Experts expect prices to continue to rise during 2006, but at a gradually slower rate than in the housing boom of the past few years, as national demand slows down, investors turn away from the property market and look towards other forms of investment. And whereas prices are certainly not expected to freeze or fall in the short term, they are expected to rise least in areas with massive supply of new housing development.
Foreign markets will become more and more important to building developers and promoters from now on, especially since building has not slowed down yet, even though prices seem to be doing so.
]]>After Sotheby's and Christie's, Afinsa is the world's third biggest collectibles company and through its controlling stake in Escala Group operates in other European cities (including London), the USA and Asia. The company has published a note on its website (www.afinsa.com) today reassuring its clients and employees that it is cooperating with authorities in order to prove its innocence.
Afinsa is not a registered financial institution which means that its advises its customers on how to invest their money. Customers of Afinsa and Forum who found that they were unable to recover their money as the scandal unfolded yesterday have already formed an association.
As the scale of the operation became clear yesterday, the Director General of Consumers said that although the Government does not have any funds to compensate victims of a fraud of this kind, she has called a meeting tomorrow with representatives from the autonomous governments to discuss how to channel applications for compensation of what for some people is the loss of a whole life's savings. She has also said that the Government will study how to modify the law in order to give private investors greater protection in the future.
]]>Fernandez de la Vega said “The new law Hill reinformes public intervention, redefine citizens’ rights and duties, guarentee greater respect for the environment, establish greater funds for vivienda protegida and improve the regulation of public ownership of land”. She said that the law reflected the need to protect citizens from excessive speculation.
The new law will also oblige building promotors to take into account aspects such as energy saving and accessibility.
]]>Ah, prognostication. It's a time-honored profession and one that's hard to beat in terms of job security. In what other profession can you get it wrong half the time and still be considered pretty good at what you do? If "Bob in accounting" had that kind of track record, he'd be out on the street before the second-quarter earnings were revised. But prognosticators can't possibly be faulted for not knowing what hasn't happened yet.
]]> All of this is a fitting introduction to our forecast of the changing real estate market in the U.S. over the next few years -- 10 markets where housing prices and values will continue to remain strong, 10 markets where appreciation will pretty much top out and the 10 markets that are most likely to experience a decline. We talked to experts, studied public and private databases, analyzed market trends and examined the analyses of many others -- often contradictory.The resulting lists are not intended to be numerical rankings, which would result in lists of markets located almost exclusively in California and Florida.
Nor are they intended to be be-all, end-all lists. In a recent quarterly metro-area, single-family home price report from the National Association of Realtors, a record 72 markets had annual increases in the double digits for median prices for existing, single-family homes. Only six areas had price declines out of 145 metropolitan statistical areas surveyed.
Plus, many reports we reviewed noted strong housing appreciation in the Gulf Coast areas impacted by the 2005 hurricanes. That's completely understandable. When a significant portion of the housing stock has been destroyed, the law of supply and demand dictates that the remaining houses will dramatically increase in value. We chose to leave those markets out because we felt the gains didn't reflect normal market conditions and would likely experience significant, unpredictable shifts during the next two years.
Finally, these are the markets Bankrate feels are most worth watching and are not intended to be lists on which to base your investments or take to the bank in any other sense. As Ingo Winzer, president of Local Market Monitor, a Massachusetts-based real estate analysis firm, says, "I thought that based on previous observations on price cycles, (prices) would have peaked two years ago, and they didn't. There is always some factor that comes up that you hadn't anticipated. It makes forecasting extremely difficult."
Are you wishful or wary about a real estate bubble? Check these market groupings to see if your area makes it onto any of our top 10 lists.
10 bubble blowers -- appreciation should continue to grow
Boise, Idaho. Besides having a happy-sounding name, Boise is consistently mentioned as a small, but strong real estate market. Forbes magazine ranked it first on its 2005 list of the best places for business and a career; John Burns Real Estate Consulting puts it almost at the bottom of its list of markets headed for a potential housing bubble.
John Schleimer, a real estate market consultant to major builders, says that both Boise and parts of the Idaho Falls panhandle will "hold up very well" housing appreciationwise.
