Castle Asia Share Discussion Threads

[bluenose851] 04/4/2008 08:58

I work in property in spain. We saw some heavy price falls in the south (costa del sol) but they have been restrained in my area. (costa blanca north). However, the Spanish market is very different to the UK maarket imo. Generally much of the property is secondary homes, so it is viewed different from the primary home. This makes peoples view of the value of the property different. We have some very good deals on villas where a cash crisis has lead to big discounts beneath the valuation. As much of the property differs, finding the real value of a property is harder. We now say to buyers that the indicated price is there as a guide. One other major factor is the spanish view on property. We find "foreign" owned property is much more likely to be bought at a cheaper price than Spanish owned. The Spanish take a view that if they dont get their price to day they will get it tomorrow. We call it the Manana Effect!

Two other major factors are the strength of the Euro and the reduction in LTV that the banks will allow on their mortgages. Whilst stil possible the 110% mortgages are much harder to achieve.

We see property prices in our area falling by around 10% this year, but this depends on how the property is valued in the first place. Was the villa really worth 500K before it was reduced? One thing is for sure. The Russians are buying the heavy weight property in droves.

[grupo guitarlumber] 02/4/2008 07:32

Major corrections on cards as European housing markets turn down - S&P




BANGALORE (Thomson Financial) - Standard & Poor's Ratings Services said
major corrections could be severe and painful in those countries where the
housing bubbles have been expanding for longer, particularly the United Kingdom
housing market and the Spanish housing market.
The ratings agency said the combination of a sharp deterioration in
affordability, scarce funding, and the economic slowdown are about to cause a
major slowdown in the United Kingdom real estate market.
The United Kingdom housing market is still suffering from a significant
imbalance between supply and demand, with demand considerably outpacing supply
in the past two decades.
S&P assumes house prices to be flat on average in 2008, with a modest
increase of 4 percent in 2009. Repossessions will likely rise because of the
worsening market conditions, to reach 45,000 in 2008 from 30,000 in 2007, it
said.
In Spain, the economy is heavily dependent on growth in its construction
sector, with S&P saying housing investment will experience a major cutback in
the next 12 to 18 months.
Also, the sudden and brisk drop in permits in Spain, if confirmed in the
next few months, would indicate an upcoming major collapse in housing starts,
the ratings agency said.
The ratings agency, however, said it holds a rather benign view on the
outlook for the French housing market in the medium term, as it expects the
French economy to continue to enjoy mild and steady growth this year and next
because of resilient consumer demand.
A combination of low indebtedness and fiscal stimulus should help support
the market in France, it added.
That said, the French real estate market is unlikely to return to the heady
rates of growth seen earlier this decade, S&P noted.
[e-mail]
bsu/man

[maxk] 27/3/2008 08:54

HMRC targets expats' buy-to-let income

HMRC is targeting expats using their UK home to generate undeclared buy-to-let income


Written by AccountancyAge.com


Accountancy Age, 27 Mar 2008



Many expats who retain their UK properties to keep a foothold in the British property market or to supplement their pensions after they have retired abroad, could face penalties for the non-payment of tax.

HM Revenue & Customs (HMRC) has sent out informal 'intervention' letters as a pilot exercise in advance of a programme of interventions later this year, The Daily Telegraph reports.

John Cassidy, PKF Accountants & Business Advisers tax investigations partner, said he had already seen HMRC use its powers to require banks to provide information regarding specific or unnamed/unknown taxpayers holding offshore bank accounts.

'Now the Revenue is becoming more active in using government data from stamp duty land tax returns and other sources to pinpoint individuals who may be letting properties but do not declare rental income on their self-assessment tax returns,' he said.

[maxk] 27/3/2008 08:03

Spain's property market suffers meltdown



Elizabeth Nash in Madrid
Thursday, 27 March 2008



Spain's once-booming property market is in freefall, official statistics have revealed for the first time.


The announcement that house sales had plunged has dashed government hopes for a "soft landing" in the sector that has driven the Spanish economy for more than a decade.

The buying and selling of homes fell by 27 per cent in January compared with the same period last year, Spain's National Statistical Institute (INE) announced yesterday. The collapse coincided with a 25 per cent fall in the granting of mortgages, the biggest drop since 2004. The size of individual mortgages has also fallen, by nearly 4 per cent, as providers fear for the security of their loans.

