Comment from andreww
Time: May 30, 2008, 8:48 am

It’s just pure ignorance and naivety. Us Brits had it very good in Spain for many years. Why did expats expect something from Spain - like it owed them a life in the sun for working so hard in the UK?!

In regards to that comment - why spend 1000 euros a month on a private school! Did you not think about the cost before hand? Of course over 50s are struggling to get work - is it not difficult in any country? I dont know many 50 year olds searching for jobs - they are still in their job they have had for many years. I think you grossly understimated the costs - you can’t blame anyone for that.

Now I’m not heartless. I’ts an awful situation for some people. But don’t go looking for sympathy.

Comment from Justin
Time: May 30, 2008, 9:36 am

Yes, things are in a terrible state. So many thousands of people losing their jobs as the constrution boom has finally ended.

Tough times all round, no one seems to have any money any more.

Anyone caught up in real estate in Spain better start looking for another avenue. It really is that bad.

Comment from Marcin
Time: May 30, 2008, 9:41 am

I guess they only have themselves to blame…

Sorry, but buying a house is a long term investment, not a flipping opportunity to make a fast buck, and if you won’t want to live somewhere for 10-20 years - just don’t buy.

I guess it’s down to the british obsession with OWNING a house. Or look at the couple in the Guardian’s article - they bought a house in a place near Marbella without making sure the place is right for them - “find it difficult to settle and cannot move back”…. Come on, why not rent the place in the UK to some eager family and rent a place in Spain for the first years?

Disclaimer: investment values can go down as well as up

Comment from frank
Time: May 30, 2008, 9:57 am

“But don’t go looking for sympathy.”

I can’t imagine for a moment they are looking for your sympathy, just telling it as it has happened to them. Obviously not everyone is as clever as you, some are perhaps more ignorant and naive. I have always maintained, Spain was a good place to retire to if you are rich, not so good if you need to make a living. Reading in other forums, this story is replicated dozens of times, it’s far from an isolated incident. people that have had enough, dying to move back, but impossible as they cannot sell.
As Ben says, the papers here are full of such horror stories, which will do nothing to alleviate an already pretty desperate situation in the construction industry. Drive around southern Spain, there are thousands and thousands of unfinished properties, work has stopped. I personally think it is the job of papers here to warn potential buyers of all the illegal houses, the housing situation etc, but “Brits in Spain” always accuse the British press of having a down on Spain, and only report the bad news! If I was a potential buyer(which I won’t ever be), I’d be very grateful for the warnings! eastern Europe and Turkey now seems to be the new Spain.

Comment from MrMark
Time: May 30, 2008, 10:32 am

“I guess it’s down to the british obsession with OWNING a house. ”
There was a news article on the bbc web site this week; according to the Nationwide there’s been the biggest fall in UK house prices since 1991. There’s been a house price bubble of gigantic proportions in the US, UK and Spain. And guess which countries are now being hit hardest by the fall in house prices? The problem is, I can see it taking 5-7 years before things settle down. There again, it is actually good news for first time buyers looking for a bargain (although they’d be better waiting at least a year or so before snapping up a house). We may actually see houses that aren’t in the regular job-producing areas (the Costas in Spain, the north in the UK) revert to being relatively cheap again.

Comment from Santiago
Time: May 30, 2008, 11:36 am

I think housing booms like those Spain and the UK have experienced for the last 10 years are the exception rather than the rule.

We are now experiencing a correction and in neither of these countries will it be possible to live off the appreciation of property for several years.

The situation of this couple is similar to what it would be if they had stayed in the UK and bought too expensive a house.

It should also be remembered that the Spanish housing crash and economic downturn are ahead of the UK one, so the UK
situation is still at an early stage
(house prices starting to fall year on year, but no visible effects on unemployment or economic growth).

The best advice is “don’t over invest” and “don’t make financial plans on the hope of an ever-lasting housing boom”.

It will be tough times ahead for many of us and our friends and relatives, etc… but at the same time, it is necessary that the economy goes through this in order to regain balance.

Santiago

Comment from Cansado
Time: May 30, 2008, 12:53 pm

Ben said:
Moving here with a family without a hell of a job waiting for you, or trying to make a fast buck on the housing market, seems like a very bad idea these days.

Let me to correct the statement:
Moving ANYWHERE with a family without a hell of a job waiting for you, or trying to make a fast buck on the housing market, seems like a very bad idea these days.

Comment from Ben
Time: May 30, 2008, 1:02 pm

@Cansado - good point!

