The Latest Spanish Property News from Kyero.com - Home

Finally, Spain Wakes up to Corruption Hangover

2009-11-20T08:00:00Z

After 15 years, Spaniards are finally seeing the rampant corruption beneath all the uncontrollable property speculation.

Fifteen years of frenzied real estate speculation in Spain is being replaced by a wave of political corruption that is angering many Spaniards already suffering from the economic crisis.

"After getting drunk on speculation, we are waking up to a corruption hangover," said Gaspar Llamazares, the leader of the United Left coalition.

Barely a week goes by without some town or region embroiled in a new corruption scandal, the backdrop to which is usually the collapse of the Spanish property market in 2008.

And Spaniards, already hit by economic recession and soaring unemployment, are taking notice.

A recent opinion poll released by the CIS institute said "politicians and political parties" has climbed two places to be the fourth most important concern for voters, ahead of Basque separatist violence but behind economic issues and immigration.

The conservative opposition Popular Party has been in the forefront of the scandals, with its members in the Valencia and Madrid regions being investigated for allegedly taking bribes for public contracts.

But in early November, a new case emerged in the northeastern region of Catalonia involving a Socialist legislator and former nationalists, showing that no party has a monopoly on virtue.

"We are seeing the consequences of the housing bubble. The economic crisis is like a wave withdrawing from the beach revealing cigarette butts" in the sand, said the PP's deputy secretary of communications, Esteban Gonzalez Pons.

The centre-right daily El Mundo estimated that EUR 4.1 billion has been embezzled in Spain in the last 10 years, "the equivalent of 50 modern hospitals."

And it based that figure just on cases that are being investigated or are already closed.

Some police believe that corruption has generated more money than drug trafficking, which is already big business in Spain.

Most of the cases concern reclassifications by mayors of rural zones into constructible land through commissions paid by contractors.

Some contractors "have become multi-millionaires without lifting a finger, through an administrative decision," said Gonzalez Pons.

And some elected officials appear to have become wealthier with their villas, luxury cars, expensive works of art or race horses.

This was seen in 2006 in the huge corruption scandal in southern resort of Marbella, a paradise of the jet-set and organised crime.

"Many politicians have lost all shame and ask you for cash without intermediaries," one contractor told ABC newspaper. "They ask you for EUR 100,000 up to 10 million if it's a big reclassification operation."

Most of the corruption is along the Mediterranean coast, the Balearic Islands, the Canary Islands and in the Madrid region.

Spanish media says more than 300 people -- elected officials or contractors -- will be tried for corruption and influence peddling in 2010.

Political parties, aware that the public is judging them, have vowed to address the issue, considering tougher prison sentences or moves to force politicians to publish their assets.

"Either we firmly contain ... corruption or the democratic capital that has been earned" since death of dictator Francisco Franco in 1975 "will go down the drain," ABC warned in an editorial written by its director, pointing to the risk of "a enormous increase of abstention in the elections."

Story from Expatica

Recession Ends Across Europe

2009-11-19T08:00:00Z

Europe's deepest recession since World War II officially ended when the world's biggest single trading bloc joined Japan and the United States in returning to growth.

Both the 16-nation eurozone and the 27-nation European Union as a whole, home to half a billion people, posted growth -- of 0.4 percent in the mainstay single currency area and 0.2 for the whole EU in the third quarter.

But after five quarters running of economic retreat, the fact that key pillar Britain still lags behind its main trading partners -- with a 0.4 percent contraction -- underlined the fragility of recovery.

Analysts said that the improvement is unlikely to be robust enough to change broad economic policy lines.

The question for the political leaders is whether and when the withdrawal of massive state support for economic rebuilding works can be withdrawn without derailing the recovery which is struggling with high and rising unemployment.

Growth of 0.7 percent in Germany, Europe's most powerful economy, and 0.3 percent in France, lay behind the improvement across the eurozone.

The eurozone economy had shrunk by 0.2 percent between April and June after a record collapse of 2.5 percent in the first three months of the year.

However, Britain's results and Spain, suffering from the bust of a Spanish property bubble, with a 0.3 percent decline, contributed to the figures released by the EU's data agency Eurostat being pulled down for the bloc as a whole.

The European figures compare with a 0.9 percent improvement in third-quarter economic output in the United States.

Japan already exited from recession in the second quarter with 0.6 percent growth.

Chief IHS Global Insight economist Howard Archer poured some cold water on the news when he said the the emergence into daylight came "at a trot rather than a canter."

In the same period of 2008, the eurozone economy shrank by 4.1 percent with the EU as a whole trailing even further behind.

Cautioning that "consumer spending likely saw little or no growth," Archer also warned that the recovery "could well lose momentum for a time in 2010 before growth starts to gradually pick up again."

But he tipped overall eurozone growth of one percent in 2010.