"They're getting migration of people fleeing the blue states," he says. Annual price increases on housing has been a modest, but steady 4 percent to 6 percent over the past couple of years, with a significant -- but not out-of-proportion -- increase of 14 percent in the last quarter of 2005.
El Paso, Texas. Real estate market watchers have noted for some time now that Texas is a value buy. Local Market Monitor recently released a listing of overvalued and undervalued markets. Four of its 10 undervalued markets were in the Lone Star State, with El Paso the most undervalued market in the nation (the other undervalued Texas markets were McAllen, Dallas-Ft. Worth and Houston).
"If I was an investor in real estate -- and I'm not -- I'd carefully consider Texas markets," Winzer says. "They had a big boom and bust about 10 years ago. They're at the end of that. They haven't been great markets for awhile, but quite likely, as economies improve there, people will move there, especially since prices are relatively modest."
Fortune ranked El Paso third on its list of markets set for strong appreciation in the next two years; another Texas market, San Antonio, was first.
Albuquerque, N.M. This is another city at the bottom of John Burns Real Estate's Housing Cycle Barometer, a measurement of cities that are susceptible to a housing bubble. It's also high on Fortune's list of markets that should experience growth in the next two years and had a healthy increase (18 percent, according to the NAR) in annual price increase in 2005. Locals say the area attracts Californians trying to escape high housing prices; once they discover the mild year-round weather, they don't want to leave.
Seattle, Wash./Portland, Ore. The overall news out of the Pacific Northwest isn't great. The area lost jobs in the tech bust and is still recouping. But in terms of housing price appreciation, the thing these cities have going for them is a restriction in supply. Tight controls on development have prevented the normal progress of builders going farther out from the city core to find cheap land in the suburbs. Hence, demand stays high for available units. (Forbes Magazine lists Seattle as the most overpriced place to live in the country; Portland was third on the list.)
"Portland and Seattle have really benefited from California's growth," says Richard Gollis, principal of San Francisco-based real estate consultants The Concord Group. "Portland is starting to see the next generation of housing product, which is large-scale, high-density projects in downtown. The same thing is happening in Seattle. People who moved there 20 years ago for the tech market are older now and have a different lifestyle."
Salt Lake City Nothing drives housing like a stable economy and job growth. Salt Lake City has both. Job growth is up about 4 percent, unemployment is low, the housing costs-to-income ratio is moderate and Utah builders give buyers a lot of house for the money. Local Market Monitor reported an 11 percent increase in appreciation in the market between 2004 and third quarter 2005, and Money magazine ranked it 20th on its list of 100 markets for growth over the next two years.
Raleigh, N.C. This city is right in the middle of the region that appeals to what real estate market consultant Schleimer calls the "halfbacks." Those are people from northern states who moved to Florida, didn't like it and then moved back, but only halfway. The halfback region includes Georgia, the Carolinas, parts of Mississippi and Tennessee. The seasons are more like what they were used to up North, without the harsh winters, and they're closer to friends and family. John Burns Housing Cycle Barometer has Raleigh dead last on its list of markets that are susceptible to a housing bubble, and the NAR shows a healthy appreciation of 7.4 percent between 2004 and 2005. The median house price of $185,200 is well below the national average of $213,000, giving it nice room to grow. Fortune predicts the region will do just that, by about 5 percent per year over the next two years.
Philadelphia Major northeastern cities may be the least expected on a list like this, so we were somewhat surprised to see Philadelphia show up in a favorable position on several reports. The NAR quarterly report showed a 12 percent increase in appreciation between 2004 and 2005, high enough to encourage people to buy homes, but not at such a dizzying rate as to spark panic purchases. The housing-cost-to-income ratio, at 31 percent, is quite favorable compared to other large northeastern cities (53 percent in Washington, D.C., and Newark, N.J., and 72 percent in New York City) and while job growth is small, it's moving in the right direction.
