# Citi Believes Spain House Prices Will Fall Another 5% to 10%



## skip o (Aug 1, 2011)

http://news.kyero.com/2014/06/citi-believes-house-prices-will-fall-by-further-5-to-10/14597

My experience in Barcelona is that, despite agencies pretending otherwise, asking prices are dropping and sales are few.


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## Chopera (Apr 22, 2013)

The INE and notary data shows that sales are increasing this year. Which probably means that asking prices are nearer the market, but of course that doesn't necessarily mean that prices won't stop falling further. Also the data is for Spain as a whole and doesn't account for local markets.


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## misterblue58 (Jun 26, 2014)

*Sales data*

Sales data can be interpreted in different ways. to generalise and say "sales are down2 is too simplistic. 

You need to look at 
year on year

Number of properties sold, by region , by value.

some areas are seeing good growth , where others are still going backwards.

Some properties sell within weeks (beachside properties attract cash rich russians for example) 

whereas areas that are further away and maybe purpose built for Ex pats around golf course are stagnant at best and unlikley to move upwards for some time.

Also Many of the exisiting empty housing stock has been written off by banks or bankrupt builders and will prob never be sold. So what you are seeing is quite a bit of up market New Build of higher spec and design thatn the previous boom aimed at the premium market (you know the type the square black/white /Glass type these are aimed mainly at Scandanavians prospects who again havent been too effected by the eurozone disaster.

Unfortunatley whilst MR cameron and osborne keep telling everyone how much better it is the truth is the cash isnt yet there for the British Buyer (second mortgagees or family second homes) to make a significant impact in fact if you dig deep into government figures currently more brits are going home from spain than relocating here.

All in all a mixed bag, but no different than the Uk wherethere is an "Economy" within an "Economy" as in London houses boom and prices soar whilst the North is still waiting for it to happen,, phew such is life


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## ExpatWannabee (Jul 6, 2011)

Citi's estimates sound optimistic. In addition to the hundred's of thousands of vacant houses, there are just too many occupied houses that have been on sale for years without changing hands, creating a great softness in the market. Plus many people will not buy into a market that has gone through a crash -- why take on risk when there's no indication of a sustained economic recovery that will keep the market from crashing further?

I live outside Valencia and every time I go into the city it looks like conditions are getting worse rather than better -- more and more apartments/condos for sale or rent, more empty retail spaces, more people panhandling etc. The fact is, much of Spain does not have the kind of economy that will lead to solid, sustained growth. If you're a very strong country, then maybe you can get by on a tourism/retail economy. But a large economy needs more, and Spain hasn't done much during the crisis to diversify it's economy and build 21st century industries.


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## Horlics (Sep 27, 2011)

ExpatWannabee said:


> why take on risk when there's no indication of a sustained economic recovery that will keep the market from crashing further?


Because you can afford to and you want a place to treat as your own rather than a rental.

I bought recently and I'll be happy with a 10% drop.

And I called a transport company for a quote to shift stuff from the UK to Spain. I was told they're top heavy with UK -> Spain at the moment. In her words, "nobody is leaving, it's one way traffic inward at present".


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## misterblue58 (Jun 26, 2014)

*Lol*



Horlics said:


> Because you can afford to and you want a place to treat as your own rather than a rental.
> 
> I bought recently and I'll be happy with a 10% drop.
> 
> And I called a transport company for a quote to shift stuff from the UK to Spain. I was told they're top heavy with UK -> Spain at the moment. In her words, "nobody is leaving, it's one way traffic inward at present".


Well he would say that wouldnt he, we know personally of 3 couples gone in the last month . What you arent taking into account is the thousands of Brits stuck here who bought properties at Sky High rates in the late 80s / 90s and now their properties are not only worth much less but have the added problem of the pound being back then half a euro up against what it was back then. Thats why you can now buy a villa with pool for the price many paid for their "Dream Apt" back in the "Good old days" Its why there are many bars standing closed or empty where the owners have just handed the keys back rather than keep heamorraging money. I lived in Tenerife for 7 years and saw the Tourist trade drop in real terms 30-40% as Long distance All inclusive became the norm and cheap budget airlines opened up the routes to other non spain destinations. 

Just because one bloke with a van who trots back and forward between here and the uk a couple of times a week to earn a few quid is booked up for the next couple of months dosent alter the facts , 

heres an excerpt from the Daily Telegraph April 2013. or maybe your van man knows better lol !!