Clemente De Lucia of BNP-Paribas said the rebound was due mainly to the industrial sector and warned that the recovery "might fade next year" once the impact of the 'cash-for-clunkers' scheme to boost new car sales and other incentive measures are fully withdrawn.

He also pointed to high unemployment, running at more than 22 million at the last count across the EU, acting as a brake on expansion for some time yet -- as well as a weak dollar.

While exchange rates are boosting exports from global competitors, nervous consumers meanwhile fear a double-whammy of rising repayments on loans and rising prices when the drip-feed of state economic support is eventually scaled back.

The global credit crisis forced EU governments to plough trillions of dollars into faltering banking systems and other direct stimulus programmes in a bid to drive the economy forward.

Brussels released figures drawing on national input from 17 EU nations, with 10 showing growth and seven still contracting.

France and Germany had already returned to growth of 0.3 percent each between April and June.

Among the remaining leading nations, Italy experienced third-quarter growth of 0.6 percent with Poland -- which had already shown expansion of 0.7 percent in the second quarter and 0.1 percent between January and March -- yet to release its figures.

The Baltic former Soviet republic of Lithuania recorded the biggest upturn at 6.0 percent -- a massive swing from a 7.7 percent contraction.

Neighbouring Estonia was the bloc's poor relation with a 2.8 percent decline

Story from AFP

Moneycorp: Sterling & Euro in Limbo

2009-11-18T09:00:00Z

Poor trade figures and positive UK house prices have equally little effect on the pound. Euroland data positive but not positive enough.

Another two cent range, almost identical to the previous week's, held the pound and the euro in close step. A net half cent loss for sterling left it at €1.1150, exactly the same position it had occupied at the beginning of the month.

There were not too many UK economic data and events to worry the pound last week but almost every one of them engendered some sort of reaction - mostly negative. It is a tribute to sterling's growing resilience that on every occasion the loses were temporary.

The pound's toughest hurdle was Tuesday's trade figures. September's trade deficit was substantially worse than investors had been led to expect. Instead of remaining steady at just over £6 billion the trade gap widened to more than £7 billion.

The announcement coincided with unhelpful news about Britain's credit rating. Ratings agency Fitch said the government's reluctance to cut public spending could mean a downgrade of Britain's sovereign debt, making it harder to sell.

Thursday's unemployment figures could have been worse. The unemployment rate actually fell to 7.8% in September from what had originally showed as 7.9% in August. Instead of the expected 20,000 job losses in September "only" 13,000 extra people found themselves on the dole.

The Bank of England's Quarterly Inflation Report was a little strange, if not for its content then for the way it was spun by Governor Mervyn King. The detail of the report suggested that the Bank's economists are optimistic about an economic rebound next year.

The tone of the governor's speech was gloomy. Nobody is sure whether he was deliberately trying to manage expectations (and the pound?) downward or if he was simply suffering from swine flu.

One almost consistently bright topic was house prices. In the last eight days the RICS, the government and property website Rightmove have all - one way or another - reported positive news about UK residential property.

For the RICS it was another improvement in its price balance, this time to its highest level in three years. At Rightmove, where they measure asking prices rather than actual transaction prices, a -1.6% monthly fall still left the index +1.6% higher than a year earlier.

Where the pound managed to recover from everything that was thrown at it the euro came close to keeping a clean sheet. The Sentix index of Euroland investor confidence improved by more than five points to -7.0.

Euro zone industrial production scored a second successive monthly increase, rising by +0.3%. The economy moved out of recession in the third quarter with gross domestic product rising by +0.4%.

They were all decent enough numbers. The problem was that they were not as good as investors had been led to expect. The Sentix index was three points short of forecast.

Industrial production grew by only half as much as promised. GDP was supposed to have gone up by +0.6%. From the market's point of view the euro was damned with faint praise. Reasonable progress but no cigar.

Neither the pound nor the euro has any clear sense of purpose. There is movement but the ups and the downs are roughly in balance and sterling looks just as it did at the end of October.

For several weeks now the conservative strategy has been to maintain a neutral stance on currency exposures. There is as yet no reason to modify this stance.

Buyers of the euro should hedge half their requirement with a forward purchase. Those with a short time horizon who do not want to cover their whole exposure should protect themselves with a stop order.

Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card

Spain: Deflation Concerns Subsiding

2009-11-18T08:00:00Z

Spanish prices dropped for the eighth straight month in October, official data confirmed, falling at the slowest rate since April amid base effects from energy prices.

Spain's consumer price index fell 0.7 percent year on year in October in line with a Reuters poll and compared to a 1 percent slide in September and a record 1.4 percent drop in July.

Core inflation -- which strips out volatile elements of energy and food -- was 0.1 percent in October, the same as September, leading some economists to say risks of a self-perpetuating spiral of falling prices were declining.