Atlanta Home to several major corporations and the country's busiest airport, Atlanta also is the second-largest housing market in the nation. Housing prices have enjoyed steady appreciation without the skyrocketing increases that have pushed other large markets toward a bubble. Commuters who have tired of long commutes have sparked resurgence in in-town development close to transit; the mixed-use development Atlantic Station has gained national attention as a true urban village with easy accessibility to jobs and cultural activities in downtown. Fortune predicts about 4 percent growth in values for the next two years.
Little Rock, Ark. Surprised to see Little Rock on this list? If so, join the club. It's not exactly on a lot of radar screens as a hot real estate market. But it popped up in a favorable way on just about every ranking related to housing appreciation, from the NAR's note of a very respectable 7.7 percent change from 2004 to 2005 to Fortune's prediction that that kind of increase should hold fairly steady for the next two years. This is Local Market Monitor's position as one of the most undervalued markets in the country. At an average price of $155,900, housing there is running a good 17 percent below where it could be, Winzer says, making it a great value.
Cincinnati, Ohio, and Birmingham, Ala. These two were too close to call. The NAR's median price appreciation list gave a clear nod to Birmingham (4 percent increase from 2004 to 2005, to Cincinnati's 0.7 percent), but Cincinnati kicked its butt on the Housing Cycle Barometer that predicts a market's susceptibility to a housing bubble. (Cincinnati was 30 spots lower on the risk assessment.) Pricing in both markets is running about 12 percent under what the experts say it should be, giving them both plenty of room for nice, steady growth. The forecasters see that in the future for both markets.
10 bubble sitters -- appreciation may have peaked
Washington, D.C. The D.C. market ranks 10th on John Burns list of markets facing a potential housing bubble, and home sellers in the metro market report that it's taking longer to sell than it did a year ago. Plus, builders are offering significant incentives to try to move inventory quickly. Fortune's survey suggests the market will decline slightly in 2007. Still, D.C. has a healthy economy and job market; Forbes ranks it fourth on its list great places for business and a career. And where there is business, there are home buyers.
Ft. Myers/Cape Coral, Fla. Is it overvalued? Yes. Local Market Monitor reports annual housing appreciation of between 9 percent and 11 percent between 2001 and 2004 and then a 33 percent leap in 2005. Has the market topped out in housing appreciation? Not yet, but it can't absorb much more, say the real estate gurus. The market is still affordable and more reasonably priced than Sarasota (43 percent overvalued) to the north or Naples (a whopping 72 percent overvalued) to the south, but the amount of building in the market is staggering -- most of the country's major builders have strong presences in Lee County -- and land prices, once quite affordable, have increased as much as tenfold in recent years.
Chicago The Midwest hasn't had the kind of dramatic price increases as cities on the two coasts and those in the Sun Belt. As such, Chicago isn't as susceptible to a pricing bubble as some of the other major urban areas of the country, the real estate pros say. However, the ratio of housing costs to income in the market far exceeds that of other markets in the state and job growth has been sluggish. "The big challenge in Chicago is work-force housing," Gollis says. "We're always looking at likely income growth and affordability growth or lack thereof."
Honolulu Because of its remote location, Honolulu is tough to compare to anywhere else. After a drop-off in population in the 1990s, people have started returning to the island, Winzer says, creating a housing shortage that has contributed to rapid increases in housing prices. In 2003, the median price of an existing single-family home was $380,000, according to NAR. By end of the 2005, it was expected to be at $620,000. Currently, the economy on the island is good, Winzer says, driven by economic conditions in Japan. Fortune predicts a small, but realistic increase in values this year followed by a slight drop-off in 2007.
Tucson, Ariz. Tucson's housing market is dwarfed by Phoenix -- new construction is roughly one-fifth of the number of units built -- it has joined its much larger neighbor in attracting the attention of real estate investors. The NAR reported a 32-percent increase in appreciation over 12 months. The current pricing is about one-fourth higher than it should be, Local Market Monitor says. The pros look for the market to stabilize in 2006, with an increase that roughly tracks the inflation rate, increase this year, followed by a decline in pricing in 2007.