Comment from ryan
Time: May 30, 2008, 2:01 pm

Well if you do have a house you can’t get rid of, here’s a neat idea: http://today.reuters.co.uk/news/articlenews.aspx?type=oddlyEnoughNews&storyid=2008-05-27T104857Z_01_L27245131_RTRIDST_0_OUKOE-UK-SPAIN-APARTMENT.XML

Comment from zania
Time: May 30, 2008, 2:09 pm

Like Frank said, they were just telling it as it is. I’m sure whether they get our sympathy is the least of their worries at the moment.
From the post it also seems as if the family in question moved to Spain some time ago. We can look at their problems now and say ‘they should have known better’, but things were very different then. And why shouldn’t they have wanted what they thought was the best for their kids? Wouldn’t we all like that if we could afford it?

And just remember that it wasn’t so long ago that ‘A Place in the Sun’ and programs like it were still telling Brits how great it is to live in Spain. To anyone hacked off with life in the UK, you can’t blame people for thinking life in Spain would be a good option.

We moved to Spain a couple of years ago and we knew life would be hard, but so was life in the UK, with soaring costs on everything. And prices have escalated in the UK in those 2 years. We couldn’t go back there if we wanted to (and we do not), because we simply could not afford to live there anymore, house or no house.

I go back to the UK regularly and see what is happening there too - building work stopped, new houses and appartments sold for a lot less than originally intended. The whole UK property market over the last few years was based on inflated prices with the ‘buy to rent’ scheme leaving thousands bankrupt.

There is no easy money in housing anymore, in Spain or in the UK and those at the bottom of the housing ladder in both countries are suffering the most because so many people over the last few years assumed there was.

Comment from miguelrr
Time: May 30, 2008, 6:32 pm

It is my feeling that now, as in the next year or so, is a splendid time to buy a property in Spain for a long-term investment. I am talking about 10 to 20 years. But I am not an expert, and would like advice…any takers?

Kind regards to all,

mrr

Comment from frank
Time: May 30, 2008, 6:42 pm

“From the post it also seems as if the family in question moved to Spain some time ago. We can look at their problems now and say ‘they should have known better’, but things were very different then.”

Agree entirely, things were very different. And it’s easy to say, buying a house is a long term commitment, I’m sure when they moved out, that returning to UK was the last thing on their mind, they were in Spain for good. But for whatever reasons, things didn’t work out. It happens to a lot of people, and many like Zania, could never afford to move back, they are stuck there. In one of the articles in Ben’s posts, it says in some areas property has dropped 60%, now I’m sure not even the clever ones here, with their crystal ball, could even have predicted a drop like that. Without knowing the finer details of individual cases, it’s hard to make an informed comment.

Comment from Jon Hundt
Time: May 30, 2008, 7:36 pm

Marcin said: “Sorry, but buying a house is a long term investment, not a flipping opportunity to make a fast buck…” but in fact a lot of people in Spain, the UK, USA etc made a whole lot of fast money by investing in houses short-term.

Now those who read the market correctly are very happy; those who read the market incorrectly are very unhappy.

I liked the Costa del Sol when I firsat went there in ‘74. When I checked prices there in ‘98 it still seemed like a pretty good deal.

When I moved to Holland in 2000, Spanish prices still seemed very reasonable, especially compared to the USA.

Since then, all hell broke loose on the property market, and apartments on the Costa del Sol started to sell for prices you might expect in San Francisco. There went my dreams …

Now the whole market is in decline, not just in Spain but in many other places as well. I think things are getting back to normal, not crashing. Maybe I can afford to buy in Spain again, soon…?

Comment from Parubin
Time: May 30, 2008, 8:18 pm

I have to agree with andreww’s first comment, has tough and hard as it is. Moving abroad and taking your family without a decent job is very dogdy.

Everyone needs a reliable source of income to make ends meet, in Spain, in the UK and even in China.

On top of that, 1000 € a month schooll per kid seems a bit expensive, taking into consideration that educacion is (almost) free in Spain.

As for Miguelrr’s comment, I agree with him. Crisis means opportunities as well. Now it is the time to consider buying property. The prices haven’t dropped 60% as it has been said before, in fact most developers and construction companies are still very reluctant to lower prices, but the will certainly have to drop them because sales have come to a sudden stop and these constructors will have to meet their commitments too.
If anyone’s looking to buy, I’d say wait a little more, and you could find pretty good bargains in the months to come. That is, if you have the money, of course (I wouldn’t think it is wise to raise your debt balance right now).

