Thursday, January 21, 2010
The rain in Spain....
Here's an alarming piece on the Spanish property market written by respected journalist Graham Norwood in the Emirates Business magazine.
In it he says:
Some figures show around 1.05 million empty homes (completed or in the later stages of construction) now exist in Spain and some 40 per cent of those are in the Costas, aimed at foreign holiday home buyers or investors.
These are complemented by many second hand homes in these areas which are also on sale; their owners become cash-strapped and (in the case of older Britons) find the cost of living soaring because their income from the UK loses value thanks to the poor Sterling-Euro exchange rate.
Now the over-supply of homes on the market, especially holiday homes, is likely to get worse.
Banks forecast that 100,000 to 150,000 repossessions will reach court stage this year – although many of these foreclosures began in 2008 and have taken two years to reach fruition.
With few vulture funds and individual "distress buyers" (yes, even they have dried up, and auctions are reporting poor numbers of attendees) banks are likely to repossess the properties at the financial industry "norm" of 50 per cent of their valuation.
In 2005 two of my best friends were tossing up between buying a house in a Spanish resort or in Jarnac. Looking at my last post I guess they'll heave a big sigh of relief when they read this.