San Francisco. With a median home price of nearly $720,000 at the end of 2005, according to the NAR, San Francisco remains one of the country's most expensive cities to live in, outpacing even Honolulu and New York City. Housing prices are unlikely to decline because of short supply -- surrounded by hills and its famed bay -- there's just nowhere else to build anything less expensive in the city. But realistically, there aren't that many people who can afford to buy at those prices, which should keep prices from going much higher.
Detroit Detroit hasn't been on anyone's list of hot markets for a long time. In the most recent report from the NAR, Detroit was one of only six metro markets in the country to show a decline in housing appreciation in the past year, with prices down about a half percent. It's a trend that Local Market Monitor has been tracking since 2001; annual price increases have dropped from 7 percent that year to just 2 percent in 2005. Fortune doesn't predict any better performance in the market through 2007. John Burns Real Estate Consulting actually gives the Detroit market its worst possible grade, an F, based largely on a large loss of jobs and the highest unemployment rate of any metro market in the state.
Minneapolis Minneapolis made our list for a couple of reasons. In a year when the majority of metro markets showed double-digit increases in appreciation, it barely surpassed the rate of inflation, according to the NAR. And for the next two years, the prediction is that appreciation won't even see the left side of a decimal point.
Baltimore Like its pricier neighbor to the south, Washington, D.C., Baltimore has seen double-digit increases in appreciation in recent years. But several reports indicate the market is overpriced compared to its history. Local Market Monitor indicates that prices are overvalued by 17 percent; Fortune's number crunchers forecast a slight increase in values for this year, followed by a small drop-off in 2007, perhaps signaling that prices have leveled off.
Denver Gollis has been big on Denver for some time, seeing it as a market that went through a rough time -- it lost thousands of telecom jobs a few years back -- but it is returning to a level state. The market has caught the attention of national builders in recent years, there is major construction underway and the Stapleton Airport redevelopment is one of the largest projects of its kind in the nation. Yet the NAR reports that in a year when the vast majority of markets showed double-digit increases in appreciation, Denver's rate was 4.4 percent, and Local Market Monitor reports that it hasn't been above 5 percent since 2001. The good folks at Fortune predict that for the next couple of years, Denver's rate of appreciation won't see half that number.
10 bubble busters -- values expected to decline
Las Vegas What goes up must come down. Fortune lists Las Vegas dead last in its list of 100 metro markets for housing appreciation in the next two years, predicting a two-year combined decrease in housing values of nearly 13 percent. Local Market Monitor reported a 33 percent increase in appreciation between 2003 and 2004, and then a 14 percent increase by the third quarter of 2005, evidence that prices have begun to cool.
"Las Vegas is a very interesting market," Winzer says. "A lot of people moved in, but construction has kept up with the pace. For a long time until recently, I didn't consider it an overpriced market. I don't think the price increases will last. There's really not an inability to produce new homes out there if there is a demand for it."
Sacramento, Calif. We're not quite sure what Sacramento ever did to anyone, but it showed up on just about everyone's list of has-been markets. Winzer's Local Home Value Ratings rates the market as 59 percent overvalued and Burns Housing Cycle Barometer also lists it as overpriced.
"Sacramento, we think, has topped out," says Gollis of The Concord Group. "There is just so much (housing construction) in the pipeline. It's a steady-as-she goes market and has always had consistent growth, but we think the land market has gotten ahead of itself."
Phoenix The bigger they are, the harder they fall, and Phoenix is the largest housing market in the country in terms of new construction. It's been running at 65,000 new units per year, with housing appreciation increasing at rates of nearly 30 percent per year.
"You can't sustain 30 percent increases a year for very long," Winzer says. "Of all the 100 markets we review, we think if you're an investor in Phoenix, you should sell, because vacancy rates are already pretty high." Gollis says his firm has been studying the market carefully and doesn't like what it sees. "It's had an incredibly unusual amount of growth," he says. "The land market has accelerated dramatically and the lot price as percentage of the home price has gone up significantly. We have some concerns about going long in Phoenix."
Boston This one is in Winzer's backyard, his firm is based in Wellesley, Mass., so he sees what is happening there every day.