Anyway, if you are seeking real state only as an investment product, I’d say forget about Europe. Even Eastern Europe is quite pricey now in comparison to what you can get in return in some other countries. Panamá, for instance, is a lot more attractive profitwise.

Comment from Ray
Time: May 30, 2008, 9:03 pm

When I first started thinking about coming to live in Spain, back in the days of cheap pesetas and strong dollars, I ‘knew’ I could make a decent living and afford a house, and all would be well.

Well, by the time I finally got around to it, my dollars were worthless, at least when comparing what they could have purchased in pesetas verses what they can now purchase in euros.
I managed to get a job in a construction company in Madrid; (very similar to what I did in the States.) I lost that job as they began laying-off everyone, in their hiring order: Last in First out.

I feel very, very lucky to have found an interim job that pays just enough to get by, and pay the rent. I would have truly been trapped if I had invested in a mortgage. I guess owning property will always be a jetsetter’s dream.

I should have stuck with the american dream, but I married a Spaniard, and she was tired of living in the U.S.

I’m not kidding, her biggest complaint had been ‘Too many Mexicans.” Seriously.

I really feel for everyone, especially British families, who are going to be forced to stick this one out. We’ll try to keep each other company.
That being said, the ‘obsession’ to own your own home is a correct one, and by no means isolated to the UK. The market just doesn’t always favor the sane.

Comment from ValenciaSon
Time: May 30, 2008, 9:04 pm

This morning on NPR, I heard a stiry about a guy in Madrid who is so desperate to sell his apartment, he is raffling it off. He plans on selling 64,000 raffle tickets at 5 euros each, which would pay off his mortgage. He has a web site which describes the details to include the legalities involved and states that for 5 euros, you could own your own place and he could get a good night’s sleep.

Comment from Ray
Time: May 30, 2008, 9:12 pm

@Ryan and ValenciaSon
An interesting story, thanks.
http://today.reuters.co.uk/news/articlenews.aspx?type=oddlyEnoughNews&storyid=2008-05-27T104857Z_01_L27245131_RTRIDST_0_OUKOE-UK-SPAIN-APARTMENT.XML
I guess when all else fails, LOTTO FEVER! /sarcasm.
Use other people’s gambling addictions to your benefit, just like the Church or the Government does.

Comment from Luciana Sarra
Time: May 31, 2008, 12:01 am

The website for the raffle is elpisodeloscincoeuros. Quite interesting… Anyone thinks it’s a good idea to participate? Or could this deal/prize end up being like a big white elephant?

Comment from Mrmark
Time: May 31, 2008, 9:49 am

Not so sure it’s a good idea to participate in the lottery (as the odds will be stacked against you). Plus, what are you actually winning? 30% of the piso (with an negative equity mortgage still to pay)? I can understand why the guy is doing it - if it’s the way to avoid letting the bank take possession of the property then it seems a very good idea on his part. Ok, so I don’t know the full story and maybe all or nearly all of the mortgage is paid off. It may still be the only way to realise his asset in a very nervous market.

Comment from ThursdaysGirl
Time: May 31, 2008, 12:00 pm

Now is not the time to be buying property in Spain, I am an Brit and have been renting in Spain for a few years. Most friends thought I was dumb not to buy property…maybe I was …..but renting gives me a great freedom that owning would not. I think it is different if you are married to a Spaniard or are making other roots here. I love Spain….even with declining house prices and the beginnings of a recession… is in not all about having realistic expectations?
ThursdaysGirl.wordpress.com

Comment from John Ross
Time: May 31, 2008, 5:52 pm

>> It is my feeling that now, as in the next year or so, is a splendid time to buy a property in Spain for a long-term investment. I am talking about 10 to 20 years. But I am not an expert, and would like advice…any takers?

Wait. The market hasn’t hit bottom yet, and probably won’t until the autumn or winter, or even next year. But my feeling is that unless there is a major recession, which I don’t expect, prices will start to pick up again in 2009 at the latest. And if you’ve got money to invest in the medium-to-long term, you can’t lose on that time frame.

I don’t want to underplay the seriousness of things here, I know any number of Spaniards who are out of work, freelancers marking time, shops and businesses closing, etc. But I remember what things were like twenty years ago, and they were far worse. Spain got used to precariousness, then to continued boom, it’ll get used to precariousness again.

Comment from Solsearch
Time: May 31, 2008, 6:30 pm

We all know that stories of doom and gloom help to sell newspapers. It’s also obvious that prices cannot go on rising year after year forever - at some point there has to be a correction/fall/crash or whatever you want to call it.

There is the same attitude towards house prices as there is towards the stock market. When things are booming everyone thinks great; we are going to make loads of money and this is the best thing since sliced bread.