'There's still a high risk core prices will peep into negative waters for a few months, but I've never backed the theory there will be a deflationary spiral in Spain,' said economist at 4Cast, Jose Garcia Zarate.

'Headline prices will turn positive in the next couple of months and there'll need to be a catastrophe for it to turn negative again.'

'We believe (the core rate) has practically stabilised and we don't expect further falls in the next few months,' the Economy Secretary Jose Manuel Campa said during a conference on the data.

'(Headline) prices are following a trend toward moderately positive levels which the government continues to forecast for the end of the year,' Campa said.

The data preceded euro zone final inflation on Nov. 16 which is expected to show consumer price inflation in the 16-member area on an annual basis was -0.1 percent in October.

Euro zone inflationary pressures eased in September, but deflationary concerns are beginning to fade across the region, The Economic Cycle Research Institute said.

Turbulent global energy markets have tipped consumer prices into negative territory across the euro zone this year, leading analysts to focus on core prices for an indication of how faltering economies are weighing on inflation.

Spain's crashing Spanish property market and plummeting consumer confidence has dropped core prices to historic lows, and many economists expect the figure to stay near zero, if not negative, through 2010.

Story from Forbes

Spanish Property Auctions, Flights & Wind Power

2009-11-17T09:00:00Z

A mixed bag of cheery items from this week's news - each affecting the Spanish property market.

In a month's time, A Place in the Sun will be holding an auction for 60 lots of key-ready properties on the Costa Blanca, Costa del Sol and Costa Calida.

They will be discounted by up to 50% and in some cases they will have no minimum price at all.

The catalogue is a very comprehensive document and contains some great information about how the auction process works together with information about the individual properties.

Personally, I believe these type of key-ready properties are likely to be the best Spanish property buys at the moment. If you are serious about buying in Spain, make sure you put the auction in your diary.

In the news this week was the proposed consolidation of British Airways and Iberia - Spain's largest carrier. It's early days yet, but perhaps their combined forces might increase the number and choice of flights to Spain in the future. More information about the deal from Expatica.

Another item caught my eye this week. Hands up who knew that Spain was pioneering the way in Wind-power?

Sure, I've seen lots of windmills everywhere - particularly in the foothills of Granada - but I had no idea Spain's capacity for wind-generated-power was quite so impressive.

According to this article, over 50% of Spain's power needs could be supplied by windmills working at their peak capacity. Trailing only the USA and Germany in capacity, Spain seems to have found something it can be world-class at.

Remember my strange article of a few weeks ago? Perhaps Spain could divert its labour subsidies away from digging up roads to creating employment related to clean energy production? Just a thought.

Back to the Spanish property market, I wrote a quick summary of the latest TINSA report and why it's heartening for a couple of reasons.

Martin Dell, Kyero.com

Spanish Property Auction: December 13th 2009

2009-11-17T08:00:00Z

Christmas will come early to the overseas property market when hugely discounted Spanish properties come under the gavel on Sunday 13th December 2009 at the A Place in the Sun Spanish Property Auction.

The auction, which will take place at London’s Radisson SAS Portman Hotel W1, will see around 60 lots of key-ready properties on the Costa Blanca, Costa del Sol and Costa Calida brought to market at discounted prices up to 50% and in some cases with no reserve price at all.

APITS Ltd, publisher of A Place in the Sun magazine, aplaceinthesun.com and organiser of A Place in the Sun Live, will partner with UK auction house Barnett Ross to present a range of property types to attract UK buyers back into the market. The company believes the auction will stimulate the Spanish property market in the UK and draw attention to competitively priced property in Spain and the rest of the world.

Amanda Lamb, presenter of Channel 4s A Place in the Sun TV series said: When I was at A Place in the Sun Live at the NEC earlier this month it felt like people were wanting to re-enter the overseas property market. The A Place in the Sun Spanish property auction will be a great opportunity for buyers to pick up some amazing bargains and with some properties coming on with no reserve price, it should be a really exciting day!

Agents have been invited to submit properties on behalf of developers with strict selection criteria to ensure buyers get a genuine bargain in a development that is completed. In addition, most of the properties are within 40 minutes of an airport and minutes from a beach. A hardcopy and online catalogue will launch on 16th November to give buyers four weeks in which to view the legal packs and visit the properties prior to auction.

Order a catalogue or register your interest with A Place in the Sun

Download a pdf copy of the catalogue (7MB)

Spanish Economy Minister: Contraction Slowing

2009-11-16T08:00:00Z

Spanish Economy Minister is satisfied the GDP is contracting at a slower pace and expects things to pick up in the next quarter.

Spain's economy contracted in the third quarter, although at a slower pace than in previous quarters, official data showed Thursday, contrasting with a return to growth elsewhere in Europe.