*]According to the latest statistics, however, the Spanish sueño isn’t all it once seemed – as expats return to Britain in their droves. Nearly 90,000 abandoned their Mediterranean dream last year, with town hall registers across Spain recording a 23 per cent drop in expats since January 2013. And it’s not only Brits who are heading home: the German and French populations also fell, with Chinese the only nationality increasing their presence in the country.
Local estimates put the figures even higher, with reports in English language newspaper The Olive Press suggesting that some 20,000 Brits want to leave the Costa del Sol alone. Across other areas popular with UK expats, there could be as many as 50,000 more hoping to head home. The real figures might be even higher, experts add, but for the number of people who can’t sell their properties in the current economic climate.*

Sorry,, I love it here in spain but I dont look thru rose coloured glasses or kid myself, For many its turned into a nightmare !!
[/COLOR]


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## Pesky Wesky (May 10, 2009)

misterblue58 said:


> Well he would say that wouldnt he, we know personally of 3 couples gone in the last month . What you arent taking into account is the thousands of Brits stuck here who bought properties at Sky High rates in the late 80s / 90s and now their properties are not only worth much less but have the added problem of the pound being back then half a euro up against what it was back then. Thats why you can now buy a villa with pool for the price many paid for their "Dream Apt" back in the "Good old days" Its why there are many bars standing closed or empty where the owners have just handed the keys back rather than keep heamorraging money. I lived in Tenerife for 7 years and saw the Tourist trade drop in real terms 30-40% as Long distance All inclusive became the norm and cheap budget airlines opened up the routes to other non spain destinations.
> 
> Just because one bloke with a van who trots back and forward between here and the uk a couple of times a week to earn a few quid is booked up for the next couple of months dosent alter the facts ,
> 
> ...


This article was discussed on the forum when it first came out and it was generally thought to be alarmist and not giving a true picture. The van man probably does know a lot more than a journalist from the Telegraph 'cos he's living and breathing the situation!
However I'm not denying that there are/ were a lot of Brits who found themselves in a very bad financial situation and I agree that Spain is not out of the crisis, and won't be for a long time. There are many threads about this if you're interested, a lot addressing posts from people who want to come over with their families and look for work(!?!!) Look for unemployment, crisis, recession, work etc.
I do agree with Expat wannabe when s/he says


> In addition to the hundred's of thousands of vacant houses, there are just too many occupied houses that have been on sale for years without changing hands, creating a great softness in the market. Plus many people will not buy into a market that has gone through a crash -- why take on risk when there's no indication of a sustained economic recovery that will keep the market from crashing further?
> 
> I live outside Valencia and every time I go into the city it looks like conditions are getting worse rather than better -- more and more apartments/condos for sale or rent, more empty retail spaces, more people panhandling etc. The fact is, much of Spain does not have the kind of economy that will lead to solid, sustained growth. If you're a very strong country, then maybe you can get by on a tourism/retail economy. But a large economy needs more, and Spain hasn't done much during the crisis to diversify it's economy and build 21st century industries.


Housing was used as investment for Spanish people from all walks of life. I teach English to adults and the majority had/ have another house on the beach or in the pueblo and on top of that many would habe another that they'd bought for their children when they were older but now were renting out to pay the mortgage. Well that just hasn't worked out for many.
I have seen signs around here of construction raising it's ugly head again, but why because new housing is not needed. I think a lot of it is desperation and also that the circle is starting again. The government hasn't invested in new jobs in other areas there's nothing else to do and someone will always sell you their land.


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## Relyat (Sep 29, 2013)

Pesky Wesky said:


> I have seen signs around here of construction raising it's ugly head again, but why because new housing is not needed. I think a lot of it is desperation and also that the circle is starting again. The government hasn't invested in new jobs in other areas there's nothing else to do and someone will always sell you their land.


This is true for the U.K. as well, as the latest statement and intervention from the BoE shows


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## Chopera (Apr 22, 2013)

ExpatWannabee said:


> Citi's estimates sound optimistic. In addition to the hundred's of thousands of vacant houses, there are just too many occupied houses that have been on sale for years without changing hands, creating a great softness in the market. Plus many people will not buy into a market that has gone through a crash -- why take on risk when there's no indication of a sustained economic recovery that will keep the market from crashing further?
> ...


It depends where the vacant houses are. A lot were built in the middle of nowhere on empty urbs and have no demand. They'll probably end up demolished. They show up on the stats but have little effect on the market. It's why you can't draw too many conclusions from national housing statistics - there are simply too many factors.

However I agree that there's no real reason to buy right now - unless you know you're going to be living there for at least 10 years and you know the market won't fall much further over that period.


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## jimenato (Nov 21, 2009)

Relyat said:


> This is true for the U.K. as well, as the latest statement and intervention from the BoE shows


The UK certainly needs new housing though...


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## Madliz (Feb 4, 2011)

> Sky High rates in the late 80s / 90s


Spain and much of the world was in recession in the early 90s. We bought in '94 and it was reckoned that the market was just about touching bottom, much like today, in fact.


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## Relyat (Sep 29, 2013)

jimenato said:


> The UK certainly needs new housing though...


