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Spain Real Estate News

What's really happening in the real estate world in Spain? The EOS Team are going to be keeping you up to date with everything that's happening from a market perspective.

Expat nightmare turns from bad to worse
Tuesday, February 22, 2011 @ 11:05 AM

Seven years ago, Marian Henderson moved to the south of Spain with £1m in her pocket.

But when — or perhaps that should be if — she finally makes it back to Britain, she will be lucky to do so with one quarter of that sum.

She's no spendthrift — the money she has lost has been on bricks and mortar.

Her home, a beautiful four-bedroom country house surrounded by orange groves, a swimming pool and stables, was once valued at £725,000. Today, it is on the market for just under £270,000.

'I have cut the price as much as I can,' says Marian, 62, who put the property up for sale shortly before her husband John died in 2007.

'But it doesn't seem to have made any difference. I am desperate to leave Spain, to get out of here. But the market has totally collapsed, and until I can sell my house, I cannot afford to leave.

'It is terrible because while I am here, I can hardly afford to live. I am surviving on the basic state pension and barely have enough to eat, let alone go out — I can go three or four days without speaking to another person.

'I am on anti-depressants and I tell my daughters that if I don't sell, they won't only be taking their dad's urn home but mine as well.'

Marian's is a desperately sad tale, but, unfortunately, it is not an unusual one. Across Spain, the British expat dream is fast turning into a nightmare.

Having left these shores in the hope of finding a better life abroad, a legion of Brits have instead found themselves caught in the midst of an economic storm.

The properties in which they invested have fallen in value by as much as 50% in the past four years. This is down to massive oversupply.

The Spanish government estimates there are 700,000 unsold new-build houses across the country. Of these, 400,000 are on the coast, the vast majority in the south of Spain where many British people have bought properties.

Take into account the fact that there are the same number of older homes being advertised for sale, and it is little wonder that experts are predicting prices will fall by another 20% on average over the next five years.

As the property bubble has burst, so the rest of the Spanish economy has suffered. The banks are sitting on vast amounts of bad debt, while the construction industry has collapsed.

Reports recently showed that of 60,000 property sector companies, 23,600 have gone bust, with debts of more than £100bn.

As a result of this economic turmoil, Spain is now in the midst of its worst recession for 50 years. A record 4.6m Spanish workers, or one in five, are now unemployed. This figure is the highest in Europe.

And if that weren't bad enough, many British expats, particularly pensioners, have been hit by the weakness of the pound against the euro. Where a £10,000-a-year pension would have been the equivalent of €16,500 nine years ago, today it is worth nearly €5,000 less.

Hardly surprising, then, that so many Britons are desperate to bail out and return home. Companies that specialise in exchanging large sums of money — such as the proceeds from a house sale — have seen a 50% increase in transactions linked to repatriations.

More would doubtless follow — if only they could sell their homes.

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3 Comments


phillip Tann said:
Tuesday, February 22, 2011 @ 7:11 PM

The fact that the property is in Spain is completely irrelevant. The property market had collapsed worldwide, prices in the UK has fallen just as much. I have a neighbour in the Uk had paid 1.5M for their house, today it's on the market for 800k and still won't sell. So stop trying to imply that this is a problem only in Spain, it's a result of a WORLDWIDE recession.



Michael said:
Wednesday, February 23, 2011 @ 4:54 PM

Interesting article. So whats the stance from EOS then? Don't move to Spain or you could lose everything?

As Phillip said the property market has been hard hit worldwide. I have seen many properties locally also lose value but to be honest some of the buyers were daft to purchase at the prices at the time. If you believe that property markets will never fall and the value of your home will always grow then you need to get your head back to reality. Same goes for the currency markets, yes 9 years ago people converting from GBP to EUR were onto a winner but again you cant keep thinking it will never change. At the moment I love the exchange rate as I buy stock from the UK but I know at anytime this great ROE could change and my stock could cost more.
If anything pensioners really need to think alot harder about moving to Spain than younger people as alot of the time when a partner passes on the one left behind wants to move back to their home country as quick as possible and whilst moving out into the country may seem like a great idea at the time it obviously backfires if one partnet dies and the other is left alone.





Angry of Walthamstow said:
Wednesday, March 9, 2011 @ 3:02 PM

Why is the Spanish property situation so much worse than elsewhere? Because it is exacerbated by a legal system that crushes losers in the Spanish property game. And yet they want Brits to buy again. No way.

From Professor Niall Ferguson's current series "Civilization - Is The West History?" - The reason North America's ex-colonies did so much better than South America's was because British settlers established a completely different system of property rights and political representation in the North from those built by Spaniards and Portuguese in the South.

As John Cooper Clarke says: "History always has to repeat, because nobody bloody listens."




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