Thank you Sharon, very interesting comments.
By nature I tend to be a pessimist and I was one of the first to start predicting "doom and gloom" for the Spanish ecomony. In fact I wrote an article about it in 2004:
Spanish Ecomomic Recession Here is an extract from that -
Quote:
| I believe that the Spanish Economy, especially Tourism and Construction are heading for a serious recession. Hopefully it will not be as severe as in the ’90, when property values in coastal areas fell by more than half. A recent article suggests that prices will fall by up to 20 - 30% hopefully it won’t be worse than this. |
Unfortunately I was only looking at the Spanish economy, otherwise I would have seen how banks everywhere where rushing headlong into a sub-prime crisis and starting a world recession.
So now, way ahead of most opinions, I am saying that I can see a glimmer of light at the end of the tunnel.
Speaking very generally, certain events can always be predicted and follow simple cause and effect rules. With the ups and downs of economies the cause is difficult to determine but the effect is easy and quite simply a recession has to follow a boom and viceversa.
We all live in our own (relatively) tiny worlds but, as far as the Spanish real estate situation is concerned, two very clear facts are obvious. Those are that there is as much interest as ever but fewer are actually buying.
Why are they not buying? Buyers are not buying because they are expecting prices to fall. In any market, when buyers are expecting prices to fall that is exactly what happens.
Cause and Effect! If you agree that a recession cannot continue forever then eventually the market must recover. This will happen when the first few fore-sighted buyers decide that the recession is over and the time has come to commit.
An important point that you have missed but which probably only applies to certain areas and I only really know about the Costa Blanca North, principally from Altea to Denia. There is a min sub-economy here in the respect that most of the sellers are Brits who purchased when the £ was much stronger.
Most of these intend to repatriate the funds and most can well afford to make a considerable reduction and still have a handsome profit.
It is not quite as simple as that however. The buyers want to make as much profit as possible and they have seen their property value climb to dizzy heights. The whole thing is like a huge 3-dimensional game of poker, with sellers on one side, buyers on the other and the "pot" reducing. Eventually the sellers either have to pull out or "show their hand" and at this point the buyer wins. Other buyers see this happening and raise their bids and win. Then the buyers who retired come back into the game and the "pot" starts to increase.
Nobody can predict when it will all turn around but, as the months go by, more and more potential buyers come on the scene. Currently the number of properties for sale is still increasing as well. Eventually, because some sellers will simply remove their properties from sale, the seesaw will swing the other way.
I am now going to make my own prediction. The recovery will start to happen early next year and get under way so slowly that it will be hardly noticed at first. Prices will continue to fall at the beginning as the Spanish economic recession starts to bite and repossesed properties enter the market.
By 2011 the market will have recovered with values overall adjusted down and perhaps half or less of the "boom-time" volumn.
There will never, ever be another boom that will create a bubble - no government could be that stupid the next time around. Off-plan, short term profit taking will be a thing of the past and banks will be very careful in future about lending - thay won't have the funds to do it with anyway!
I cannot even begin to think what will happen to the huge surplus of new, unsold property. During the next few years the population of Spain will decrease as unemployment increases and immigrants go back home, leaving empty properties behind, and that is the real problem that Spain has to face - quite simply they have to do it all again from scratch!
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Spanish jobless hits 12-year high 
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