"Until about a year ago, homes would go on sale and be gone in a week," he says. "Now they're sitting on the market for a year." He doesn't see the prices dropping rapidly here -- or in any market, for that matter -- because while real estate prices escalate rapidly, they drop slowly.
"In markets that are well-overpriced, prices don't really fall because people just won't sell," he says. "The adjustment mechanism is skewed by people's emotions getting involved. People will grit their teeth and hang on as long as they can to get the price they want."
They might not be able to hang on for long. Burns ranks Boston fourth on his list of markets likely looking at a bubble; Winzer's analysis indicates the market is 33 percent overvalued.
Los Angeles The City of Angels has been described as the poster child for how a lack of new housing near employment centers can hurt an economy. Affordable housing has been an issue in the market for years. It's ranked as one of the least affordable places in the country to live, with housing prices consuming 91 percent of income, according to statistics from John Burns Real Estate Consulting. The median price of an existing single-family home was $568,000 at the end of 2005, the National Association of Realtors reports. Plus, job growth is virtually flat. Together, it's cause for real estate market consultant Gollis to predict that the prices for California coastal markets are topping out in single-family homes. Fortune predicts a drop-off of nearly 8 percent in housing prices in the next two years, putting it in 95th out of 100 markets for growth.
Naples, Fla. At 72 percent, Naples is No. 2 on Local Market Monitor's list of overvalued markets in the country (Santa Barbara-Santa Maria, Calif., is No. 1 at 86 percent overvalued). In actual pricing, it outpaces other Florida markets by a good $100,000 margin. Plus, there is an abundance of more affordably priced options for buyers within a short driving distance. It is no understatement that entire cities are being built nearby. "The markets that are the most overvalued are the ones at greatest risk of a substantial correction," Winzer says. "Naples is at the top of that."
Miami/Ft. Lauderdale, Fla. Rapid, dramatic price increases over the past two years -- and an extraordinary amount of new products being built in the condo market -- is the reason many real estate market analysts think this market just can't sustain much more in terms of price increases. The market probably won't decline, they say, because the region remains attractive to South American and European buyers, but there just isn't sufficient demand to absorb the entire available inventory. Plus, according to NAR research, affordability is an issue in the market, calling the home price to income ratio "unfavorable."
Edison and Newark, N.J. As far as the real estate analysts are concerned, these two cities have pretty big targets on them for a decline in appreciation. John Burns Real Estate Consulting ranks Edison seventh -- ahead of Los Angeles, Miami and Washington, D.C., -- as a market facing a potential housing bubble. It gives Newark an F on its local market grading scale, attributable largely to the loss of several thousand jobs and the highest housing-cost-to-income percentage in the state's metro markets. Fortune predicts a very modest 1.2 percent gain in housing appreciation this year for Edison that would be wiped out in 2007 by a loss of 2.9 percent. The situation is similar in Newark, where Fortune suggests a 1.5 percent increase this year will be canceled out by a 1.8 percent loss the following year.
Nassau/Suffolk, N.Y. Otherwise known as Long Island, this market is No. 2 in the country on real estate consultant John Burns' list of locations facing a potential housing bubble. (Modesto, Calif., has the top spot.) Similarly, Fortune predicts a loss of about 6 percent in housing values over the next two years.
]]>Here is a the monthly round up for all the related news to Spain´s proprety market. If you need further information then visit Mark´s site.
]]> The wrecking ball WILL swing in Marbella The President of Andalusia - Manuel Chaves - has reiterated his administration's intention to demolish projects in the municipality of Marbella that have been illegally built on land reserved for public installations or green areas. If the regional government of Andalusia were to go through with this, it could affect some 60 of the 300 projects currently under judicial review. However, it is unlikely that the decision to demolish any illegally built properties will be taken before Marbella's municipal elections in 2007.Euribor is calculated using the European Central Bank's (ECB) base rate. The ECB surprised the markets by leaving the Euro-zone base rate unchanged at 2.5% in April. The markets had been expecting a 0.25% increase from 2.5% to 2.75%. Nevertheless, Jean Claude Trichet, President of the ECB, has made it clear that we should expect rate tightening to continue for the time being, despite this temporary pause in April. Despite the recent increase in the base rate, Nicolás Garganas - one of the bank's board members - described the present low level of base rates as "far from normal". The next opportunity to increase base rates will be at the beginning of June 2006.
