Spain is one of the main destinations for Britons looking to move abroad or buy a holiday home as an investment. Sales of tourist property in Málaga Province have fallen to an historic low. Analysts warned that a crash could spread to the wider Spanish economy The total turnover on the sale of residential tourism property in the province fell by 50% over 2007 to 540 million €. It means that in two years the province has gone from the leader of the sector to the last place in Spain. The advance numbers were presented by the Costa del Sol Association of Constructors and Promoters at the FITUR tourism fair in Madrid yesterday, but the definitive numbers will not be known until March when they will be published at the ITB Berlin Tourism Fair.
The numbers mean that the province of Málaga has now been overtaken by all the provinces in Cataluña, the Valencia region, Murcia, the Balearics, Canaries and the rest of the Andalucian coastline. In comparison while sales have fallen 50% in Málaga, in Murcia they increased over the same time by 125%.
Fears of a Spanish property crash have increased, prompting a sell-off in real estate shares and fanning concerns that thousands of Britons will lose money.
The sell-off was triggered by worries of rising bad debts and speculation that one large company had been buying its own properties to keep prices high
The country is over-housed, households are over-indebted and the construction industry continues to churn out houses 
On top of that, households now have some of the highest debt levels in the eurozone, much of which is based on variable lending rates leaving consumers open to sudden increases in borrowing costs.
The worry is that should the suspected property bubble burst, and some analysts estimate that house prices are overvalued by 30%, then many other industries such as banking and retail would also suffer.
Spain's government and construction industry figures tried to calm fears on Wednesday, stating that the fundamentals of the property market remained solid.
Economy Minister Pedro Solbes said that the country was not in a "worrying situation".
He argued that the outlook for household earnings, and as a result their debt repayments, was steady because there "are good prospects for employment".
The chairman of Astroc, the Spanish property firm at the heart of the recent market wobbles, has also said that the fears are unfounded.
Analysts are asking how high the building industry can go
There had been reports that Enrique Banuelos, the chairman and majority shareholder of Astroc, had bought properties from the company and rumours that a large shareholder had sold out.
However, Mr Banuelos said that there was no "determining reason" for the sell off that has wiped more than 60% off the value of the company in the past six days.
Analysts warned that while the current fears of a crash may be over amplified, the Spanish property boom that had provided strong returns for the past eight years was probably over.
"The country is over-housed, households are over-indebted and the construction industry continues to churn out houses," said Lombard Street analysts in a note to clients the biggest problem facing the market was over-supply of housing. Industry estimates show that more than 800,000 new homes were built in Spain last year, four times the number in the UK.
"That is not good news for UK investors in Spain,"
"We have had over-investment on a gigantic scale and it has already started a slowdown in house price growth," she explained.
"We will definitely see house price growth stop and falls in nominal prices are likely in Spain over the next 12 to 18 months."
President of the Association, José Prado, told La Opinion de Málaga that there were many factors in play, but without doubt the corruption in Marbella had a great deal to do with it, as it has generated a climate of distrust among purchasers.
‘If even today they are still talking about knocking down homes which obtained their construction licence, have their mortgage, and are registered at the notary, how would anybody dare to buy a house?’, he said. Prado went on to criticise what he called the enormous legal vacuum across the province.
"If even today they are still talking about knocking down homes which obtained their construction licence, have their mortgage, and are registered at the notary, how would anybody dare to buy a house?"
‘Currently there is not a single new PGOU Urban Plan approved anywhere in the province, not even in its initial phase. Even if they were started now they would not be definitive for two or three years, and by that time we would be in crisis because of a lack of designated building land’.
The number of new homes completed across the province has fallen from 41,740 in 2005 to 29,450 in 2007. The fall was most acute in the tourist muncipalities - Nerja (-30%), Vélez (-44%), Torremolinos (-74%), Fuengirola (-44%), Mijas (-31%) and Estepona (-73%).
You Might Also Like :
0 comments:
Post a Comment