Gross domestic product declined 0.3 percent from the previous quarter, its fifth straight quarterly contraction, and was down 4.0 percent from a year earlier, the National Statistics Institute said in preliminary figures.

It follows a contraction of 1.1 percent in the second quarter, 1.6 percent in the first quarter, 1.1 percent in the three months to December and 0.6 percent in the third quarter of 2008.

The statistics office said the slowdown in the pace of economic contraction was due to "a less negative contribution of domestic demand and a positive contribution of exterior demand" as government stimulus measures helped smooth the decline in activity and a return to growth in other nations aided exports.

Economy Minister Elena Salgado said she was "satisfied" with the figures.

"We expect that the results of the next quarters with our predictions and they will be better," she told reporters as she entered parliament.

The government expects the economy, Europe's fifth largest, to shrink 3.6 percent this year and return to growth by the second half of 2010.

The latest quarterly results leave Spain, along with Britain which unexpectedly slumped 0.4 percent in the third quarter, as the only large European economies still stuck in recession, usually defined as a drop in GDP for two or more consecutive quarters.

The European Commission forecasts the entire 16 member eurozone likely expanded during the third quarter.

Eurozone heavyweights France and Germany will publish third quarter GDP data on Friday. Both nations posted surprise economic growth in the second quarter of 2009, meaning their recessions were technically over.

The Spanish economy has proved especially vulnerable to the global credit crunch because its growth relied heavily on credit-fuelled domestic demand and a Spanish property boom boosted by easy access to loans that has collapsed, leaving around one million new homes unsold.

Prime Minister Jose Luis Rodriguez Zapatero's Socialist government has responded to the economic slump by putting in place a stimulus plan worth more than two percent of GDP this year which it says is the largest in Europe.

The plan includes a massive works programme, which has torn up vast swatches of Spanish cities as workers extend or repair roads and pavements. That however failed to prevent the jobless rate from soaring.

Spain's unemployment rate has doubled over the past two years to hit nearly 18 percent, the highest level in Europe, with construction workers leading the job losses.

The country of just over 46 million people accounts for roughly half of the rise in the number of jobless in the euro zone over the last year, according to the European Union's statistics office Eurostat.

At the height of its 15-year boom, Spain was creating about half of all new jobs in the eurozone, which drew millions of immigrants, especially from Latin America and Eastern Europe.

The sharp economic slowdown has caused Spain's public deficit to balloon as tax receipts fall and government spending on stimulus measures and unemployment benefits soars.

The government, which posted budget surpluses between 2004 and 2007, predicts the budget deficit will hit 9.5 percent of GDP this year.

The European Commission on Thursday gave Spain an additional year -- until 2013 -- to bring its budget deficits back under the European Union limit of 3.0 percent of GDP.

Story from Expatica

Spanish Property Values to Fall 7% in 2009

2009-11-13T08:00:00Z

Spain’s housing stock will fall 7% in value this year, to 4.19 trillion Euros, according to a new report from the Funcas savings banks foundation. They also say there is too much rubbish property for sale, which it will take years for the market to digest.

Funcas calculate that the value of Spain’s housing stock rose by a factor of 3.6 during Spain’s decade long property boom, from 1996 to 2006, driven by “an increase of about 25% in the area of built land and a tripling in prices.”

As a result, household wealth is now double disposable income, the difference being made up by an “enormous” level of household debt that will cause problems with bad debts and defaults for a long time to come.

Interestingly, Funcas also argues there is a stock of housing and land that is “too big and of poor quality” that will take “years to digest and use properly.” This hints at separate question that I will explore in greater detail in another article. Namely, that the Spanish property market is clearly segmenting into different grades of quality, with the best starting to sell now at reasonable prices, whilst the worst may never sell at any price.

Meanwhile, Spain’s G-14 developers’ association has claimed that the conditions are now right for the property market to come back to life. “Low interest rates, the correction in property prices, and the reopening of financial markets are creating the conditions for demand to start waking up,” argues the latest report from the G-14.

Getting the market going again is the key to dealing with the glut of unsold new homes, which the developers now estimate at around 732,000.

But despite the increasingly propitious conditions the developers claim to see, there will be no rebound without help from the government, they argue. So far the Spanish government has resisted the developers’ calls for a bailout.

Story from Mark Stucklin

TINSA House Price Index October 2009

2009-11-12T08:00:00Z

Many people have trouble making sense of and interpreting the TINSA numbers. Here's why I think some of them are more useful than others.

The TINSA Spanish Property Index was updated and published recently.

TINSA calculates a number to represent the overall value of the properties which they have valued - that's what the TINSA index is: a single number which represents the relative value of the Spanish property market at a particular snapshot in time.

An example.

