Knight Frank Global House Price Index flatters Spain

Spanish property prices fell by 6.8% over 12 months to the end of March, and by 3% compared to the previous quarter, according to the latest Global House Price Index just published by international real estate consultants Knight Frank.

Taking the figures at face value, Spain ranks number 30 out of 46 in order of declining property values. Compared to some other countries, like the UK (-16.5%), the US (-16.9%), not to mention Dubai (-32%), and Latvia (-36%), Spain’s 6.8% fall in year-on-year property values looks modest in comparison.

“Of the first quarter data which we have received, Israel was the top performer over the 12 month period ending Q1 2009 recording growth of 10.9%, followed by the Czech Republic at 9.9%,” explains Nick Barnes, head of international residential research at Knight Frank. “The better performing markets tend to be smaller and with fewer structural imbalances. The worst performers were Dubai and Singapore who recorded a fall in average prices over the period of, respectively, 32% and 23%, while a further five countries also returned double digit declines.

The rankings, however, are distorted by the fact that 30% of the countries covered by the index had not reported housing market data in time for the report. “We can only surmise that the data collection bodies have either been unable or unwilling to publish the data to timetable – perhaps a reflection of the ailing health of their respective residential property markets?” says Barnes.

Spanish figures from the Ministry of Wishful Thinking

The other problem with the Knight Frank index, at least as far as it concerns Spain, is that it uses the official house price data published by Spain’s Ministry of Housing, which, as I have repeatedly pointed out, is so inaccurate it borders on useless. The official figures are interesting only to the extent that they tell you if prices are going up or down, and they don’t always get that right either. In reality, Spanish property prices are probably falling in the 20% to 30% range, maybe more, which would push Spain down to the very tail end of the index, rubbing shoulders with Singapore and Dubai.

Of course Knight Frank are not to blame. Like The Economist, which also publishes regular global house price information, they have to rely on the official figures from the government. But when it comes to Spain, the official house price figures are a joke (I’m sure Spain is not alone here). I can’t help thinking that an index like this gives the Spanish numbers credibility they don’t deserve.

You can see the whole ranking here: Knight Frank Global House Price Index


Sourge: Spanish Property Insight Blog

The Odd Use of Terraces in Spain

It is a well known fact that life in Spain can only be complete if it takes place outdoor. Spaniards have always been fond of sipping their daily cortado (or caña...) on the bright terraces of their favourite café every morning. It is not uncommon to see their children playing state-of-art football and celebrating their goals on small and typical plazas from dusk till dawn. Ultimately, how would the myth of the Spanish siesta be credible if it was to happen anywhere but on a sunny and sandy beach?

In the Spanish architecture, such an observation has always been reflected by the presence of large community terraces on the roof of almost every building, whatever their period of construction and no matter the area of town where they are located. Nevertheless, from our experience as an international estate agent in Barcelona, we have always been surprised to see that these fantastic open spaces are hardly used by the local population. When they are used, they will be exclusively considered as a place to hang your laundry - as the old lady living up there never forgets to mention when you move into your new place. Odd for a Latin nation, isn’t it? To us, a Scandinavian founded company, any opportunity to feel the sun light on our skin is nothing else but a godsend. A small coffee table and four chairs will do the trick. Why would you waste the incredible potential offered by the Spanish climate when you come from up North where precipitations occur all year round.



If you are, like us, keen on enjoying every one bit of what Spain has to offer, please visit our website http://www.casamona.com/ and you will find plenty of properties with terraces for rent and for sale.



Author: Nicolas Vo Van, Casamona International

Credit crunch still big problem for Spanish property market

The credit crunch and lack of mortgage financing is still the single biggest problem for the Spanish property market, argues Marifé Esteso, President of the API real estate association in Alicante province, home to the Costa Blanca. The other big problem is excessive asking prices, making the average property still unaffordable, despite recent price declines.

“The scenario hasn’t changed at all, and what is worse is that banks and cajas (savings banks) are still not extending credit, and under those circumstances it’s impossible to reactivate the market,” says Marifé Esteso, quoted in the Spanish press. Esteso calls on the government to pressurise banks to use some of the bail-out funds they have received to start lending again.

To add to the gloom Esteso says here association can see no end to a market funk that has already been going on for 2 years. “We started to notice it at the start of 2007 and we are still not optimistic because of the lack of liquidity. Right now there are even lots of cases of buyers who can’t afford to pay the mortgage and have to hand back the keys to the bank, which means they are also losing income.”

