A good result for sterling in the property market.

February 21, 2010 – 12:08 pm

The value of overseas properties owned by Brits actually rose by more than £2.6bn, according to research. In many countries, the devaluation of sterling against the local currency was greater than the drop in property prices.

Sterling exchange rate means a profit for British property sellers in Tenerife and Spain

Sterling exchange rate means a profit for British property sellers in Tenerife and Spain

Property prices fell across much of the world last year, but looking at property in France, Spain, Portugal, Italy and the US. In France, for example, where prices declined by an average of 6.63 per cent in 2009, the Euro gained 13.22 per cent against the pound, giving an estimated 98,000 British owners an average gain – in sterling terms – of £10,373 per property. In Spain the fall in prices was even greater, but British owners are still looking at a profit in sterling terms. .

 There has been a lot of volatility in the currency markets recently and many expect this to continue. This is having a huge impact on the value of property owned by British people abroad and in many cases it is more influential than price changes in the local property markets.The research also highlights the need to get your timing right with overseas property purchases, and to consider forward foreign exchange contracts, as opposed to relying on spot prices

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

Time to return and buy property in Spain and Tenerife?

February 14, 2010 – 12:57 pm
Time to return to the property market in Tenerife as prices start to rise?

Time to return to the property market in Tenerife as prices start to rise?

We may think that we are savvy property investors, but are we really any good at investing abroad?  Many British investors crashed and burned in Spain over the last decade. German investors, on the other hand, largely avoided the trouble and are now purchasing from distressed British vendors. Germans always used to be big buyers in Spain and the Canary Islands, but from around 2003 onwards  many sold to British buyers after several years of surging property prices. Now it looks like they are back.They bought low and sold high, and now they are back to buy low again.  The Germans have been lucky with their timing. One reason they left Spain after 2003 was an economic recession at home that dented their confidence, and made surging Spanish property prices look crazy in comparison to their own declining house prices. But they also deserve some of the credit for their cautious attitude to buying property abroad.  Germans don’t like borrowing money, unlike the British who will happily borrow more than 100%  They are always looking for a good investment but only something they can afford with cash. Rising prices just encouraged the British to borrow more.

The Germans are also shrewd buyers who instinctively go for good beach locations in places like The Balearics and The Canaries, where there is always strong demand from holiday makers. Many British investors, on the other hand, were easily persuaded that new developments in obscure parts of inland Spain, miles from the sea, would make a good investment.  Germans are fussy about quality and like to see what they are getting, so they found the off-plan boom a turn-off. Nonchalant British investors, on the other hand, piled into off-plan investment. By 2007, German buyers were just 10% of British demand, according to figures from the Property Register.

So what is starting to lure the Germans back? Prime property at reasonable prices. Prime property prices  are down by as much as 25% in the last few years. You can now buy apartments in good locations with sea views for around 350,000 to 400,000 Euros, down from 550,000, and villas are down to 1.5 million from above 2 million Euros. The crisis has created a window of opportunity that the Germans are exploiting. They are after the best properties, in the best locations, with the best views, for the best price. If the price isn’t right, they won’t buy.

Though there is little evidence that Germans are buying outside of their usual haunts, you could argue that this is the best time in years to buy property in other popular destinations around Spain and Tenerife. For a start there is a glut of brand new, key in hand properties languishing on the market, so investors are spoilt for choice.

In Tenerife, prime property with sea views is selling quickly if the price is right, showing that the market is far from dead. There are lot of enquiries for villas between 1 and 1.5 million euros, and anything really good in that range – private, with sea views – gets snapped up.

Of course prices may continue falling, but it would be foolish to expect prime properties to be given away.British people making offers 50% below asking prices are going home empty handed. Sellers are still open to offers, and it’s far easier to negotiate with them just before prices start rising than just after.

The big problem for British buyers right now is the weak Pound. There are ways to mitigate this, such as forex option contracts or taking out a mortgage (if you can), but there is no escaping the fact that British buyers with Pounds do not benefit from lower prices as much as German and other buyers with Euros.

The British may have dominated the mass market during the boom, but today there are plenty of other Europeans interested in prime property now that prices are coming down. So Spain may be in the middle of a massive real estate crash, but it could be a mistake to think that prices for the desirable properties in good locations will go down much further. Warren Buffett famously said that he tries to be greedy when others are fearful and fearful when others are greedy. Right now British property investors are fearful, but German buyers are showing signs of an appetite. If we have anything to learn from the Germans it is that the time to buy property is during the bust, not the boom. Maybe it is time to take the plunge and return to the buying pool?