In October 2007 when the TINSA index stood at 2265, let's say the market price for a particular property was €200,00. Now with the TINSA index at 1960, that same property would be valued at 13.4% less, or €173,000 (200000-(((2265-1960)/2265)*200000)).

The weakness in the TINSA methodology is that their index is based on valuations, not actual sales values. However, in a property market where the official data is also based on valuations or inaccurate transaction prices, I rate the TINSA data as the most reliable guide available.

In my opinion, the government valuers are certainly guilty of valuing according to the government's agenda - rather than as an accurate reflection of reality.

The government record of house price transactions does not take into account the cash that still passes 'under the table'. As this black-market facet has been slowly eroded over the past few years, transaction prices appear to have increased when, in reality, more of the 'real' price is being declared.

How much of an error could this cause in the government data? It was not uncommon a few years ago for 40% or 50% of a house purchase to be paid in cash. Today, many of those deals have been eradicated or drastically reduced - causing an apparent 'increase' in house prices of perhaps 30-40% - enough to completely mask the actual reduction in real-world house prices.

The reason I rate the TINSA data above those government sources is that they tally very well with what we actually observe to be happening in the market - something which none of the other data can claim.

In summary, the TINSA data suggests that Spanish property values are still falling, although that fall has slowed in recent months.

The more confusing part of the TINSA data is reflected in this graph showing year on year changes to their index.

This graph shows the rate of change in the index, not the actual trend of the index. The fact that the line on the graph has risen over the last few months is an indication that the rate of decline in prices is slowing - not that prices are increasing again.

However, as an indication of trends, this upturn is encouraging because it says that the decline in prices is slowing - again consistent with what we see happening in the real world.

Finally, the TINSA breakdown of index activity by region is not terribly useful because there isn't that much difference between areas.

Despite the inherent weakness of being a valuation-based price index, the TINSA index is the best we've got, it closely correlates with reality and, if you ignore some of the extra fluff in the report, it is a useful measure of the Spanish property market.

Martin Dell, Kyero.com

Moneycorp: Stalemate for Sterling

2009-11-11T08:00:00Z

No interest rate change from Bank of England, FOMC or the ECB. Sterling shrugs off £25 billion of additional QE measures.

UK data had less influence on currency levels during last week, with the main focus on how much the Bank of England (BoE) would expand its existing quantitative easing (QE) programme.

Nevertheless, it’s worth looking at some of the numbers. Industrial production came first and provided a pleasant surprise when September’s figure came in at 1.6% month on month, versus the previous month’s -2.5%, and above the 1.2% expectation.

However, this was more of a technical correction and flatters to deceive, as factories were closed for summer break and hence, falls short of suggesting a recovery across the industrial sector.

The Chartered Institute of Purchasing & Supply (CIPS) services Purchasing Managers’ Index (PMI) also came in strong with a reading of 56.9 (versus the previous 55.3) - its highest level since August 2007.

Though construction PMI showed a small drop, the manufacturing number posted an impressive rise to a two-year high at 53.7. Add to this the latest rise in the Halifax house price index and it is no surprise that the market started to scale down its previous expectations of a £50bn addition to the BoE’s QE programme.

As expected, UK interest rates were kept at 0.5%. The actual amount of additional QE money to be made available came in at just another £25bn, with an anticipation that the extension would take three months to complete. Sterling actually went up straight after this announcement, as the market was clearly expecting more.

EUR / USD traded within an even tighter range of 1.4720 - 1.4900.

There was very little important data from the eurozone early in the week, with only an inflation indicator to go on. Better than expected PMI numbers were seen, with those relating to the service sector well above expectations.

On Thursday we saw the European Central Bank (ECB) leave interest rates on hold; not that any other outcome was ever on the cards. But it was the press conference that the markets were interested in.

The president of the ECB, Jean-Claude Trichet, gave one of his masterly performances - promising much, answering all, but saying very little. The market took the overall tone, however from his comment that “we will be timely but gradual in phasing out measures”.

This was largely anticipated, with the disappointment of the risk traders that the stimulus was to be withdrawn tempered by the assertion that it would only be done gradually. So, with no dramatic surprises, the effect on the market was limited.

Over in the states, news filtered through that another US bank, CIT, had filed for bankruptcy protection over the weekend. Asian markets did have a few moments of panic as they mistook the acronym for another much larger and already bailed-out bank.

The tone for the first part of the week had been set; and despite some upside surprises in data, the week began with soft equities and a stronger USD.

We saw an improvement from the US ISM manufacturing release up from 52.6 to 55.7, versus expectations of 53.

On Wednesday evening we arrived at ‘central bank time’, with the Federal Open Market Committee (FOMC) announcement. There was no surprise to see rates left unchanged, though there were differing opinions as to where the slightly changed statement left markets.

In what really looks like a fairly neutral result, the FOMC “continues to expect economic conditions to warrant exceptionally low rates for an extended period”.

