Developers ask government for mortgage interest tax relief on holiday homes

February 1, 2012 – 11:51 am

Developers ask for reduction of tax on properties in Spain and Tenerife

The G14 association of Spain’s leading developers says it will ask the Government to introduce mortgage interest tax relief on holiday homes to stimulate demand and deal with Spain’s   empty new holiday homes on the coast.

The Government has just reintroduced mortgage interest tax relief on main homes, despite the fact that it favours owner-occupiers at the expense of those who rent, and makes it harder for Spain to reach its stated goal of increasing the rental market. Developers want a similar tax break for holiday homes.

Some industry voices like Antonio Carroza  have wasted no time in describing the request as “irresponsible”. He believes it is wrong to use public money to subsidise “large developers so they can sell second homes that should never have been built,” he said, quoted in the Spanish press. In any event the tax relief would only apply to Spanish residents, not foreigners buying holiday homes in Spain and Tenerife.

The G14 has also called on the Government to reduce the ITP sales tax on resale properties.

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

Tinsa shows house price index down by 8pc in 2011

January 19, 2012 – 8:45 pm

Tinsa shows property sales in Tenerife and Spain down in 2011

Spain’s most reliable house price index fell 8.1pc in 2011, making last year almost as bad as the crisis year of 2008, when prices fell 8.8pc. There is a clear double-dip in the curve with price falls accelerating again after staging a feeble recovery last year.

One of the reasons house price declines have picked up speed is because of the return of the credit crunch in Spain. The double-dip in house prices is mirrored almost exactly by a double dip in new mortgage lending.  In coastal areas where holiday homes and much of the glut are concentrated finished the year better than other areas, with prices down 7.2pc over 12 months, compared to 9.1pc in cities and 8pc on the islands such as Tenerife.

Some experts argue that popular coastal areas will recover before the rest of the market thanks to diversified international demand from economies doing better than Spain

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

Cheaper homes in Spain

January 17, 2012 – 2:57 pm

The average price of a Spanish home fell by 8% in 2011, with further price falls anticipated in 2012, research shows.

The Tinsa House Price Index, considered to be Spain’s most reliable residential property price index, reveals that average home prices fell by 8.1% in 2011, the worst annual decline in property values since 2008, when the average price a home in Spain fell by 8.8% year-on-year.

“There is a clear double-dip in the curve with price falls accelerating again after staging a feeble recovery last year,” said Spanish property commentator Mark Stucklin. The main reasons why home price falls have picked up pace are due to a lack of mortgage finance and a severe oversupply of homes on the market.

Stucklin added: “The double-dip in house prices is mirrored almost exactly by a double dip in new mortgage lending.”

Somewhat surprisingly, homes located in coastal areas, where there is generally the greatest oversupply of properties, finished the year better than other areas, with prices having declined by  7.2%, on average, year-on-year, compared to 9.1% in cities and 8% on the islands such as Tenerife.

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

Potential purchasers looking for property discounts in Spain

January 6, 2012 – 9:45 am

Potential investors still want discount on property for sale in Spain and Tenerife

A  survey compiled by Spanish  portal Idealista reveals that potential homebuyers are looking for a property asking price discount of 21%, on average, despite the fact that prices have plunged  in recent years.

Data provided by Idealista shows that Spanish home prices dropped for the fifth consecutive year in 2011, with the average asking price now 20% below the high reached at peak of the market in 2007.

In spite of the fall in the property values, many would be purchasers feel as though values have not fallen enough to reflect the chronic oversupply of properties on the market, along with the country’s dire economic situation.

Spanish property commentator Mark Stucklin said: “As far as all other housing market indicators go, 2011 was another bad year, if not the worst since the crisis began. Property sales, house building, mortgage lending and confidence all tumbled to new lows, whilst repossessions hit new highs.”

Stuckin, like most Spanish property experts, expects home prices in Spain to continue falling in 2012.

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

Euribor rate falls for fourth month in a row

January 4, 2012 – 11:40 am

Euribor down again which means mortgage repayments up in Spain and Tenerife

Euribor, (12 months), the interest rate typically used to calculate mortgage repayments in Spain, fell for the fourth month in a row to end the year at 2.01, a percentage fall of 1.7pc on the previous month. Compared to the 12 months ago, however, Euribor rose by 33.4pc, meaning higher mortgage repayments for all those on annually resetting mortgages.