The indicators published by the state organisation for the first time confirm the widespread fear that Spain's property sector is not just cooling off, but falling sharply. "We have to accept this is not a gentle correction, but a full-blown crisis. We can only hope it will be sharp and short," says Fernando Encinar, a director of Spain's leading online estate agent, idealista.com.

The news will scare millions of Spaniards – and hundreds of thousands of Britons and other northern Europeans – who stretched themselves to get mortgages on homes they believed were a cast-iron investment.

Miguel Blesa, president of the Caja Madrid savings bank, Spain's second leading mortgage provider, warned that things would get worse. "There will be more problems in the property sector in coming months, since the market in new homes is paralysed," Mr Blesa predicted.

"Many people thought that buying property, especially a second or third home, was an investment to make a profit. Now we'll see cascades of these homes up for sale." Mr Blesa was speaking in Vienna, where his savings bank yesterday inaugurated a new headquarters to handle credit lines for big construction companies operating in central and eastern Europe.

The message seemed clear: leading financiers are forsaking domestic homeowners and shunning Spain's burst bubble to boost property development in livelier markets abroad.

The bulk of the transactions – 52.4 per cent – logged by INE were in second-hand homes, where the decline in activity was sharpest – 35.6 per cent. The drop in sales of the remaining 47.6 per cent of new homes was 14.6 per cent. This milder fall reflected developers' savage price-slashing of up to 30 per cent to shift new properties.

"The problem is that many people refused to face up to the slowdown for more than a year, fearing to produce what they most fear. But now it's clear the sector is in crisis, there's a danger people will make things worse by panicking and predicting disaster. It's a herd mentality," Mr Encinar says.

By region, Murcia – the Mediterranean "Costa Calida", which has become a magnet for British homeowners in Spain – remains reasonably active. But prosperous Catalonia saw a dizzying 42.7 per cent drop in property transactions, and Madrid has virtually ground to a halt.

There is still demand, Mr Encinar insists. "But buyers, not sellers, are fixing the price, forcing owners to negotiate. This has never happened in Spain before. It means we can expect substantial discounts in coming months. It could soon be a good time to buy."

Spain's National Construction Confederation, which represents big companies, has pleaded for improved tax breaks for first-time buyers, to halt the downturn. Several high-profile construction companies have gone bust in recent months: with sales paralysed, they could not repay their massive bank loans.

[waldron] 26/3/2008 15:48

Poor Spaniards Surrender Gold to `Mounts of Pity' Pawnbrokers

By Charles Penty

March 26 (Bloomberg) -- Jose Vega hands his gold chain to a jewelry appraiser in Seville, availing himself of Spain's six- century tradition of pawnbroking to pocket 260 euros ($406) he'll use to buy groceries for a month.

``I come here when I owe some money or just need to eat,'' said Vega, 60, a construction site guard who has been pawning jewelry to make ends meet since 2003. ``It gets me through the hard times.''

Pawnbrokers, known in Spanish as ``Montes de Piedad,'' or Mounts of Pity, after the piles of coins once donated to fund them, are so much a part of local culture that 25 savings banks offer the service, including La Caixa and Caja Madrid, the country's two biggest. The practice dates back to medieval times, when Franciscan friars used alms to help the poor.

Impoverished Spaniards are increasingly turning to pawnshops as jobs disappear and economic growth slows to the lowest rate since 2002. As ever, the services attract those on the margins of society, including workers from Latin America, Romania and North Africa hired as manual labor during the decade-long housing boom.

The European Commission cut its forecast for Spanish economic growth this year to 2.7 percent, and unemployment claims have risen for the past five months.

``In times of crisis, traditionally the mounts are more active,'' said Francisco Aguilera, head of the 166-year-old pawnbroker run by Cajasol, a Seville-based savings bank.

Gold Price

In 2006, the last year for which figures are available, mounts made 242,864 loans totaling 103.2 million euros, a 1 percent increase from 2005, according to the Spanish savings bank association. They valued more than 1.2 million items with a combined weight in gold of 10 tons and 14,400 carats.

As gold prices rise, more struggling borrowers are turning to the pawnbrokers. The price of gold has jumped about 40 percent over the past 12 months, with the value of a contract for immediate delivery reaching a record of $1,032.70 on March 17.