Then, when there is a downturn, everyone is full of doom and gloom and that is the end of the world as we know it.

Of course, it won’t be long before the shrewd investors start moving in to pick up a few bargains.

Comment from Frank
Time: May 31, 2008, 7:07 pm

I don’t have a property background, only my personal guesstimate, but I can’t see everything bouncing back up again in the near future. I think it’s got quite some way to go yet before we see the new shoots of recovery. Don’t forget, there are many thousands of properties out there unsold, unfinished, it’s going to a much steadier market before the majority even contemplate buying. Traditionally the biggest buyers, certainly on the costas, have been the Brits, and apart from a crashing market, all the talk in the papers here of illegal builds, houses being demolished etc, has done absolutely nothing for the confidence of potential buyers. Many are looking elsewhere for holiday properties.

Comment from Solsearch
Time: May 31, 2008, 7:37 pm

Yes, I think you are right Frank, it’ll probably be a little while before things start to improve.

I read through the Guardian article that Ben mentioned, but when you actually look at the figures you start to get a different picture.

In the first example, the retirees from the UK bought their property in 2004 for 325,000 euros. The exchange rate then was around 1.5 euros to the pound, which means they bought the property for about £216 grand. They are now asking for 299,000 euros, but the exchange rate is now around 1.27 euros to the pound, which is the equivalent to about £235,000. It is a similar story with the other properties mentioned in the article, so things are not as bad as the article makes out for Brits who have bought in Spain during the last few years.

I also think some of these stupid overseas property programmes that are regularly shown in the UK have a lot to answer for. The presenters sometimes say things like “prices have gone up x percent in the last x years, so this is a great area in which to invest”. On one of the programmes the prat of a presenter (I can’t remember his name) said of Istanbul, “prices have risen x percent in the last x years, therefore if you buy a property worth y amount, in y years time it will be worth z’.

Comment from John Ross
Time: May 31, 2008, 7:56 pm

@ Ben:
In your original post, you said:
>>Spaniards have given up on investing in new coastal/second home properties as well.

I think it’s important to understand that the Spanish and British housing markets are radically different. Spaniards have never really had our concept of a “housing ladder,” with its “starter homes” or “first-time buyers.” Spaniards buy a house or flat before they get married or soon after, and live there more or less for ever, no matter how much their family may swell or shrink thereafter. And they don’t speculate at this level, they invest in the proper sense of the word: when they buy a second home, it’s because they have spare money and they want to put it to use. They may buy a flat as a holiday home for themselves or to let out, but it’s to use, not with the idea of selling and making a killing in the immediate future. In other words, if Spaniards have stopped buying second homes (and they have), it isn’t so much because of price trends or faith in the future as because there just isn’t as much spare money around - it’s belt-tightening time.

@Marcin
I nearly missed this, as I quite agree with your general drift:
>> I guess it’s down to the british obsession with OWNING a house.

The Spanish rental sector is in fact much smaller than the British one, something like 5 or at most 10 per cent depending on who you believe. A Spaniard’s home is even more his castillo than an Englishman’s. It’s to do with a real fear of the real poverty which Brits don’t have because however awful post-war Britain was, it was only ever a temporary situation there, something to grit your teeth and endure. Here it was more terrible.

@ Frank
>> Traditionally the biggest buyers, certainly on the costas, have been the Brits

The biggest foreign buyers. I’m more or less sure that the biggest buyers overall have always been Spaniards themselves, including on the costas (though I can quote no evidence off the top of my head and would have to check if challenged).

Comment from Parubin
Time: May 31, 2008, 8:26 pm

@ John Ross :
>> Traditionally the biggest buyers, certainly on the costas, have been the Brits

The biggest foreign buyers. I’m more or less sure that the biggest buyers overall have always been Spaniards themselves, including on the costas (though I can quote no evidence off the top of my head and would have to check if challenged).

John Ross’ comment is abosutely right. The British buyers do not even come second. The biggest buyers in Spain (by large) are the Spaniards. Close to 90% of the number of new buildings in Spain have been bought by Spaniards in the last years. Brits buyers have made about 2,5% of the total sum, which I reckon is even less than homes bought by immigrants.

Depending on when they bought their property, a Brit wanting to sell their Spanish real state can offset part of their loss with the exchange rate. The Euro has gained purchasing power against the Pound. More than 20% in the last few years.

Comment from Frank
Time: May 31, 2008, 10:47 pm

“@ Frank
>> Traditionally the biggest buyers, certainly on the costas, have been the Brits

The biggest foreign buyers.”

