Buying opportunities in Tenerife and Spain

December 13, 2011 – 12:10 pm

Property bargains abound in Tenerife and Spain

The recent credit crisis has opened up some superb buying opportunities for buyers seeking a second home in Spain. While prices have fallen typically 25% from their peak.

For example, the Polaris World resorts were made famous by endless TV adverts featuring Jack Nicklaus before the recession hit, now these superb, complete golf resorts have a small proportion of unsold properties which the banks are keen to sell.

Buyers are advised to move quickly as much of the stock made available by the banks has sold in the last twelve months. Prime position property is becoming more difficult to find for buyers and the future of such cut price deals and mortgages remains uncertain with the government bailout of CAM about to result in a sale to a stronger banking group in Spain.

Villa Cashback MD Paul Williams remains cautious about continuing half price deals. “At this stage we don’t know what form a future CAM bank will take and what the pricing strategy of the new banking group will be. What we do know is that a weak CAM bank has so far undercut the stronger banks in pricing their property. Now it’s about to be bought by a stronger institution there’s no guarantee of the property giveaway continuing.”

Brand new apartments are available on resorts such as Hacienda Riquelme where front line golf apartments are available at less than half their original prices. Mortgages of up to 90% are available for overseas buyers. The resort has proved extremely popular with UK and northern European buyers this year.

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Property prices to fall further?

November 28, 2011 – 9:37 am

 The distressed nature of the Spanish property market combined with the country’s fragile economy suggests that property prices will fall further, despite the fact that they have tumbled nationwide since the peak of the market in 2007. The Eurozone debt crisis that has already seen three countries, Greece, Ireland and Portugal bailed out is now threatening much bigger economies like Italy and Spain. Furthermore, with unemployment and foreclosure levels in Spain both growing, it is hard to see how further price falls are not inevitable, presenting purchasers with an opportunity to bag an even cheaper priced home in Spain. Fresh research by an association of homeowners facing foreclosure (AFES), reveals that almost 20% of Spanish mortgages signed between the boom years of 2004 and 2008 are or will become delinquent. AFES calculate that over 700,000 families will have had their homes repossessed by 2015, which is a tragedy. But while extremely unfortunate, it does present those in a position to buy property, with an opportunity to secure a home at an even cheaper price, crushing any slim hopes that that market will soon embark on the road to recover. Mark Stucklin of Spanish Property Insight wrote: “Specifically, there were four million home purchases between 2004 and 2008 , the bubble years of the Spanish property boom  of which 170,000 have already been foreclosed, another 170,000 are in process, and another 375,000 are expected to be repossessed by 2015.” “All this at a time when there are more than three million empty homes in Spain,” he added. AFES propose partial or total debt forgiveness by banks, more mortgage lending, and lower property prices to making housing affordable. “The big social drama is that after losing their homes people are saddled with debts they can never afford to pay,” said Carlos Baños, President of AFES. or total debt forgiveness by banks, more mortgage lending, and lower property prices to making housing affordable. “The big social drama is that after losing their homes people are saddled with debts they can never afford to pay,” said Carlos Baños, President of AFES.

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Almost 1 in 5 Spanish mortgages signed between 2004 and 2008 are or will become delinquent

November 24, 2011 – 10:11 am

1 in 4 Spanish mortgages in Tenerife and Spain in trouble

Almost 1 in 5 Spanish mortgages signed between the bubble years 2004 and 2008 are or will become delinquent, according to a study by an association of home owners facing foreclosure (AFES).

AFES calculate that more than 700,000 families will have had their homes repossessed by 2015.

Specifically, there were 4 million home purchases between 2004 and 2008,  the bubble years of the Spanish property boom  of which 170,000 have already been foreclosed, another 170,000 are in process, and another 375,000 are expected to be repossessed by 2015.

All this at a time when there are more than 3 million empty homes in Spain.