Friday’s release of the non-farm payrolls figure saw the announcement of another 190,000 jobs lost - which was slightly worse than expected - and the prior month’s figure was also revised down.

The unemployment rate rose to 10.2%; much worse than the 9.9% forecast. This caused a brief bout of risk aversion and subsequent dollar strength, albeit rather muted by usual standards.

In the UK, this week is a quiet one data-wise. Early on, we have British Retail Consortium (BRC) retail sales, the Royal Institute of Chartered Surveyors (RICS) house price balance and the UK Trade balance.

On Wednesday we will see the long-awaited BoE quarterly inflation report. Stateside we have little data on Monday or Tuesday, which leads into the Veteran’s Day Holiday on Wednesday. This only leaves weekly jobless figures on Thursday and the US Trade balance reading on Friday.

From the eurozone, we look forward to the German economic sentiment survey from the ZEW, as well as speeches from Jean Claude Trichet and Axel Weber of the ECB - which could also influence the rate.

Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card

Kyero: One Million Spanish Properties

2009-11-10T09:00:00Z

Once again, Edward Hugh has written compellingly about how Spain is under-performing compared to the rest of Europe.

It's a long and detailed article, but Spanish Spectre Haunting Europe is well worth the effort.

If you have purchased property in Murcia at Trampolin Hills, you will no doubt already be aware of the developer filing for administration. Just a reminder, you only have until December 9th to file your claim to recover any deposit or stage payments you have already made.

Since last week's newsletter, Kyero.com passed a significant milestone - listing our one millionth property!

Properties come and go all the time, and that's certainly true for our property number 1,000,000. However, these properties are it's closest cousins.

Property 999,142 is a pretty town house for sale in Puerto Banus.

Property 1,000,012 is a small flat on Palm Mar in Tenerife.

Property 1,000,000 lacked quite a bit of mandatory information so it never actually saw the light of day. Wonder how I know that?

Well, we keep a copy of the important details of every property ever advertised on Kyero.com - because one day we might like to do some historical analysis on that data.

You might also be interested to know that, at any one time, only 3 out of every 4 properties are actually visible on Kyero.com - because the remainder are lacking some piece of information we deem as mandatory.

From time to time, the odd rogue property slips through, but we're constantly working to make your Spanish property search quicker and easier.

Martin Dell, Kyero.com

Andalucia: Billion Euro Subsidy for Home Buyers

2009-11-10T08:00:00Z

The government of Andalucia, or Junta, announced yesterday a subsidy of 1 billion Euros to help liquidate the region’s property glut estimated at around 70,000 newly-built homes.

Like the ‘cash-for-clunkers’ programme used to subsidise car sales, public money will now be showered on house-hunters in Andalucia. But second home buyers can stay in their seats as the scheme only applies to local residents buying main homes. Even so, it could benefit foreigners living in Andalucia, and help lift the market out of its slump, which might lift prices for all types of property.

How it works

The way it works is developers participating in the scheme have to offer their property for sale at mortgage cost, wiping out their margins and giving a discount of 20%. Participating banks, for their part, will loan 100% interest only for the first 3 years. Starting in the fourth year the Junta will offer loans to subsidise mortgage payments for up to 5 years and a maximum of 15,000 Euros. As a result, buyers will save as much as 40% over 8 years, according to calculations by the Junta.

The offer stands until the end of 2010, the properties must be newly- built, and the mortgage no greater than 245,000 Euros, the price limit for social housing. Mortgages must be 100% LTV, up to 30 years, charging an interest rate of Euribor +1%

Read the fine print, though, and the Junta isn’t being so generous. In year 9 mortgage lenders have to reimburse the subsidy to the Junta and add it onto the outstanding mortgage, so the borrower pays in the end. Nevertheless, thanks to inflation, buyers will probably have to pay back less, in real terms, than they borrow. Many people expect inflation to take off in the next few years.

Criticisms

You could argue that it is morally questionable for the government to be spending 1 billion Euros subsidising Spanish property buyers when there are so many other more needy causes. And isn’t this is just a wheeze to get buyers to pay inflated prices for homes today whilst transferring the burden of payment onto tax payers in the future?

Wouldn’t it be cheaper, and cause less economic distortion, just to drop prices today to a level that people can afford without crucifying themselves on a 30 year mortgage subsidised by the government?

Story from Mark Stucklin

Trampolin Hills Developer in Administration

2009-11-09T08:00:00Z

The developer behind the Trampolin Hills Golf Resort in the Spanish province of Murcia has been forced into bankruptcy proceedings unable to pays its debts, according to reports in the local press.

Administrators have been appointed to run the company, and creditors now have a month to register their claims.