If the credit crunch is the root problem, then there will be no improvement in the housing market until credit starts to flow again. As a result, eliminating mortgage relief - the recent measure announced by Luis Rodríguez Zapatero, Spain’s Socialist Prime Minister, to stimulate the Spanish property market - will do very little, if anything, to get the property market going again.

The voices criticising Zapatero’s initiative as ineffective or even counterproductive are increasing. “Eliminating mortgage relief from 2011 onwards is a mistake,” says a notary in Benidorm, quoted in the Spanish press. “It won’t help to sell the stock of unsold property, and is bad news for the middle classes. All it will do is paralyse the market even more than it is already.”

Sourge: Spanish Property News

Rental prices falling in Barcelona

Good news for some people looking to rent a home in Barcelona, and bad news for landlords already nursing capital losses. Rental prices are falling sharply in Barcelona, reveals a new study by local real estate consultants Forcadell. Average monthly rental costs for a typical 75m2 flat has fallen below 1,000 Euros/month, for the first time since 2007.

In the first 3 months of this year the average cost of renting a home in Barcelona fell by 6% to 965 Euros/ month, on top of a 9% fall in 2007. Last year rents fell the most since 1991, and are expected to continue falling this year.

By district, rents fell the most in Gracia, down by 30%, but rose slightly in the Eixample, Sants-Montjuïc, Les Corts, and Sant Andreu.

Behind Barcelona’s falling rental prices lies a moribund property market and an economic recession. Unable to sell, many owners are putting their properties up for rent, pushing up the supply of flats for let. At the same time, the recession and rising unemployment means a dwindling number of people that landlords would like as tenants. Thanks to rental laws that favour tenants, landlords in Spain have to be careful whom they rent to.

Sourge: by Spanish Property News

Costa Blanca property rebounds thanks to British civil servants

“The developers of Alicante are starting to see the light at the end of the tunnel,” says Jesualdo Ros, head of the Alicante developers’ association Provia, quoted in the Spanish news website La Verdad. According to Provia sales improved substantially in March and April, with demand led by British public-sector workers.

Sales in March and April rebounded, claims Ros, mainly thanks to demand from “clients with better budgets and ability to pay, even without having to request a mortgage.”

“There is a strong movement, with notable signs of a market rebound, after a terrible January and February,” says Ros, who explains that the jump in sales has not yet shown up in the official figures. “Sales are still not yet where we would like them to be, but the progress of the market in March and April is a great relief, not a bit to do with the fall in Euribor and property prices, making us see light at the end of the tunnel.”

Some of the developers belonging to Provia are said to be selling dozens of properties, especially those offering holiday homes. To the surprise of developers, who were hoping that German buyers would come back in force but haven’t, demand is being led by the British, and in particular by those with jobs in the public sector.

Perhaps this shouldn’t come as too much of a surprise. Despite all the problems, many Britons still dream of living all or part of the year in Spain, and those with guaranteed jobs and gilt-edged pensions these days are public sector workers (paid for by the private sector). If anyone has security of income to splash out on a pad in Spain, it is them.

All claims by Provia. No independent verification.

Sourge: Spanish Property News

Euribor falls to new record low of 1.771pc

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell from 1.909% in March to 1.771% in April, a percentage change of -7.2%.

This is the lowest that Euribor has ever been, and is 63% lower than it was a year ago. Compared to July last year, when Euribor peaked at 5.393%, Euribor has fallen by 67%.

After the latest drop in Euribor, borrowers with annually resetting mortgages should see their annual mortgage repayments fall by between 3,000 and 5,800 Euros, in theory at least.

In reality, however, some borrowers complain that their payments haven’t fallen at all, and in some cases, have actually risen. This may be due to banks using a derivative of Euribor, such as a moving average, that lags the fall, or due to other malicious conditions buried in the small print (and so beloved by mortgage lenders), such as interests rate ‘floors’ below which mortgage rates cannot fall.

Euribor is derived from the European Central Bank (ECB) base rate, which is currently at 1.25%. The markets are expecting another interest rate cut in May, so that is already baked into the current Euribor rate.

Experts expect Euribor to keep falling in the coming months to around 1.25% at the end of the year.

Sourge: Spanish Property News