Also in April: Jaime Caruana - Governor of the Bank of Spain - suggested reforming Spain's land laws to reduce the pressure on property prices caused by speculation with development land. Caruana also noted that, for the time being, Spanish households are still not struggling to meet their mortgage repayments, despite the recent increases in Euribor. Spain's Foundation of Savings Banks (Funcas) has forecast that Spanish property price inflation will decline gradually, and that there will be no 'hard landing' in the absence of a serious external shock leading to an enormous increase in interest rates. Analistas Financieros Internacionales (AFI), for its part, states that the property-related risks to the economy are moderate, whilst expecting property prices to continue increasing due to strong demand.
Half of the arrests were made in Marbella and the rest in Madrid and Murcia, while García Marcos was detained at Malaga Airport as soon as she stepped off a plane from Russia. The police investigation has focused on corruption connected with town planning and the consequent laundering of money gained illegally. Embezzlement, bribery and influence peddling are among the possible charges.
According to the investigation Juan Antonio Roca, who apparently has been holding the reins to Marbella Town Hall from a back seat, earned his illegal income from deals involving the redesignation of land and building licences, paying the town councillors for their cooperation. On Wednesday the police searched 27 properties including municipal offices, private residences and business premises.
Marisol Yagüe was the first to fall, soon after 9 a.m., when the police arrived at her home in Xarblanca-Park where she was convalescing after an operation (to remove a cyst from her back according to relatives; or an intervention of a more aesthetic nature according to other sources). After searching the premises the police left with two computers and a bag full of papers.
Juan Antonio Roca was arrested on his estate in Jimena de la Frontera (Cadiz) and was brought to his home in Marbella which was also searched before the alleged ringleader of Marbella corruption was taken to the Provincial Police Station in Malaga.
Meanwhile the police (a total of 320 officers took part in Wednesday’s operation) took over the Town Hall building as well as the Planning offices and the Local Police station, where extensive searches took place. After nine and a half hours the officers emerged from the Planning building with boxes of documents and computers.
Also as part of the investigation around a thousand bank accounts have been frozen, distraint orders have been placed on a number of properties, luxury vehicles and works of art, and a substantial sum of cash has been seized. As well as in Marbella searches were carried out in Malaga, Madrid, Murcia, Cadiz and Huelva.
Meanwhile in the absence of the Yagüe, the councillor and former Atlético de Madrid footballer, Tomás Reñones, is acting Mayor. On Wednesday the Town Hall issued a communique expressing its support for the Mayor, adding that it would fully collaborate with the course of justice.
Residents call for resignation
The people of Marbella were witness on Wednesday to yet another police raid in the town, with the scandal this time being at the heart of the Town Hall. During the day curious onlookers gathered outside the main scenes of the action.
Local residents groups and political parties were quick to call for the local people to express their disgust at the activities of their local leaders, by attending the demonstration organised for yesterday evening. The protest was planned by a lobby group a month ago to call for the resignation of the team running the Town Hall but Wednesday’s events encouraged more people to attend, under the slogan “Against corruption. Resignation”.
Here is a the monthly round up for all the related news to Spain´s proprety market. If you need further information then visit Mark´s site.
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.
Barcelona, San Sebastian and Madrid still the most expensive
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).
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.
Two thirds of promoters in Madrid fail to live up to their promises
A new study by the Spanish consumer protection organisation Fuci reveals that only a third of developers in Madrid are meticulous about delivering on the promises made in leaflets and brochures. The study shows that common problems include vague specifications, vague delivery dates, a failure to specify whether sizes quoted are for useable or built areas, and 'real' prices that are only correct in 85% of cases.