Trampolin Hills, in Campos del Río, had been struggling to survive since the market downturn and was dealt a fatal blow when the town hall refused to approve its plans to build 2,500 homes and a golf course.

Investors who bought off-plan without a bank guarantee will now at the back of the creditor queue and face potentially huge losses.

The bankruptcy will add further weight to the argument that developers should offer escrow facilities or bank guarantees as standard to protect consumers and help reverse the damage that cases like this do for the image of the industry.

If you are a creditor of Trampolin Hills and wish to recover any money you paid, you must file a claim before December 3rd 2009 - more information.

Where does this leave the property purchaser who has not yet completed?

Under the terms of the Private Purchase Contract (PPC) that you have signed, you will usually be acquiring an option to purchase the Spanish property at completion. This is not a property right as such but a debt owed to you by the development company with whom you’ve signed your PPC.

As in English law, there are different categories of creditors. These include: “Secured” creditors who have registered charges against the development company’s assets probably by way of mortgages or other loans – often manifested in an up to date Nota Simple of the property - the Spanish state tax and social security offices; “Favoured” creditors such as the company’s own employees and “Unsecured” creditors.

Until completion it is usual that a property purchaser will be an “unsecured” creditor of the developer. This means that your rights in respect of your cash as deposited with the developer will mean that you rank behind the “secured” and “favoured” creditors.

Spain has a developed and legally backed system of Bank Guarantees (Aval Bancario). The Law 57/68 establishes a system of bank guarantees - or insurance policies - to protect the amounts paid by the buyers in case of the developer’s failure to complete the development.

The aim is to ensure that you do not lose your money should the property not be built for some reason. This is usually offered by the main funding bank which has provided the developer with their project finance.

In practice, bank guarantees may not always reach the require level of protection as envisaged by the law. In our experience they need to be studied very closely to ensure that they are valid, up to date and signed by all relevant parties.

To give you added comfort, you should seek from your Abogado written assurance that they have hold original versions of up to date – amended to include your deposit funds and any subsequent stage payments - fully signed and original Bank Guarantees from the developer’s banker.

Should you find yourselves in a position where your developer has announced that they are entering into a formal creditor protection arrangement or they have filed for, Administrative Receivership, voluntary liquidation or similar you should consider whether it’s appropriate to give your Abogado instructions to seek to call upon the bank’s Guarantee.

Whilst it may be difficult in practice to invoke this guarantee – it will usually require the intervention of your Abogado and possibly formal court proceedings – which may prove costly – it should provide you with long stop protection in the event of the collapse of the developer that results in the property not being constructed or completed.

It is not the intention to overly simplify this process and for one reason or another it is likely that the bank providing the guarantee may seek to delay honouring or even refuse to honour their guarantee - so ensuring that your Bank Guarantee arrangements are at all times in “apple pie” order is very sound advice.

If you developer does not appear to be in financial difficulties we’d recommend that you review your Bank Guarantee arrangements in any event. A difficulty often arises if a date of expiry of the Bank Guarantee is specified on its face.

Such a date may be an “in any event” date meaning that the Bank Guarantee will expire whether or not the property is “legally” completed. You should check with your Abogado to ensure whether such a date is stated in your case and he/she should apply to have them renewed before they expire.

It is usual that the developer and the bank will need to sign each Guarantee and any extension to it which in our experience may well not happen if the developer and their financier are in dispute over other liquidity issues.

Finally, and this sounds like total stupidity, if your property is pretty much completed but your developer is threatening to file for creditor protection, Administrative Receivership or similar, it may be worth considering to complete on your property in any event.

For obvious reasons, care and professional advice must be taken if you are considering upon such a strategy, but the net result of such completion will mean that the property is registered in your name. Instead of a debt owed to you by the developer you will have a property asset with an enforceable title.

Story from The Rights Group and Eye On Spain

Spanish Property Swings & Roundabouts

2009-11-06T08:00:00Z

The latest figures for planning approvals show that for the residential construction sector there is still plenty of bad news out there. Bank of Spain to double provisions in move that may drive property prices down.

The depressing news for anyone who makes a living building homes in Spain is that in the year to August planning approvals were down 62% to 76,411 compared to the same period last year, and down 0.4% on a monthly basis.

But these figures don’t tell the whole story, now that the Spanish property sector’s slump has lasted longer than a year. The year-on-year decline in the same period last year was over 50%, so compared to 2 years ago, this year’s decline can only be described as a debacle.

It means that Spain’s residential building trade is shrivelling up. All the resources that used to be dedicated to building hundreds of thousands of homes each year are increasingly standing idle. In the boom years the real estate sector, including construction, accounted for close to 20% of Spanish GDP. By some estimates it has now shrunk to 10%, but that is still substantially above the OECD average and way too high for Spain.