The victims of this drama “borrowed more than they could cope with based on false expectations of rising property prices and employment,” explain AFES. “They never imagined they would lose their jobs and that property prices would crash.”

AFES propose partial or total debt forgiveness by banks, more mortgage lending, and lower property prices to making housing affordable. “The big social drama is that after losing their homes people are saddled with debts they can never afford to pay,” said Carlos Baños, President of AFES.

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Record number of repossessions in Spain this year?

October 21, 2011 – 2:51 pm

Repossession bargains in Spanish and Tenerife property

 A record number of homes in Spain could be repossessed this year, according to estimates by the ADICAE banking and insurance consumer group, presenting prospective buyers with an even greater selection of distressed housing stock to choose from, once the banks start to release these properties back onto the market.

The group projects that around 16,500 homes in Spain were repossessed in the second quarter of 2011, squashing some claims that the market is now on the road to recovery.

With Spanish home prices having declined by up to 70% since 2007, caused primarily by a severe oversupply of homes, property buyers are bagging some genuine bargains, particularly in coastal resorts such as in Tenerife and the Canary Islands.

Spanish property commentator Mark Stucklin said: “If the trend continues, there will be a total of 160,000 home repossessions this year, on top of the 140,000 families that have already lost their homes since 2008.” He added: “To make matters worse, many of those families will still have to pay off mortgages for the homes they have lost.”

According to ADICAE, a further 270,000 families are behind on their mortgage payments, suggesting that the more repossessions could follow,

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Economic uncertainty keeping housing market subdued

September 30, 2011 – 2:12 pm

Housing market in Spain and Tenerife may be subdued by economic worries

Economic and political uncertainty will keep the housing market subdued for the rest of the year, according to several experts quoted in the Spanish press

With the Spanish property market down an annualized 26pc in June, and 11pc year to date, the experts see no recovery for the market this year.

Angel Serrano, a director of Spanish property consultancy Aguirre Newman, says that “few people will start looking for a home in what remains of the year.” On the other hand, he also thinks the correction in house prices is into its final phase.

Economic and political uncertainty, with unemployment over 20pc and general elections in November, are making Spaniards wary about buying primary residencies, let alone holiday homes.

Moreover, the credit crunch is still in full swing for Spain, making scarce the financing needed to oil the wheels of the housing market. The lack of mortgage finance is the biggest problem and obstacle to recovery, according to Emiliano Bermúdez, from the Don Piso chain of estate agents.

Employment, mortgages and asking prices are the key variables , argues Fernando Encinar, head of research at idealista, a property portal. In the short-term the only solution is to “reduce prices if one wants to sell more homes,” said Encinar.

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Expats set up action group to fight Nordic banks.

September 15, 2011 – 9:05 am

Expats launch scheme to challenge Nordic banks

Expats who bought into unsuccessful equity release schemes and now face losing their properties have set up an action group to fight the Nordic banks behind the schemes.

Tempted by the offer of a salary for life and an inheritance tax reduction, organisers of Equity Release Victims Association, Ian Sherdley, 69, and Euan Armstrong, 73, used their Spanish holiday homes as collateral to buy into the equity release schemes.

The schemes were sold by independent financial advisors working the expat communities along the Costa del Sol on behalf of Denmark’s biggest bank Danske Bank and Nordea Bank SA.

They were told that if they took out full mortgages against the value of their Andalucian homes, which were fully paid for, and then gave the money to the bank to invest, their inheritance tax liability would be reduced and they’d receive a small lump sum, as well as a monthly return on the bank’s investment which would cover the cost of the remortgage and provide a small salary.

Source: The Telegraph

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Spain eases conditions for those with mortgage problems

July 21, 2011 – 2:46 pm

Spanish mortgages problems may be eased?

Spain will ease conditions for people who can’t pay their mortgages as floating interest rates rise and unemployment remains the highest in the European Union, the government said on Thursday.

Interior Minister Alfredo Perez Rubalcaba said the government will decree  a new and higher limit on the amount banks can legally deduct from the wages of a mortgage holder in default.

