Weak economic growth in Spain

March 6, 2010 – 12:42 pm
Weak economic growth in Spain and Tenerife

Weak economic growth in Spain and Tenerife

Credit ratings agency Standard & Poor’s warned Spain that its weak economic growth prospects could undermine its plan to rein in its budget deficit, making a debt downgrade even more likely. Investors are increasingly worried about Spain’s budget deficit - and skeptical about the government’s ability to push through sharp cutbacks to right the situation.

The government has announced both tax rises and spending cuts - not all yet specified - to reduce its deficit back towards the 3 percent limit that euro rules prescribe.

In a statement, S&P said Spain’s deficit would likely remain above 5 percent of the country’s gross domestic product through to 2013 against the government forecast of 3 percent, and that as a result the debt burden could rise to above 80 percent of GDP by 2012.

S&P said it also expects much weaker economic growth than the Spanish government and that there was a “significant implementation risk” with regard to the current plan to reduce the deficit, which is estimated at 11.4 percent of GDP in 2009. Spain, which has still to get out of recession, is expected to grow by an average annual rate of 0.6 percent between 2010-13, according to S&P, way down on the Spanish government’s forecast of 1.5 percent.

S&P said it saw downside risks relating to the government’s revenue collection assumptions in particular, largely because Spain’s tax base is “highly sensitive” to domestic demand and has been sensitive to the real estate sector, which has collapsed over the last couple of years. “Neither of these sources is likely to be a strong contributor to revenue growth over the next several years,” S&P said.

S&P said it was maintaining its negative outlook on Spain’s double A+ rating, which it assigned in December, in the absence of “more aggressive and tangible actions” by the authorities to tackle Spain’s economic and fiscal problems.

“Any deterioration over and above our current expectations could put further downward pressure on the ratings,” S&P said.

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

New mortgage lending still depressed in Spain and Tenerife

March 4, 2010 – 12:56 pm

Mortgage lending still depressed in Tenerife, the Canary Islands and Spain.

Mortgage lending still depressed in Tenerife, the Canary Islands and Spain.

New mortgage lending in Spain is still very depressed, according to the latest numbers from the National Institute of Statistics (INE).

According to the latest figures, for December and therefore the whole of 2009, new mortgage lending fell again last year, by 22% in volume terms (to 653,173), and by 34% in value terms (to 76.8 billion Euros). These are the lowest levels in both volume and value terms since the INE started publishing this data series in 2003.

The number of new mortgages signed has been falling now for 3 years, and the value of new mortgages has been falling even faster. That means there is less money around to spend on Spanish property, which puts downward pressure on prices.

Mortgage lending has been changing in percentage terms over the last few years - falling in both volume and value for the last 3 years, though the rate of decline improved slightly in 2009. That means it is still falling heavily, just not by as much as last year.

Over the last 2 years, new mortgage lending has been falling more in value terms than in volume terms. That means that the average mortgage value is also falling, as borrowers take out smaller mortgages. The average value of new mortgages last year was 117,688 Euros, down 16% on 2008.

Banks have tightened up their lending criteria, and now demand bigger deposits. But also because Spanish property prices are falling, so borrowers don’t need such big mortgages as before. New mortgage lending is down 51% by volume, and 59% by value, compared to 2006, when the market peaked. That is a massive decline in the amount of money around chasing property

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

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)

Spain back in top spot for enquiries

January 25, 2010 – 5:28 pm

 

Spain and Tenerife top the enquiry list for holiday properties

Spain and Tenerife top the enquiry list for holiday properties

Holiday lettings companies  advertising Spanish holiday homes benefit from a kick-start to 2010 with a significant increase in enquiries, some fresh accommodation stock and the fantastic news that living costs have fallen making it even more cost effective for self-catering holidaymakers in Tenerife,the Canary Islands and Spain. 

Throughout 2009, Spain vied for the top destination spot losing out much of the year to the UK. Now Spain is back with vengeance stealing the top spot back,  the Canary Islands pinch fourth  place in the popularity stakes. However, the Canary Islands continue to draw winter sun seekers on good deals and cheap flights

Spanish holiday home owners are proving savvy to this change in mood with increasing numbers offering special offers for advance bookings. This tactic is particularly good at reaching families who need to plan ahead due to the restriction of school holiday dates.

Homes in the Canaries may have greater competition for business because of the volume of holiday apartments available, but they have a truly year round market, with no seasonal fluctuation and can optimistically look to fill 35 plus weeks a year with paying guests.

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

Cruise and Diaz promoting Spanish cities.

January 16, 2010 – 5:52 pm

Famous film stars could be appearing in Spain and Tenerife again soon.

Famous film stars could be appearing in Spain and Tenerife again soon.

Spain has turned to Tom Cruise and Cameron Diaz to promote its cities as ideal tourist destinations in 2010.

Government officials have made it easier for the Hollywood duo to shoot scenes for their new film Knight and Day in the hope that picturesque shots will encourage tourists to visit the country. With other non-Euro destinations luring in cost-conscious Britons, Spain has suffered particularly badly in the recent downturn, but picturesque scenes in films can often inspire new waves of tourists.

Officials hope that scenes such as the running of the bulls in Cadiz and other shots of Seville could serve to highlight the charm of the southern cities and help boost ever-diminishing tourist numbers.

Cadiz councillor, Bruno Garcia, told local media: “This is part of efforts by the municipality to promote the city, attract film producers and project Cadiz’s tourism image internationally.”

Tenerife has of course been used in the past for western  and sci fi films, especially the areas around the volcanic rocks of Teide. and the weather in Tenerife and the Canary Isles naturally helps

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)