It helps explain why unemployment in Spain is heading for 20%. Every point of GDP lost to the housing slump destroys 200,000 jobs. That in turn is bad news for the housing market, as people without jobs can little afford to buy a home or pay the mortgage.

The Bank of Spain plans to introduce a new rule forcing banks and savings banks (cajas) to double the amount they write off when they own a repossessed property for a year or longer. This will give banks and cajas a big incentive to reduce their prices to liquidate their growing stock of repossessed properties and developments.

Under the new rule, banks and cajas will have to increase their provisions from 10% to 20% of appraisal values for repossessed properties they have owned for a year or more.

In the past they only had to write of 10% at the time of repossession. Now they must write of an additional 10% in provisions for properties they haven’t sold after a year.

The new measure, which is expected to come into force in a few weeks time, is being interpreted as a warning from the Bank of Spain that banks should stop their practise of disguising bad debts by swapping debt for property. It will also encourage banks to drop their prices to reduce their property holdings.

Banking analysts estimate that banks and cajas have repossessed property valued on their books at 36 billion Euros. This implies they may have to write off 3.6 billion Euros collectively when the new rule comes into force.

Note, however, that BBVA and Santander, Spain’s biggest banks, are unaffected by the new rule. They were already making provisions of 20%.

Story from Mark Stucklin

Moneycorp: Sterling's Resilience Shines Through

2009-11-05T08:00:00Z

Sterling's resilience shines through. Have we all forgotten the previous week's appalling UK third quarter GDP performance?

Following the previous Friday's dismal UK GDP figure, there was every reason to suspect the pound would have to face the full force of economic law and aggressive selling from worried FX traders at the beginning of this week. Neither happened and the fact that we saw no new evidence of worsening economic conditions meant the pound duly recovered a good half of its losses against the other major currencies.

Having opened at 1.0854 against the euro, there was only a slight dip into Monday morning, before this recovery kicked in, rebounding to just under €1.10 by the afternoon.

Tuesday saw further gains for the pound against the dollar and the euro, as a Confederation of British Industry report showed UK retail sales climbed to the highest level in almost two years.

On Thursday, net UK mortgage lending was as expected. The rates were therefore influenced by the strong US Gross Domestic Product (GDP) reading, which saw an annualised growth of 3.5%, confirming that America is officially out of recession.

This saw a resurgence in risk appetite and the pound subsequently gave back some of its gains from earlier in the week, whilst holding its ground against the US dollar. This move proved relatively short-lived however, as the markets read between the lines of the GDP figures and the trends from earlier in the week resumed.

With this week dominated by the Bank of England rate decision and accompanying statement on quantitative easing, trading in sterling is likely to be choppy. Significant moves are less likely in the build-up and even after the decision itself, there could be a muted response while the markets wait for the quarterly inflation report released on Wednesday 11 November.

There was little data of note from the eurozone last week and, subsequently, the single currency was at the mercy of news from elsewhere.The primary influence was the growing belief that we are coming towards the end of the stock market bull-run, and that present monetary stimuli are likely to be withdrawn in most major economies in the relatively near future. As a result, short positions in the dollar, sterling and yen were closed out, which lead to euro selling.

The major cross that markets watch is the EUR/USD rate, which had been trading over the psychological 1.50 level through the end of last week and into Monday. After the rate broke back below that level on Monday, stop loss orders were triggered and the pound was able to appreciate against its continental counterpart. This was key in allowing sterling to breach the 1.11, although follow-through came to a halt near 1.12.

The small amount of data we did have was largely negative. German consumer confidence was lower than forecast and down on last month, when a gain had been expected. M3 Money supply was also lower than forecast - which is positively correlated with interest rates - so a weak reading only served to further hamper the euro.

Some other minor German data was on or just above expectations. However, this was not enough to turn the tide, as investors unwound their recent trades and awaited the important GDP figure from the US on Thursday. As mentioned, this figure showed a strongly positive reading, so risk appetite returned to the markets and the euro recouped some of its losses.

Friday morning's flash inflation estimate and Europe-wide employment figure were both on expectation and did not influence the market. Euro movement this week will also be dominated by the central bank interest rate meeting and subsequent press conference on Thursday, with no other data of any real significance due for release in the build-up.

With sterling widely considered undervalued - especially against the euro - we may see the current levels hold, although it is unlikely we will see any significant rally until the market is confident that the Bank of England has finished its quantitative easing measures.

With so much uncertainty surrounding the upcoming decisions from both the UK's Monetary Policy Committee (MPC) and the eurozone's European Central Bank (ECB), it is certainly prudent for buyers of the euro to hedge half their requirement with a forward purchase. Anyone selling euro should still view the current levels as attractive, considering that just two years ago, it would have cost you €1.40 to buy £1.00.

Get the best foreign exchange rates with no bank fees or commission charges using your Moneycorp Privilege Card