largest savings banks. These include the Canary Islands,Cantabria, the Basque region, Asturias and La Rioja, says the report.
The much awaited real estate recovery is underway in locations where there is no glut of property such as the
‘House and land prices have touched bottom in some cases. The adjustment is almost over, if not already,’ said Eduard Mendiluce, head of Caixa Catalunya’s property division Procam.
Indeed the report points out that there are between 660,000 and 1,040,000 homes on the market. This represents between 2.6% and 4.1% of the country’s housing stock. They expect the glut to fall slightly to between 640,000 and 1,070,000 in 2010, down to between 2.5% to 4.2% of housing stock.
The Caixa Catalunya report estimates that there will be an annual demand of 220,000 homes between now and 2015, almost half the level of 300,000 to 450,000 estimated by developers. At this rate it could take five years for the market to digest the glut.
But there is more good news for the luxury end of the Spanish market with one buyers agent reporting that transactions in prime areas around Marbella were increasing as early as the first quarter of 2009. ‘Secondary areas lagged behind with the first green shoots only appearing about nine months later and the worst locations are still in total paralysis in 2010,’ she said.
Currently the typical person looking for property is a cash buyer, buying for their own use, with a medium to long-term perspective, not dependant on rental income and only interested in buying in prime locations, she explained.
‘And those that require a mortgage need a maximum of 50% relative to value. In other words, the right purchasing parameters are in place again. Spain’s property market managed very well without a mass market before the boom of the Noughties and will do so again, returning I hope to the stability and long-term growth that held for four decades but this time going for quality rather than quantity,’ she added.
She also points out the uselessness of official statistics. ‘The official Ministry of Housing figures, based on registered transaction prices and supposedly objective, are distorted by under declarations of the sale price in the past and only once we have had several years of full price declaration will this distortion be washed out of the system, while the oft-quoted TINSA stats are based on subjective market appraisals. Either way, they are unreliable and, therefore, are meaningless,’ she explained.
‘There is only way to get good information about what prices are doing in 2010 and that is to talk to someone who is actively involved in putting deals together right now. When I’m asked about price falls, if they have hit bottom or if they have further to go my reply is that it all depends and there is no one answer but it seems to me that there are two main factors influencing outcomes: location and how badly the seller wants to sell. I would say there is a shortage of top quality properties in the best locations at the right price level for 2010,’ added Wood.
The latest news from Spain and Tenerife's Euribor,mortgage and property situation
Mikel Echavarren, an experienced professional in touch with many different companies in the property sector is worth listening to. Here is a selection of his recent comments
Do you think there are any good investment opportunities in Spanish real estate today?
I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.
So you think there are opportunities in a residential sector because the adjustment has already taken place?
There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.
Has the price of housing and land touched bottom?
House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%.
What’s wrong with the official statistics?
They are based on valuations. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.
Do you think there is any residential property that will never sell?
What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrialsOn the other hand, the stock of finished property will be absorbed sooner.
Is there any real demand for housing at the moment?
Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.
How does one get the Spanish property sector to recover?
The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.