``From the start of the year, there has been more demand,'' Aguilera said of the current economic situation in Spain. ``We see it because more people come to our windows with their gold.''

In 2007, Cajasol lent 8 million euros to small borrowers, 8.8 percent more than a year earlier. Some 4 percent of the pawnbroker's 12.4 million euros of outstanding loans weren't repaid, forcing the bank to sell the jewels at auction.

Aguilera's team of six appraisers weighed 140,000 items last year. They typically offer loans equaling 70 percent of a piece's value after dabbing acid on a gold rubbing from the item to test authenticity.

Cheaper Loans

Customers, who range from businessmen to ``gitanos,'' or Spanish gypsies, can have their cash within minutes at interest rates that now range from about 5.5 percent to 7.5 percent, he said. Those who take out multiple loans pay higher rates on subsequent deals.

Cofidis SA, a French consumer credit company that operates in Spain, charges about 25 percent for a 500-euro loan.

``For working people who are struggling or the poor it's a great resource,'' said Vega, the security guard. ``More people should use it.''

The mounts have always thrived in times of economic misery such as the Spanish Civil War, said Antonio-Claret Garcia, chairman of the National Committee of Spanish Mounts of Pity.

The practice of providing loans to the poor through mounts can be traced back to the 16th century. The first Spanish mount was established in 1550 when the Count of Buendia left 300 ducats to provide loans to the poor in the northern town of Duenas, said Manuel Titos, a historian at the University of Granada.

Saints' Medals, Earrings

A priest, Francisco Piquer, founded Caja de Ahorros y Monte de Piedad de Madrid in 1702 using alms to fund loans for the destitute and masses for the dead. Caja Madrid is now Spain's second-biggest savings bank. Many of Spain's 45 savings banks came into being by providing mount services, Garcia said.

Latin American immigrants are also familiar with pawnshops, which were introduced to their countries under Spanish colonial rule, Garcia said. Nacional Monte de Piedad founded in Mexico City in 1775.

The catalogue for the Cajasol pawnbroker's March auction lists 446 lots, from saints' medallions and 203-year-old gold coins to an 8,000-euro set of emerald and diamond earrings. If a jewel goes to auction, the mounts pay the owner the difference between its original valuation and the sale price.

``When you go to the bank they make things so difficult with all the questions they ask and forms to fill out,'' said Luisa Gomez, a caregiver from Ecuador, after emerging from Caja Madrid's pawnbroker, where he used rings and bracelets to secure a 600-euro loan. ``Here they just hand over the money, and it's cheaper.''

That easy access to credit is attracting those concerned about how they can survive as the good times recede.

``The mounts once had the stigma that it was only the truly destitute who used them,'' Aguilera said. ``More people are realizing there's no shame in coming here.''

To contact the reporter on this story: Charles Penty in Madrid at [e-mail]

Last Updated: March 25, 2008 19:06 EDT

[bluenose851] 07/3/2008 12:22

we are starting to get some interesting deals now. Just had one magnificant villa dropped from 1.1m to about 850,000.

[bluenose851] 21/2/2008 19:27

i live here...it aint that bad but the banks are tightening

[tim] 05/2/2008 09:30

Oh well as long as it all looks ok before the elections.

Spain rapidly going the way of the US - stagflation here we come.

You got to cry:

"The Credit Institute is an arm of the Spanish treasury, used to promote technology and green energy."

So now tax payers money is being used to rescue over greedy developers and reckless borrowers - ok similar to technology and green energy - who's counting?

[maxk] 03/2/2008 07:53

Is it all over for the Costa del Plenty?



Battle of the bulldozers leads Brits to shun Spain


UK buyers take fright as thousands of illegally built homes are threatened with demolition

Tom Worden in Madrid
Sunday February 3, 2008
The Observer




Britons are being scared off buying property on Spain's Mediterranean coast, with the number of potential buyers plummeting after a series of corruption and planning scandals and the announcement of plans to demolish thousands of illegally built homes.


New figures, released on Friday by the Costa del Sol Association of Constructors and Promoters, show a dramatic fall in the number of non-Spaniards purchasing villas and apartments in the popular tourist area. Foreign buyers, of whom an estimated 40 per cent are British, spent €540m (£406m) on property in the area in the first 10 months of last year. Over the same period in 2005, the figure was €1.84bn (£1.38bn) - a drop of 70 per cent in two years.




