Property Market News1 |
PROPERTY MARKET NEWSMarbella’s municipal administration dissolved In keeping with local tradition, the latest mayor of Marbella is in jail facing corruption charges, PROPERTY MARKET NEWSMarbella’s municipal administration dissolved In keeping with local tradition, the latest mayor of Marbella is in jail facing corruption charges, following in the footsteps of the previous 2 mayors, who were also both arrested for graft. After 15 years of chronic corruption in Marbella’s town hall it appears that the regional government in Seville has had enough. Marbella’s municipal administration has been dissolved by a government fiat until elections next year, and in the meantime the city will be run by a government-appointed administrator. The Andalusian government is also stripping Marbella of town planning powers, as the worst of the corruption has been related to the real estate sector. As a direct consequence of corruption in the town hall there are now an estimated 30,000 illegal properties in Marbella. Some 10 to 15% of these may never be legalised. > If the Great Gatsby were house hunting in Spain today, he would probably buy Casa La Manzana in Sotogrande, at the western tip of the Costa del Sol. On the market for ?24m (£16.5m), it’s the priciest place in the country. More at the Sunday Times online > Radio Liberty antennae in Pals (Costa Brava) finally torn down Unbelievable as it may seem, the Radio Liberty antennae that have been both disfiguring and protecting (from development) the beach at Pals for decades have finally been torn down. Pals beach, on the Costa Brava, is one of the most beautiful, and least built up beaches in Spain. It remains to be seen what will happen with the land. Don’t believe it? See for yourself > Spanish property prices expected to rise 10% this year. A new report from La Caixa; The report also forecasts a “soft landing” for the Spanish property market, with property inflation rates falling this year and in subsequent years. Commenting on the report, Jordi Gaul, La Caixa’s director of research, said “In the next few years Spanish property prices may even rise below inflation, which in real terms means that property prices would fall, as happened in the years 1993 to 1996″. The report identifies a rising Euribor rate as the principal driver behind falling Spanish property inflation rates. Euribor is the interest rate used to calculate mortgage repayments on the vast majority of Spanish mortgages. As Euribor rises, as it has been doing, it drives up the financing costs of buying Spanish property, thereby reducing potential demand. Gual was keen to discount the possibility of a “hard landing” for the Spanish property market. “We are not expecting a sudden drop in prices, but rather gradual decline in demand” explained Gual. Despite the extraordinary growth in Spanish property prices in recent years, the report also dismisses the claim that Spain is suffering from a real estate bubble. The report finds that the present level of Spanish property prices, and recent growth rates, are justified by structural changes in Spain such as employment growth, low interest rates and high immigration levels. The report dismisses the concerns regarding the Spanish property market raised by “certain international organisations” - an allusion to the IMF and the BCE - and points out that the average financial cost of property to Spanish households has barley risen, despite 5 years of substantial increases in Spanish property prices. La Caixa believes that Euribor could rise from 2.5% today to a maximum of 3.5% in the mid-term future. > As a group, foreign owners of holiday homes in Spain spend 1 billion Euros a year on maintaining their properties, according to new figures from the Spanish bank BBVA. Record number of Spanish housing starts in 2005 According to the Spanish government there were a total of 729,652 housing starts in Spain during 2005, 6.2% more than in 2004 and an all time record for Spain. This compares to around 200,000 annual housing starts in the United Kingdom in recent years. 73.3% of these new Spanish properties were in apartment blocks, whilst 26.7% were detached homes. It should be noted that around half of all housing starts take place in just 12 of Spain’s 52 provinces: Madrid, Toledo, Guadalajara, Huelva, Cádiz, Málaga, Granada, Almería, Murcia, Alicante, Valencia and Castellón. > A new study by the appraisal company Tasamadrid shows that Barcelona, San Sebastian and Madrid are still the most expensive Spanish cities for buying property.Barcelona tops the list as the most expensive provincial capital in Spain. The average cost of newly-built property in the Catalan capital was 4,267 Euros per m2 in the first quarter of 2006, up by 4.72% compared to the previous quarter. Resale property in Barcelona rose to 3,621 Euros/m2, up 4.65% compared to the last quarter of 2005. San Sebastian is the 2nd most expensive provincial capital in Spain in which to buy property, according to Tasamadrid’s figures. Newly-built property in San Sebastian costs 3,920 Euros per m2, and resale property costs 4,143 Euros per m2. Tasamadrid finds that Madrid is the 3rd most expensive city in Spain, although other studies find that Madrid is the most expensive city in Spain in which to buy property. According to Tasamadrid, newly-built property cost 3,717 Euros/m2 and resale property 3,528 Euros/m2 in the first quarter of 2006. At the other end of the scale, Tasamadrid’s figures reveal that Lugo, in Galicia, is the cheapest city in Spain (1,281 Euros/m2), followed by Zamora (1,405 Euros/m2) and Huesca (1,460 Euros/m2). Euribor rises to 3.105% Euribor - the rate used to calculate the vast majority of Spanish mortgage interest payments - rose to 3.105% in March, the highest level since October 2002. For a typical Spanish variable-rate mortgage of 120,000 Euros at 20 years and Euribor +0.60 terms, monthly mortgage payments will rise from 661 Euros to 708 Euros, a rise of 47 Euros per month, and 564 Euros per year. The ECB raised base rates from 2.25% to 2.50% on the 2nd of March. A rising Euro reflects market expectations that base rates will continue to rise this years, in response to inflation fears. Experts believe that Euribor could rise to up to 4% this year. Spanish property buyers who might suffer the most from a rising Euribor are those who bought when Euribor was at an all time low of 2%, between June 2003 and September 2005. These buyers may have been tempted to gear up or withdraw equity from their properties based on unsustainably low interest rates. |
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