The European Central Bank (ECB) cut base rates from 1.25 to 1.00 during December, the second cut in 2 months since the Italian Mario Draghi took over as the new Governor. Markets were expecting the cut, and judging by Euribor’s recent trend do not expect rates to increase any time soon. As you can see from the following chart, Eurozone base rates are still significantly higher then the US, the UK, and Japan.

New mortgage lending continued to shrink in October, with new mortgage approvals down 43pc to 23,193 (and down 46.5pc by value), according to figures from the INE. It’s clear the credit crunch is well and truly back in Spain.

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

Lowest level of quarterly sales since crisis began but Canary Islands buck the trend

December 19, 2011 – 10:58 am

Canary Islands buck the trend of falling Property sales in Spain

The lowest level of quarterly sales occurred since the crisis began, according to figures from the property register.

There were 84,852 homes sold in Spain between July and September, 31.9pc less than the same period last year and 9.3pc less than the previous quarter. It was the lowest quarterly level of sales since the data series began.

 Q4 may well be another record low, but after that  the market is expected to  bottom out in the course of 2012. Which is not to say there will be a strong recovery after that , but at least the market will have stopped shrinking.

However, if the credit crunch gets worse, then we could still find major problems as  mortgage financing is the key to any market recovery. However parts of the  Canary Islands have bucked the trend and may well continue to do so as  tourism increases in 2012

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

Euribor Rate

December 5, 2011 – 10:58 am

Euribor down again which means mortgage repayments up in Spain and Tenerife

Euribor(12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell for the third month in a row to 2.044pc in November, a percentage fall of -3.1pc on the previous month.

After rising abruptly in the first quarter of the year, Euribor has been stable or declining since May in expectation of a cut in the base rate.

Mario Draghi, the new Governor of the European Central Bank (ECB), announced a cut in base rates of a quarter of a point to 1.25% just a few days after taking over from Trichet at the beginning of November. In the face of alarming economic headwinds, markets expect the ECB to cut the base rate even further, hence the fall in Euribor.

When the Euribor goes  down, mortgage payments  go up.The fall in Euribor will not be much immediate comfort for those with an annually resetting mortgage. Euribor is now 33pc higher than it was 12 months ago, meaning repayments on the average mortgage will rise by 400 Euros/year.

The Credit Crunch is back in Spain with a vengeance. New mortgage lending fell 42pc in September year-on-year (to 30,808), and the average value fell 6pc to €111,934, according to figures from the Statistics Institute (INE). Lower mortgage lending = less money chasing homes , downward pressure on prices and more bad news for vendors.

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

Home sales fall once more

November 30, 2011 – 3:21 pm

Homes sales fall once more according to Spanish paper El Mundo

Home sales fell 31.9% in the third quarter of 2011 over the same period of 2010, accounting for 84,852 transactions, and representing the lowest figures recorded by the Association of Property Registrars since 2005.

The agency attributed the data to the difficult economic situation and high unemployment, which has not been alleviated by the reduction in prices and mortgage borrowing or by low interest rates.

El Mundo reported that, of the total number of homes sold between July and September, 41,734 were resales (28.7% less), a figure which marks a new low.

The remaining 43,118 homes sold were new (34.7% less), a figure that is above the record low reached in the last quarter, mainly due to the lowering of VAT for the purchase of housing (from 8 % to 4%) which came into force in August and will continue until the end of the year.

Source: Kyero

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

If Spain had kept the Peseta……..

November 18, 2011 – 3:26 pm

If Spain had kept the Peseta would the property crisis have been as bad?

If Spain had kept the Peseta the bubble would never have been so big, claims Max Otte, an economics professor and fund manager who forecast the crisis in a book published in 2006.

Otte explains that low interest rates that came with Euro-zone membership are the root of the problem. Egged on by the banks, Spaniards binged on cheap mortgage credit and drove the property market into a frenzy, making a traumatic bust inevitable.

Given where we are now, Spain would have been better off with higher interest rates and steady growth outside the Euro-zone, argues Otte in comments reported in the Spanish press. The boom years were no worth this bust.

He also claims it’s only a matter of time before Greece abandons the Euro, and recommends that Spain does so too. The Euro has been a waste of time and money, says Otte.

By Angela | Posted in Economy, General, Holiday, Inspirational, Property, Tenerife, Things to Do | 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)