Economists cite higher mortgage repayments, oversupply and concerns about the economy as factors. But José Prado, president of the association in Málaga, said: 'The single most significant factor in this horrific decline has been the threat of demolition.'

During the 1990s, vast stretches of Spain's 1,000-mile Mediterranean coast were concreted over in a property boom fuelled in part by a relentless demand from British buyers. Town halls often turned a blind eye to planning regulations or even took bribes to grant building licences to thousands of homes that were constructed on protected land.

Much of the previously unspoilt coastline, described by Greenpeace as 'of high ecological value', was destroyed by over-development but recent crackdowns by regional authorities, the national government and prosecutors have led to thousands of homes being threatened with demolition.

The most spectacular violator of planning laws was the council in the Costa del Sol town of Marbella. Planning chiefs allegedly took bribes to grant licences to 30,000 houses. In 2006, police arrested 28 people, including the mayor, Marisol Yagüe, and the former head of planning, Juan Antonio RocaNicolás - the alleged mastermind of the fraud. Police investigating allegations of corruption and fraud seized property and goods worth a total of £1.7bn.

Roca, 53, is said to have approved 600 developments during his 15 years in office, taking a 10 per cent 'commission' to ignore planning restrictions and becoming one of Spain's richest men.

The owners of 5,000 illegally built homes in Marbella, including many British expatriates and second homeowners, are still fighting in the courts to stop them being bulldozed. Even actor Antonio Banderas has been ordered to demolish part of his £5m six-bedroom beachfront home, La Gaviota (The Seagull).

The concerns of the estimated one million British homeowners in Spain deepened last month when pensioners Len and Helen Prior's £350,000 villa in Vera, Almería, was flattened for breaching planning regulations. The Priors, who had sold a house in the village of Hurst, Berkshire, to move to southern Spain, had been issued a building licence for their three-bedroom villa by the town hall in Vera in 2002. The regional Andalucian government argued that building permission should never have been granted and won a court order to demolish the house. Ten other houses in Vera, four owned by Britons, have also been earmarked for demolition.

On the Costa Blanca, 35 miles south of Alicante, 1,270 homes were built in Catral on protected land, some on a nature reserve, between 2003 and 2006. Two years ago the town council was stripped of its planning powers and hundreds of homeowners, many of whom are British, discovered that their homes had been built illegally. Valencian authorities say they will demolish all the homes built on the nature reserve and will consider the other cases individually.

Another Catral homeowner, Dave Wheeler, 62, of Birmingham, said: 'The demolition in Vera was a big wake-up call to people around here as many of them have had their heads in the sand. Even people who received demolition orders just ignored them because they never thought they would be carried out. The only way out of this nightmare for us is for our homes to be legalised. Until that happens we are in limbo.'

Meanwhile, the national government also announced at the end of last year a campaign to clear any developments deemed to be too close to the beach, under the 1988 Ley de Costas, or Coastal Law. Though it insists it is not planning widespread demolitions, the government has not placated homeowners who say the drive is unfair as the law is being applied retroactively to properties built legally in the 1970s.

A lobby group set up to fight the campaign says that the government's drive could affect tens of thousands of families, around 10 per cent of whom are British expats.

Clifford Carter, 59, and his wife María José Ruiz Giner, 58, have been told they no longer own the ground on which their home in El Saler, Valencia, is built because the house breaches the Ley de Costas. Carter, a retired electronics engineer from south London, said: 'We have owned the chalet since 1976 and it was built legally 17 years before the Ley de Costas came into effect. We received a letter from the government saying we are no longer the legal owners of the land. We've been told we can live here until we die, but we cannot sell the house or pass it on to our children. It is scandalous.'

A survey by Barclays Bank four years ago suggested a million Britons intended to leave the UK for Spain, but in the past two years the UK market has dropped so significantly that some developers have stopped promoting Spain to Britons.

Jesús Pérez set up Seville-based Area 10 New World to sell Spanish properties to UK buyers. In 2006, he switched to selling homes in Romania, Hungary, Germany and Portugal. 'A few years ago I was selling six houses in a single day to Brits,' he said. 'Things changed so quickly that we no longer promote Spanish properties .'