The government is contemplating other new rules to protect homeowners four years after a property bubble burst leaving many Spaniards stuck in homes worth much less than what they owe the bank.

“Indignados” or “indignant” protests around Spain in recent months have called on the government to address the plight of borrowers who can be evicted by the banks but still owe the entire amount of their mortgage even though the bank now owns their home.

Source: Reuters.com

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Euribor rate falls a fraction in June

July 5, 2011 – 10:00 am

Euribor rate falls . Properties in Tenerife and Spain will cost more if mortgage rates are set now

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell a fraction to 2.144pc in June, a percentage change of just -0.1pc on the previous month.

On an annualised basis, Euribor is now 67pc higher than it was a year ago, meaning higher monthly repayments for borrowers with mortgages resetting now.

Repayments for a typical mortgage (150,000 Euros, 25 years) will go up by around 61 Euros /month, or 741 Euros / year. That will punish many a stretched household budget in Spain.

In other mortgage news, new mortgage registrations dived an astonishing 38pc YOY in April to 31,358,, according to the National Institute of Statistics (INE). The average mortgage value fell by 3.8pc. That came on top of a 20pc fall in March. Lending is at all-time lows, which is bad news for the housing market.

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Have Spanish and Canarian property prices bottomed out?

May 29, 2010 – 11:27 am

Spanish property prices are still falling, but by less with every passing month, according to the house price index published monthly by Tinsa, one of Spain’s leading property valuation companies. Average Spanish property prices fell by 4.6% over 12 months to the end of April, show the latest figures. On a monthly basis, prices even rose a fraction. Should  Tinsa figures  be believed, the rate of decline has been slowing since June 2009, when it peaked at -10.1%. Should this continue, average property prices will be  stable, or even growing slightly within about 6 months.

Tenerife,Canarian and Spanish property prices bottomed out?

Tenerife,Canarian and Spanish property prices bottomed out?

Prices fell by 5.2% on the Coast, and by 3.8% in The Canaries and The Balearics – areas that interest holiday home and expat buyers the most. On a peak to present basis (since prices peaked in December 2007), prices are down 16.1% nationally, 21.5% on the Mediterranean coast, and 13% in the Canaries and Balearics according to Tinsa’s figures, prices have bottomed out and are beginning to recover.

Tinsa’s figures are based on their own valuations, not actual transaction prices. They are interesting in what they reveal about trends, and the valuations used by banks for mortgage lending purposes.

National: 1,916 €/m2
Mediterranean coast: 2,033 €/m2
Balearics & Canaries: 1,636 €/m2

Peak prices (December 2007)
National: 2,284 €/m2
Mediterranean coast: 2,590 €/m2
Balearics & Canaries: 1,881 €/m2  .

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Spanish banks relaxing lending criteria

March 14, 2010 – 11:28 am

Spanish banks begin to relax lending criteria

Spanish banks begin to relax lending criteria

Spanish Banks are slowly relaxing their lending criteria, with one or two offering more attractive deals and higher LTVs. A spokesperson for Kyero explained: “Most banks use a debt / income ratio of either 35% or 40%, although we work with one bank that uses 50%. This really helps those clients who struggle to get mortgages elsewhere due to having a higher ratio of regular outgoings on mortgages, loans, credit cards etc. to net disposable income (the “debt / income ratio”).

“The interest rate is as low as Euribor (annual) + 0,66% (the lowest we have come across to date), with 0,5% bank opening commission and 0% redemption penalty for partial redemption”.

The eurozone base rate has remained at 1% for some time now, meaning that borrowing in Spain is still cheap. With the recovery in Germany faltering and ongoing problems in the so-called PIIGS group of countries (Portugal, Italy, Ireland, Greece and Spain), it is very unlikely that there will be a sudden hike in rates. This more relaxed attitude may help the property market in Spain, Tenerife and the Canary Islands.

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