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

Latest Spanish morgage and Euribor news

February 13, 2010 – 1:27 pm
Tenerife and Spainish mortgage news

Tenerife and Spanish mortgage news

 Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.8% in January compared to the previous month.
- Euribor now stands at 1.232%, the second lowest level on record.
- Last month I reported that Euribor rose a fraction in December, suggesting that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January, that is still probably the case. Flipping around is often consistent with a period of change.
- After January’s fall, Euribor is now 53% lower than it was a year ago. That means borrowers on annually resetting mortgages can expect some relief in their mortgage payments.
- As a consequence of the latest reduction in Euribor, repayments on a typical mortgage (150,000 Euros, 25 years, Euribor +0.75%) will fall by around 100 Euros a month, or 1,200 Euros a year.
- Most of the savings from the fall in Euribor have already been had, and Euribor is unlikely to go much lower. By March borrowers on annually resetting mortgages will hardly notice any savings, even if Euribor goes a bit lower.
- Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.

Clearly if you wish to buy a new property in Tenerife or mainland Spain now is a good time.

- There were 52,043 new mortgages signed in November, up 1.8% compared to the same month last year, according to the latest figures from the National Institute of Statistics (INE). That is the first time in 2 &1/2 years that monthly new mortgage lending has risen on an annualised basis.
- The average new mortgage value fell by 12%.
- I can once again say that “the good news is the decline in new mortgage lending has been bottoming out in the last few months. If the trend continues new mortgage lending will soon be growing again year-on-year in volume terms. That will give some support to the housing market.”
- But let’s not kid ourselves. New mortgage lending is still a far cry from what it was during the boom, or even what it should be during normal times.

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

Buy property in Tenerife and Spain now.

February 7, 2010 – 1:18 pm

Time to get your bargain property in Tenerife and Spain now

Time to get your bargain property in Tenerife and Spain now

 

Property markets are cyclical, and the time to buy prime property  could well be now. When the “bust” is here, everyone else is trying to sell. This could be  the threshold of the buying opportunity of the decade.

We have been expecting things to go pear-shaped  in the Spanish property market  before the boom started to show the first signs of running its course  because property markets are cyclical, and always have been (though the long-term trend has always been up, in Spain at least).  However for the first time in 6 years,  we could be  on the threshold of the buying opportunity of a decade, as we start the next cycle. Prices, in many cases, are back to levels last seen before 2004.  This is the time to buy, during the bust, when everyone else is trying to sell, not during the boom, when everyone else is buying.

Caution is the way  to proceed . There is still a lot of over-priced property on the market, there is a large glut of property that may not have a market today at any price, unattractive, poor quality flats in undesirable locations. However,you can now find attractive homes in superb locations for very reasonable prices. The worst of the crisis appears to be over, and most European economies are growing again. Many affluent Europeans are bound to be interested in a prime property on Tenerife’s  coast, which means those properties are never going to be given away, and prices might not go down much further.

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

Value of Britons overseas homes booming

January 23, 2010 – 2:15 pm
Value of property in Spain, Tenerife and the Canary Islands increasing due to currency fluctuations

Value of property in Spain, Tenerife and the Canary Islands increasing due to currency fluctuations

Analysis  reveals that despite property prices falling in France, Spain, Portugal and the USA, and only a small rise in Italy, the collective Sterling value of property there owned by British citizens increased by over £2.6 billion between July 2008 and December 2009. This is because the value of the Euro and the US Dollar against Sterling increased by 13.22% and 16% respectively.

In Spain, where Close Treasury estimates 144,500 properties are owned by British citizens, property prices fell by around 8.35% between 2008 and 2009, but again because of the rise in value of the Euro against Sterling, they would have made a collective gain of £1.1 billion, or £7,668 per property.

There has been a lot of volatility in the currency markets recently and many expect this to continue.  This is having a huge impact on the value of property owned by British people abroad and in many cases it is more influential than price changes in the local property markets. With the currency markets being so volatile,some clients are taking out forward contracts as opposed to paying spot prices.

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

Property discounts are they what they seem?

January 17, 2010 – 2:54 pm
Property discounts in Spain and Tenerife,are they all that they seem?

Property discounts in Spain and Tenerife,are they all that they seem?