Yes, in some areas it does. However, this lack of supply has led (again in some areas) to prices rising unrealistically with the returning prospect of speculation fuelling an unsustainable spiral.

The root of this is lack of supply, but supply of what - houses? Yes, but why? My neighbour can demonstrate a piece of the problem. He is a self employed brick salesman, he was in this business for the major supplier of bricks for years and made redundant 5 years ago and went out on his own. He now sells to anyone, from an individual building a shed to Wimpey, Persimmon etc. He is now experiencing a decline in business, not because nobody wants to build, but he can't get the bricks. At the time he was made redundant the whole building industry was in decline, as a consequence because nothing was being built the brick factories closed. Since then, mainly smaller plants stayed in business, better able to adapt to changing production to meet needs, the big players sold off stockpiles and in time sold the land that the production plants were on. Now the demand is returning, there simply isn't the capability to supply. 

I have seen his orders, he is being quoted delivery of "not before February 2015" and this isn't for specialist lines it's common or garden bricks. This applies whether he is quoting for a single house extension, a new filling station or an estate of houses. Often the delivery date can change overnight, or the price increase by 10% or more.

I am sure that he is not the only one and it's not just bricks, but that is where the investment needs to be made, in manufacturing the basic commodities that are needed to enable the building to take place, not throwing money out to increase the availabiltiy of mortgages. That is then spent importing these commodities from overseas, improving other countries' economies and denuding ours.

So yes, the UK does need more housing, but we need the industry to supply the needs and the jobs to support the expenditure more.


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## Horlics (Sep 27, 2011)

misterblue58 said:


> Well he would say that wouldnt he


Who are you referring to, the van man? If so, I can't see how he would benefit from saying what he did. All we were doing was discussing possible dates and he pointed out that he was busy in the direction of the UK to Spain. He was setting my expectations about when he might be able to do the job, that's all. Therefore, I don't understand your "he would say that wouldn't he" comment. Please explain if I am missing something.



misterblue58 said:


> Just because one bloke with a van who trots back and forward between here and the uk a couple of times a week to earn a few quid is booked up for the next couple of months dosent alter the facts


If the facts you are referring to are about the general state of the market and its recent history then of course one man's experience doesn't weigh against that. But as you said in your opening post in this thread, there are factors such as regions to take into account. This particular van man deals in one small area of what is a massive country so isn't ever going to be representative of the market as a whole (obviously!) just like Citi's broad statement about house price drops won't be accurate across every region. Van man's experience is just one anecdote that contributes to the discussion, if you want to "lol" at it, that's up to you.

In the UK news today is a story about house prices having risen 6.9% over the last year. I am looking for an apartment in the UK at the moment and there is a glut of them which I can buy at the same or slightly less than their current owners paid for them 9 to 10 years ago. Your point about regional differences holds true in the UK too.


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## Horlics (Sep 27, 2011)

Relyat said:


> So yes, the UK does need more housing, but we need the industry to supply the needs and the jobs to support the expenditure more.


The issue with the UK is that the market is not in a healthy state and I can't see how it will transform for at least another 8-ish years.

My nephew married last year. He and his wife are now buying a house. They're paying 140,000 and it's going to be very hard for them. They both work but not in particularly high paid jobs. He drives a delivery van and is on a zero hours contract and has to be self employed to work for the one company that "employs" him.

In much of the UK a developer can't buy land and build a family house on it for 140k. The point is, the bottom end of the market is out of reach of first time buyers, so it will all go to BTL and young people stand little chance of owning a home unless they suffer a low standard of living while paying for big loans.


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## Horlics (Sep 27, 2011)

Chopera said:


> However I agree that there's no real reason to buy right now - unless you know you're going to be living there for at least 10 years and you know the market won't fall much further over that period.


Well nobody can know that the market won't fall much over any period. I wish I could predict that one.

I bought very recently. My reason, without any regard for what will happen to the market, was because I want somewhere to live that I can do what I want with, and I don't want to be moved on by a landlord when he decides my time is done. I don't care what happens to prices because I don't intend selling it. I hope my kids enjoy it when we're not here anymore.

All sorts of people in all kinds of different circumstances make their decisions. The above is the real reason I bought right now.


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## Chopera (Apr 22, 2013)

Horlics said:


> Well nobody can know that the market won't fall much over any period. I wish I could predict that one.
> 
> I bought very recently. My reason, without any regard for what will happen to the market, was because I want somewhere to live that I can do what I want with, and I don't want to be moved on by a landlord when he decides my time is done. I don't care what happens to prices because I don't intend selling it. I hope my kids enjoy it when we're not here anymore.
> 
> All sorts of people in all kinds of different circumstances make their decisions. The above is the real reason I bought right now.