Half of the country's estate agents have closed, last year 50,000 construction workers lost their jobs and 20,000 fewer new homes are expected to be sold this year.

Meanwhile the Priors, now living in a caravan on top of the rubble of their former home, hope to find out this week if they will receive compensation from Vera council.

[maxk] 29/1/2008 18:30

29 January, 2008

How Spain's banks could be the Northern Rock of Europe

From John Stepek, across the river from the City





I like to keep an eye on Spain at the moment. It's a bit of a morbid fascination.

The economy is in the same or worse trouble than the US and the UK, but it has no central bank to fall back on to bail it out, and it can't devalue its way out of trouble as the US is trying to do.

So what will it do? And what will happen to the eurozone when Spain does finally crack under the pressure? Who will bail it out?

Well, interestingly enough, it seems that Spain's banking system is already being propped up by the European taxpayer, in much the same way as Northern Rock is being propped up by us British taxpayers.

The Europeans just don't know about it yet...

Spain might be unable to set its own interest rates, but it does appear that its banking system is being propped up very generously by the European Central Bank, as Ambrose Evans-Pritchard points out in today's Telegraph.

The secret bail-out of Spain's banks

Spanish banks issued a record £39bn of mortgage bonds and other asset-backed securities in the fourth quarter, according to ratings agency Moody's. Now, as you'll no doubt recall, the market for these securities seized up back in July and hasn't really opened up since.

(Incidentally, that's one of the reasons why mortgage rates in the UK aren't really coming down, despite the fall in the interbank lending rate and the base rate. The banks and building societies still can't sell on the loans they make.)

So who is buying all these Spanish mortgages? Well, it seems they are being used as collateral for loans from the European Central Bank. The ECB accepts AAA-rated securities as collateral, apparently unaware that the label AAA carries a lot less weight than it used to.

This has helped Spanish banks avoid the fate of Northern Rock. The Rock, you'll no doubt remember, was brought down when it was unable to sell on its mortgages, which meant it was unable to pay back the money it had borrowed to write them in the first place. It seems that Spain's banks, rather than get a very public loan from the ECB, have instead been quietly dumping their mortgage books onto it.

Of course, no one's overtly admitting to this. And at the moment, the consequences of all this aren't entirely clear. But if the ECB is holding a lot of mortgages as collateral against loans to Spanish banks, and the Spanish property market crashes as badly as say, the US, you do have to wonder just how much of that money the ECB is going to get back. How will German taxpayers feel about bailing out the Spanish? I don't know. But I can't wait to find out.

[tim] 29/1/2008 17:30

Spain all but bankrupt - makes the US look quite frugal lol




......It may equal the taxpayer rescue of Northern Rock in Britain, and possibly exceed it in proportion to the overall size of Spain's economy.

The key difference is that the ECB rescue operation in Spain has been disguised. A veiled method is necessary since the eurozone lacks a clear-cut lender of last resort. The IMF has warned that this gap in the architecture of of the single currency could prove serious in a crisis.

Traders say the Spanish authorities are quietly turning a blind eye to use of the ECB window, and in some cases may be encouraging banks to go to Frankfurt - a claim denied by the Bank of Spain.

Moody's said the total issuance of securities by Spanish banks last year reached €143bn, up 55pc on the 2006. Over €62bn were mortgage securities. The agency said the default rate was likely to rise, with mounting concerns among participants over a possible "housing crash". Some of the mortgage securities have already begun to draw on their reserve funds.

David Owen, Europe of Dresdner Kleinwort, said Spain could face serious difficulties this year as the excesses of a decade-long boom finally catch up with the country.

"The size of the Spanish corporate sectors financial deficit is truly is really scary. It rose to 14.5pc of GDP in the third quarter of 2007 from 10pc in the first quarter. This must be a record for a relatively large economy. Clearly this is not sustainable. Cost imbalances have a nasty habit of unwinding, quickly and very painfully," he said.

Mr Owen said Spain was acutely vulnerable since it cannot cut interest rates or let the currency slide to cushion the downturn. "Several years of no growth could now beckon. It will be very difficult for the economy to pick itself up again inside EMU," he said.

Spanish corporate debt is now 112pc of GDP. The current account deficit is 10pc of GDP. These are both flashing red warning signs.