There is no shortage of price promotions being touted, for example Metrovacesa’s December promotion of 1,500 homes with alleged discounts of up to 52%, and Banesto’s November promotion of 1,200 homes with alleged discounts of 40% (Metrovacesa is one of Spain’s biggest developers, and Banesto one of its biggest banks).

But when  real estate experts what they thought of the discounts, scepticism was the order of the day. “One has to interpret these discounts and ask what levels they are calculated fromDi,” said Ernesto Tarazona, Corporate Recovery Director at Knight Frank España.

After all, what good is a discount if it is applied to some unreal starting price? According to the experts consulted for article, in many cases today’s discounts are based on the demented valuations used at the height of the boom, arguably irrelevant in today’s straightened economic circumstances. Supporting this position is a recent report on the Spanish property market  stated that prices are still close to 30% over-valued, and the valuations used by banks and savings banks (cajas) “do not reflect true values and result in a general over-valuation of property.”

That said, you might still get lucky and get the odd bargain,  especially holiday homes on the coast.

Just look at the published accounts of developers for the third quarter of this year, says the article. Their gross margins are still positive, implying that they are selling above the crazy prices they paid for land in the boom, if they sell at all, that is.

The real question is why are prices so high, even with the alleged discounts? Because neither banks nor developers are prepared to sell at a loss whether in Tenerife or Barcelona, explains the article. New accounting rules from the Bank of Spain may change that, but for the time being the discounts on offer are not really discounts at all, at least not compared to today’s market prices.

For my money I would say that will all change in 2010, one way or another.

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

Spain tops the table on interest in property once more

January 13, 2010 – 5:23 pm

Spain and Tenerife,top of the pile for those interested in property purchases

Spain and Tenerife,top of the pile for those interested in property purchases

 Spain overtook the USA in December’s

Investment Property watch chart - which tracks the level of interest in certain properties and countries

Spain and the Canary Islands, has long been a hotpot for holidaymakers from all over the world, along with retirees, second home buyers and those chasing a more permanent life in the sun. 

There are now  some great deals on prime Spanish property to be had during 2010, for those who can be bothered to do their homework and have funds. Indeed, some people will do very well.

Martin Dell, director, Kyero.com, Spain predicted that “The differing pace of economic recovery between nations will create opportunities for buyers and sellers. In Europe, the stronger German, French and Dutch economies will enable buyers from those nations to seek and aggressively negotiate property deals in the slower-to-recover European countries–Portugal, Italy, Ireland, Greece and Spain. Even though there is no currency exchange advantage for these buyers, the Euro will buy a lot more property in these PIIGS countries in 2010 compared to 2009,” he added.

Smart New Homes predicted a tentative recovery for Spain. “The new homes market in Spain is showing tentative signs of recovery, according to the G-14 group of top Spanish property developers. There is some basis for the developer’s optimism in the latest sales figures from the National Institute of Statistics which reveals the sales of newly built properties in Spain increased by 7.6% from August to September.. A sales rise for the fifth consecutive month.

“The latest Tinsa property price index for November shows that average prices fell by 6.6% over the last 12 months, down from 7.4% last month. But many in the industry point out that the index does not reflect what is actually happening on the ground as it is based on valuations, not actual transaction prices.

Analysts are warning that 2010 could see a large number of cheap properties coming onto the market in Spain and Tenerife.

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

Property prices starting to rise in certain areas of Spain

January 10, 2010 – 12:23 pm

Property prices on the rise in parts of Tenerife,Spain and the Canary Isles.

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.

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

Opportunities available in Spanish real estate

January 7, 2010 – 5:03 pm
The latest news from Spain and Tenerife's Euribor and mortgage situation

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.

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

No major turnaround in property market.

January 4, 2010 – 2:08 pm
No major upturn in the property market on mainland Spain, whilst Tenerife and the Canary Islands show an improvement

No major upturn in the property market on mainland Spain, whilst Tenerife and the Canary Islands show an improvement

There has been no major turn around in the health of the property market in mainland Spain but no lurch downwards either. Homes sale in September, not including social housing, stood at 33,276, up 7.4% on the previous month, but down 19% on the same month last year. Compared to 2 years ago, sales in September were down 42%, which just shows how much the market has shrunk since the boom.

The figures show that, though the market is significantly smaller than it was, it is not getting any smaller. It appears to be bumping along a floor of around 30,000 sales per month.  Monthly sales have come down compared to 2007 and 2008.  The market is still depressed in volume terms, but not getting worse the islands, such as Tenerife appear to be improving in fact.

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