Spanish property market implosion
The Telegraph reported Friday that sales in the Spanish property market have plunged and many British vaction home investors will find themselves under water.
“In the clearest sign yet that the boom is over, the developers said the combined value of their sales had plummeted from 1.3?billion euros (£1?billion) to less than 300?million euros (£240?million).
There are an estimated two million unsold properties in Spain and estate agents are closing their offices across the country.
Analysts are warning that many investors will be unable to sell their properties and could find themselves saddled with negative equity.
In the worst cases, those who bought properties off-plan and have not yet completed on their purchases could lose everything as smaller developers go into liquidation.
“The latest figures are a disaster,” said Mark Stucklin, from Spanish Property Insight. “As the developers’ sales collapse, many will be forced into liquidation meaning that those who have bought off-plan and not yet paid in full could be left with nothing.”
He estimated that thousands of British buyers could be affected.
“Even those who bought desirable properties in Spain as early as 2000 could see the value of their assets shrink. Those who can afford to ride out the downturn should not consider selling at the moment if they can help it. But some will have a long struggle ahead.””
–The Telegraph, 16 March 2008
It’s reasonable to expect that these problems in Spain will filter through to the banking systems in the UK, Germany and the Benelux countries as many vacationers from those market are heavily invested in Spain. Loans for the properties were financed in the vacationers’ home countries as well as in Spain. This is another example of the globalized nature of the housing boom and crash.
Spanish property crash hits Britons, The Telegraph, 16 May 2008
See also: Other posts under the label ‘Spain.’