Among those issuing mortgage securities in the last two months are BBVA (€4.9bn), Caja Madrid (€2.4bn), Caja Catalunya (€1.6bn), CAM (€1.4bn), and Caja Castilla la Mancha (€800m).

[waldron] 20/1/2008 17:47

Warning on rising Med Sea levels
The level of the Mediterranean Sea is rising rapidly and could increase by up to half a metre in the next 50 years, scientists in Spain have warned.
A study by the Spanish Oceanographic Institute says levels have been rising since the 1970s with the rate of increase growing in recent years.

It says even a small rise could have serious consequences in coastal areas.

The study noted that the findings were consistent with other investigations into the effects of climate change.

The study, entitled Climate Change in the Spanish Mediterranean, said the sea had risen "between 2.5mm and 10mm (0.1 and 0.4in) per year since the 1990s".

If the trend continued it would have "very serious consequences" in low-lying coastal areas even in the case of a small rise, and "catastrophic consequences" if a half-metre increase occurred, the study warned.

Global climate change

Scientists noted that sea temperatures had also risen significantly by 0.12 to 0.5C since the 1970s.

Sea level rise is a key effect of global climate change. There are two major contributory effects: the melting of ice, and expansion of sea water as the oceans warm.

Last month, a study by the Intergovernmental Panel on Climate Change said the world's sea levels could rise twice as much this century as UN climate scientists had previously predicted.

The Nobel Prize-winning IPCC predicted a maximum sea level rise of 81cm (32in) this century.

Story from BBC NEWS:


Published: 2008/01/19 01:07:30 GMT

[maxk] 20/1/2008 17:05

PROPERTY MARKET
PRICE CRASH


Builders talk openly of 'real crisis'

By Nuria Pérez



FIGURES released this week confirm that the housing market in the south of Alicante province is now in crisis.

The prices of resale properties fell by more that 15 per cent in some towns during 2007.

And according to Antonio Navarro, president of promoters' association Procosta, sales of new-build homes fell by 70 to 80% in the Vega Baja area in the same period.

He said sales started to drop off in 2006 and have been falling dramatically since October 2007.

He said: "The Vega Baja is suffering a real sales crisis."

In the second-hand property market prices have fallen in nearly all Vega Baja municipalities as well as in San Pedro del Pinatar, Los Alcázares and San Javier on the Mar Menor, according research by the specialised internet site Facilisimo.com.

Figures collected by the site operators show that prices in 2007 fell by 16.36% in Orihuela, 8.16% in Torrevieja, 7.85% in Pilar de la Horadada, 12.83% in Los Alcázares, 5.65% in Torre Pacheco, 7.05% in La Manga del Mar Menor and 11.19%in San Pedro del Pinatar.

However, prices in Guardamar del Segura showed a slight improvement, rising by 0.19%.

Research shows that resale three-bedroom town houses are available for 151.000 euros in Orihuela Costa.

Procosta president Antonio Navarro blames the current market slump on several factors.

He said the rapid increase of property prices in pervious years, the bad image of the Costa Blanca in Europe and the competition of emerging markets in Eastern Europe and Northern Africa have hit sales.

"Property prices on the coast were really low in 1997," he told CB News.

"They have trebled since then and now they are similar to cities' property prices."

And he said that only a few builders are starting new building projects at the moment.

"The offer will adjust to the demand in the end", he said.

"The Vega Baja has faced a deep building crisis before and the area has enormous potential."

However he said small businesses related to the building industry will be affected and many employees will have to look for new jobs.

"Only reliable builders with a real commitment to do things right will survive," he added.

He also said that the facilities and infrastructure needed to provide residents in the area with a decent quality of life must now be built by local, regional and national governments.

[waldron] 20/1/2008 13:14

still a shame

and i feel that those hurt by failure of the authorities to control
these bad guys should not be penalised.

[hermana] 20/1/2008 12:57

waldron,supply and demand fuelled by loose planning and mucho greed.

[waldron] 20/1/2008 12:55

all very sad

Over the last 30years theres been certainly too much coastal building.

