See here. They (whoever 'they' are) now expect prices to fall by up to 30%, mass unemployment, recession etc. Only 250,000 Spanish properties have British owners, it says, and I'm guessing that these are small flats, not family homes?
Which illustrates the theory (scroll down to 'Ireland shows that extra supply doesn't help' here) that even a massive expansion of construction (800,000 new units per year in country with a population two-thirds that of the UK) for the last few years did little to stop prices increasing by 130% in real terms since 1996.
Well not until it goes tits up, anyway.
Shares in UK REITS*, The Goblin King's desparate last throw of the dice to try and prop up property prices by encouraging small investors to risk their savings are already down by 20% this year.
*mumble*mass immigration*mumble*
So I guess the only sensible way to avoid these booms'n'busts has to be land value tax (or site value rating, or a progressive property tax like in Northern Ireland, Denmark or Sark). If introduced at the bottom of the market and set high enough, it would act like a much higher interest rate, so prices would stay down. Of course the revenues would enable us to scrap Council Tax, Stamp Duty Land Tax, Inheritance Tax and Capital Gains Tax and maybe even make headway into really awful taxes like VAT (a turnover tax) or Employer's NI.
*Real Estate Investment Trusts - like unit trusts, but they invest in commercial property, not shares.
Stormlight
3 hours ago
4 comments:
Mar, I remember reading an article in the Estates Gazetter (Property people's bible)about a year ago predicting this. Basically the property market in Spain is not driven by 'real' demand. It is driven by dirty money. When the Euro was introduced everbody looked for places to 'stash' their dirty money so they didn;t have to declare and convert it. They stuck it in property. Now for whatever reason that momentum is slowing and the country is left with over supply of houses. Great if you don;t own one, but not so good if you do!
Thanks! Now you mention it, that does sound vaguely familiar, but I had completely overlooked this factor. But Euro notes and coins came in in 2002, wouldn't that have dried up? The Spanish central bank is still accepting peseta coins and notes, but that's hardly where you stick your dirty money?
Both of you are guessing. Lots of honest foreigners (including myself) have a house or flat in Spain, generally 2-3 bedrooms or larger as property is cheap. The market is driven by the income and house prices in the countries where the majority of the buyers come from: until recently the house prices in the Valencia District were following the prices in the UK and Germany, but a change in the German tax law (preventing them from deducting interest from a mortgage on a foreign home) meant that a lot of Germans have left.
There are probably also dirty money invested in houses but hardly enough to change the house prices. There are easier ways of hiding money than buying real estate.
I would think that the reason prices stagnate now is that people are buying houses in Romania or Bulgaria, hoping that these countries in 5-10 years time become good holiday spots.
J, my opinion (for what it's worth, i.e. not much) is that property prices go up and down in 18-year cycles, it is most pronounced in the UK and USA, but seems to have spilled over to a lot of other countries as well.
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