For most of us, when we reminisce about 2005 – 2008, it’s mainly positive. A prosperous time when the economy was booming, and we had a bit of spare change in our pockets. A time when thousands of Brits and Irish, could finally realise your dream and splash out on your very own slice of paradise. Purchasing a ‘luxury ’ holiday home in places like Spain or Cyprus was suddenly an affordable opportunity.
This is in no way indicative of the state of mind of any of you who purchased your dream property in the EU, but this buying frenzy was encouraged by duplicitous bankers, promoters, and developers. Rubbing their hands with glee, it was a cash cow that they believed could be milked forever. During this period, the appetite for the holiday home market grew significantly - quickly becoming flooded and causing demand to soar to even higher heights.
And to add wind to its wings, funds were easy to access both at home and abroad; non-status mortgages were two a penny, and credit checks didn't even factor into the equation. With little to no barriers stopping the purchase of too 'good to be true places' in the sun and non-existent due diligence from the professionals, it was only a matter of time before the foundations of this property boom literally crumbled underneath us all.
It was not just the developers and Banks to blame, but also the valuers, notaries, solicitors, and dodgy promoters.
Together they invented attractive, but totally unfounded, property valuations before the unscrupulous sellers sold at crazy prices. Every aspect of the process and each stakeholder involved, coupled with lax financial regulations, was responsible for the self-perpetuating nightmare that buyers unwittingly bought into.
Much like the film ‘The Long Short’, whilst part-fictional, showed that everybody and anybody could get rich during these times whatever the situation. And it did not matter that the money earned by the developers, bankers, and promoters was at the detriment of the unsuspecting property buyers, like yourselves.
So, it’s no wonder that in the autumn of 2008, when the world stopped turning and the financial crisis hit like a blunt instrument, these properties built on financial sand in the years before, suddenly sank quickly into negative equity, leaving people stuck with unwanted debt.
It was a crazy world, where we witnessed well-established Banks like Lehman Brothers, which had been around since 1850, collapse. Others like Allied Irish Banks (AIB) and the Royal Bank of Scotland (RBS) went under state control and materially are still there.
Countries including Cyprus and Spain were savagely hit as the whole banking industry was shored up by their State Banks. The collapse of the financial sector, and many of its long-established institutions, started a domino effect, leaving those at the end of the chain the main losers.
Those of you who had dared to live the holiday home dream had become the unwitting victims. Your once refreshing holiday cocktail left a bitter lingering aftertaste that you are still paying for to this day!