What else? Given that the article is about foreigners buying in Spain, of course I’m on about foreign buyers. And I even confined it to the costas. But thanks to Pararubin, I now know that the biggest buyers overall all are the Spanish, very grateful for that info, that would never have occurred to me! And as I was talking specifically about the costas, I have not seen all the immigrants owning property there that he talks about.

Comment from Parubin
Time: June 1, 2008, 12:50 am

Foreign buyers have little impact on the overall housing market in Spain.
In the years 2004, 2005 and 2006 the average number of houses bought by foreigners is about 40.000 (Brits make up less that half of that figure).

As much as that figure might have some relevance on certain tourist-guettoes, its influence on the whole of the housing market is very limited. Prices are not affected overall, because of Brits stopping to buy.

Comment from frank
Time: June 1, 2008, 9:53 am

“As much as that figure might have some relevance on certain tourist-guettoes, its influence on the whole of the housing market is very limited. Prices are not affected overall, because of Brits stopping to buy.”

You keep talking about Spain as a whole, and I have made it abundantly clear that my comments are confined to the costas. If you think they don’t have a big problem on the costas, dream on!

La crisis en la construcción ha llegado con más rapidez y fuerza de lo que el sector preveí­a, especialmente en el segmento de la segunda vivienda en la costa, donde la situación es de “parada total” de ventas, según Violeta Aragón, gerente de la Asociación de Promotores y Constructores de Málaga, la provincia más afectada por el frenazo. “En la segunda residencia está todo paradí­simo y en primera vivienda, aproximadamente las ventas han caí­do un 50%”, estima Aragón, que ya habla de crisis sin paliativos.

En los últimos tres años en Andalucí­a se ha producido un stock de 89.700 casas que todaví­a no han encontrado comprador y algunos promotores especialmente acuciados por la parálisis han comenzado a ponerlas en el mercado a precio de coste.

Comment from John Ross
Time: June 1, 2008, 4:04 pm

@Frank

What we have been discussing is this comment of Ben’s:

>>And I can only imagine what the Brits’ declining faith in the Spanish property market will do the country’s already troubled construction industy… especially since most Spaniards have given up on investing in new coastal/second home properties as well

And the answer is “not very much.” Even on the costas, non-Spanish property buyers (including in “Spanish” what Parubin calls “immigrant”) are a minority, and British buyers only the largest part of that minority. Yes, the Spanish property bubble has burst, no, it hasn’t got very much to do with Brits. There are far more Spaniards than Brits with holiday homes even in Benidorm. Polaris World, for example, for all its half-English name, is a Spanish affair and by far the majority of its customers have always been Spaniards. Except for a few urbanizations which have been sold exclusively abroad and become ghettos of Brits (or Dutchmen or Russians or Finns or whatever), the Spanish property boom was fuelled by internal demand, and its collapse is the result of reduction in that internal demand. The downward house-price spiral will end when the Spanish economy and Spanish consumer confidence touch bottom. The distinction between the costas and the rest of Spain is irrelevant.

Comment from Parubin
Time: June 2, 2008, 9:21 am

John’s comment is spot on. I have to agree to it from A to Z.

Comment from hellothere
Time: June 2, 2008, 9:37 am

Interesting post.

I think each individual is responsible for their own actions.
Obviously, just because the sun is shining and people are enjoying a fresh beer on a terrace somewhere, this does not mean that life will be easier.

What can I say, we are all human, not perfect, and we make mistakes.

I do not share the view of going to a country with such high social differences and such low social policy in general, as going a step up in personal comfort.
Personally, I would never have set a foot in Spain, had it not been for a hefty pay rise and a pretty nice job.

But, this is just my point of view and I cannot judge whomever moves to Spain thinking life will be easier.
Who knows? Maybe they will end up being right: our experiences are all different in the end.

In the same way, although I respect whomever does it, I cannot share the view of someone who buys a flat or a house in Spain, thinking prices will pick up after the crisis.

First of all, the crisis in Spain has only just started.

Second of all, with the quality of materials used in many modern buildings, I would hate to see what they will look like in 15 years time and how much money will have to be spent in refurbishing.

And finally, bearing in mind mortgages last on average 26 years, combined with a scarily tree-shaped demographic pyramid, someone please explain me how many people will be left in Spain to buy old second-hand houses in 2034…

Not to mention the effects the much-feared global warming may have on Spanish sea resorts (although this may kick in a bit later, which is great for us, but not so for our children…).

This is just my point of view: I sincerely hope I am wrong.