[hermana] 20/1/2008 12:31

waldron,very unfortunate to buy a house with illegal planning permission. The abogado is supposed to check such things but on the other hand I have first hand knowledge of land and property transferring without any paperwork at all

[waldron] 07/12/2007 08:26

Global property

Run down
Dec 6th 2007
From Economist.com

AMERICA'S housing market is sickly. The S&P/Case-Shiller national index, the broadest measure of house prices, fell by 4.5% in the year to the third quarter, the biggest drop since the series started in 1987. The Economist's quarterly round-up of house prices suggests this malaise may be spreading. In Ireland, prices fell by 3% compared with a rise of over 15% a year earlier. Prices in Britain dropped in October by 0.8%, the biggest monthly decline since 1995. But housing markets in some emerging economies and in Asia seem unaffected. And in Sweden and Australia, where central banks raised interest rates even after the Federal Reserve started to cut rates, prices are rising rapidly.

[waldron] 07/12/2007 06:10

courtesy of:


maxk - 6 Dec'07 - 10:01 - 2253 of 2255 (premium)



Spain braced for drop in GDP
By Mark Mulligan in Madrid



Published: December 6 2007 02:00 | Last updated: December 6 2007 02:00

Growth in Spanish gross domestic product in 2008 is expected to slow to 2.7 per cent from 3.8 per cent this year, according to the latest estimates from the International Monetary Fund.

Although hardly a disaster when compared with the rest of the eurozone, it will be the first time since 2003 that the figure has dipped below 3 per cent.

It will also mark the end of a credit-fuelled boom characterised by a growing job market, corporate international expansion and the construction of more than 3m new homes in the past five years.

According to most estimates, about 1m of these are currently unsold, raising the possibility that the inevitable adjustment in the residential construction sector will be more a rough ride than a soft landing.

Spanish mortgage holders, most of whom hold variable-rate loans, have been stretched by a series of interest rate rises. This, coupled with emerging worries about the value of their homes, has forced them to shelve plans to buy second, investment properties. Potential first home-buyers have also held back, while there has been a sharp fall-off in demand for holiday and retirement homes from foreigners. Angel Serrano, from property consultants Aguirre Newman in Madrid, estimates that new home sales have slumped by more than 50 per cent since August.

"Buyers are waiting around in the hope that prices fall," he says.

For most of this year, Spanish politicians and some economists have sought to play down the impact of the housing downturn on the broader economy.

A gradual slowdown in investment and job creation in the sector would be offset by growth in infrastructure development, export industries and domestic services, encouraging a more balanced economic model, they argue.

However, that analysis has gradually lost weight since late April, when problems at one property developer sparked heavy falls on the Madrid stock exchange and spooked banks into marking up risk premiums to any Spanish company with exposure to the sector.

Corporate borrowers had barely had time to adjust to this new reality when the summer credit crunch began to bite. As wholesale funding markets dried up, Spanish banks toughened their lending criteria further. Now, with recovery in Spain's European trade partners threatened by the weak dollar and unease in the US economy, observers are again being forced to adjust their outlook for next year.

A rapid deceleration in consumer demand in the third quarter, coupled with rising inflation and unemployment, will soon force another downward revision in official estimates, which still put GDP growth next year at 3.3 per cent. "It's still too early to say for certain Spain is headed for a soft landing," says José Luis Feito, a Madrid-based economist. "The performance of the economy in the first quarter of next year will give us key information."

Even if demand for housing does bounce back once the credit squeeze eases, it will be too late for many of the estimated 80,000 small-time property developers in the country, many of whom have been caught with overvalued land or unwanted apartments on their books.

[grupo guitarlumber] 30/11/2007 08:02

France's Theolia in talks to buy Spanish wind companies - chairman




MADRID (Thomson Financial) - France's Theolia is looking to buy a Spanish
wind company, Cinco Dias reported, citing chairman Jean-Marie Santander.
"To reach the level of growth we want, the only options are strategic
alliances or mergers and acquisitions," Santander said to the newspaper.
The company is in talks with unnamed Spanish companies in the wind energy
sector and is looking to buy one that is "more or less" the same size as
Theolia, he said.
Theolia has an estimated market value of 850 mln eur.
"The importance is not on its size but its medium-term growth potential,"
Santander added.
Theolia's Spanish affiliate, Theolia Iberica, is constructing three wind
farms in Almeria, Spain, set to open in late 2009.
[e-mail]
ccs/kd1/ms1