Again it depends on area, but if you know you are buying at say 60% off peak and you can see a few properties selling (such as in my part of Madrid) then the market probably isn't going to fall much further. Personally I don't consider a 10% drop to be a big deal anyway, provided you're not under threat of repossession.

However you have to take into account the costs of buying and selling, and generally tenants are much more protected by the law in Spain. In theory the minimum tenancy is 3 years and if you are a good tenant, most landlords treat you like gold dust. So from a purely financial point of view, renting may suit most people.

Of course if you get additional pleasure from owning your house and having control over it then that's another factor. We bought 3 years ago, knowing that prices would keep falling, but the combination of tax breaks, low mortgage rates, and having 2 young kids made buying more attractive, even though we took a hit on the house price. We felt we'd be where we are for at least 10 years so it made sense.


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## baldilocks (Mar 7, 2010)

misterblue58 said:


> Well he would say that wouldnt he, we know personally of 3 couples gone in the last month . What you arent taking into account is the thousands of Brits stuck here who bought properties at Sky High rates in the late 80s / 90s and now their properties are not only worth much less but have the added problem of the pound being back then half a euro up against what it was back then. Thats why you can now buy a villa with pool for the price many paid for their "Dream Apt" back in the "Good old days" Its why there are many bars standing closed or empty where the owners have just handed the keys back rather than keep heamorraging money. I lived in Tenerife for 7 years and saw the Tourist trade drop in real terms 30-40% as Long distance All inclusive became the norm and cheap budget airlines opened up the routes to other non spain destinations.
> 
> Just because one bloke with a van who trots back and forward between here and the uk a couple of times a week to earn a few quid is booked up for the next couple of months dosent alter the facts ,
> 
> ...


Sorry but that DT article and the associated Olive Press and DM articles were based on an advertorial by a money transfer company using their own "survey" that was the equivalent of walking into a bar and saying "who wants a beer rather than a Coke?" totally unrepresentative of the world at large. In other words cr*p.


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## maxd (Mar 22, 2009)

Does anyone here buy shares? When I look at companies I look for bargains. Buy low, sell high. We bought recently too and got 50% off the old prices, that may not be the low but good enough for me as my time frame is 20+ years to recoup my investment.

My investment is primarily in my family, so the money is secondary but based on my builders estimate we have already made 100K after the improvements we made but I do not care, not selling.

The ones who keep waiting for that 5 or 10% are walking in front of the bulldozer to pick up pennies especially in the better areas. Just negotiate another 10-20% off the asking off something you like that is already a bargain.

It is now cheaper to buy than build, personally I think it is a fantastic time to buy. Just to repeat something I have said in another thread that our road in Tenerife, ALL available houses have sold in the last 12 months. There are 3 renovations going on and 2 other neighbours are painting their houses.

There is a ban on building any new houses in the Canaries so the only choice you have is to buy something finished or started or a renovation.

If you want to live by the airport in an empty development for 30k euro be my guest, they will not fill up in the next 10 years  The retirees who keep selling up in Northern Europe, those with cash for a second home are looking and buying the nice places for the right price.

This is not opinion, this is based on fact with my own eyes. Also the last time I walked along the seafront in Los Cristianos I saw only one for sale sign. Again, nice area, nice demand.

If I go to a crap area lots of for sale signs because no one wants to live there. So the point is buy somewhere nice and buy for a nice price and you should be laughing if your time frame is as long as mine.


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## maxd (Mar 22, 2009)

baldilocks said:


> Sorry but that DT article and the associated Olive Press and DM articles were based on an advertorial by a money transfer company using their own "survey" that was the equivalent of walking into a bar and saying "who wants a beer rather than a Coke?" totally unrepresentative of the world at large. In other words cr*p.


I think Hepa has explained this "90000" figure before. There was a change in the way town halls reported figures. Suddenly people that had left years ago were included in the figures.


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## maxd (Mar 22, 2009)

ExpatWannabee said:


> Citi's estimates sound optimistic. In addition to the hundred's of thousands of vacant houses, there are just too many occupied houses that have been on sale for years without changing hands, creating a great softness in the market. Plus many people will not buy into a market that has gone through a crash -- why take on risk when there's no indication of a sustained economic recovery that will keep the market from crashing further?
> 
> I live outside Valencia and every time I go into the city it looks like conditions are getting worse rather than better -- more and more apartments/condos for sale or rent, more empty retail spaces, more people panhandling etc. The fact is, much of Spain does not have the kind of economy that will lead to solid, sustained growth. If you're a very strong country, then maybe you can get by on a tourism/retail economy. But a large economy needs more, and Spain hasn't done much during the crisis to diversify it's economy and build 21st century industries.


Valencia is the worst of the worst in terms of house building and empty properties. Cannot remember the % but it had the most properties built.


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