© Mark Stucklin / Spanish Property Insight 2006
News provided by Spanish Property Insight
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]]>The director general of the Mediterranean-Andalusian Water Board himself, Antonio Rodríguez Leal, makes it quite plain that the demand for water in recent years “is huge and quite unsustainable”. Moreover, in addition to the water used from the reservoirs, there is also the supply extracted from wells; on the Costa del Sol alone last year 30 cubic hectometres were used from this source. Then there is the volume provided by Marbella desalination plant: this can provide 20 cubic hectometres a year.
In addition there is the water provided by wells in the Guadalhorce, Antequera and Axarquía areas. The volumes are just beginning to be known under the regional drought decree by which owners are obliged to report the amount supplied.
But it is not hard to explain why water consumption has risen substantially. The population of the province of Malaga has grown by about 175,000 people in the last five years, according to the National Institute of Statistics. And that is not all; a large number of people living in the province are not registered. Since so many of them do not put their names down at their local town hall it is almost impossible to know how many foreigners there are living here, whether all year round or for long periods. It is even harder to ascertain the figure in the case of foreigners from other countries in the EU, as there is no frontier control. Another of the great consumers of water is farming. But the number of hectares of irrigated land has not risen. So it is clear that the exorbitant rise in water consumption is due to the proliferation of high class housing developments, with green areas, swimming-pools and golf courses.
If to all this is added the fact that in the last ten years little new water infrastructure has been created (the exceptions are the Casasola water reservoir, which in any case, is not yet in use, and the Marbella desalination plant), and very little recycled waste water is used for watering, it is obvious why the current drought is putting the province in a tight spot.
Antonio Rodríguez Leal insists that the rise in consumption has gone hand in hand with the growth in population. That is why, he says, the only way to find out how many people are living in the province would be to calculate the number of tons of refuse treated in a year and divide it by 1.8 kilos - the average amount of rubbish created per person per day. So the key finally to ascertaining the number of people who use water in the province of Malaga may lie in the rubbish.
Nevertheless, another factor that reflects the situation very well is the pace at which new housing has gone up. The number of resident foreigners who live in their own homes in the province rose to 1,137,000 in 2004, according to the Andalusian Federation of Developers and Residential Tourism.
In a situation like this the only way out is the creation of desalination plants, the same as in California, and reaching “zero waste”, in other words, the re-use of all waste water, from whatever source, for irrigating the land.
Water consumption
Marbella:
Aquagest (supplying the town and most residents)
2000: 9.7 cubic hectometres (47,000 accounts)
2005: 11.8 cubic hectometres (59,000 accounts). Consumption rose by 18 per cent.
Acosol (supplying developments and golf courses)
2000: 8.1 cubic hectometres
2005: 25.7 hm3 (consumption tripled in five years.)
Malaga:
Emasa (supplying residents)
2000: 27.8 hm3 (610,000 estimated inhabitants)
2005: 30.65 hm3 (640,000 estimated inhabitants). Consumption rose by ten per cent.
Emasa (industrial use)
2000: 8.3 hm3
2005: 9.4 hm3 (ten per cent growth)
Vélez-Málaga
Aqualia (for residents)
2000: 5.1 cubic hectometres (21,000 accounts)
2005: 6.2 hm3 (28,800 accounts) A rise of18 per cent. In this case the municipal water company says that although the number of accounts has grown vastly, in most cases the new ones are for second homes - and the owners are, therefore, absent for long periods of the year.
Benalmádena
Aqualia (residents)
2000: 7.6 hm3 (77,000 inhabitants)
2005: 10.5 hm3 (120,000 inhabitants). Consumption rose by 28 per cent.
Mediterranean Andalusian Water Board
Consumption on the Costa and in Malaga:
2000: 121.2 hm3
2005: 148 hm3 (plus 30 hm3 from wells on the coast, and another 20 hm3 from Marbella desalination plant) What swells
the seaThe re-use of all waste water is one of the options that has, as yet, been little explored in the province of Malaga. However this situation will shortly be rectified as the treatment works at Peñón del Cuervo and Guadalhorce will soon include plants to treat waste water that currently flows into the sea at a rate of 2,500 litres a second. To be more precise, the former plant “wastes” 2,000 litres a second and the latter 500 litres.
This waste water could be used for watering gardens if just one more step were added to the purification process. It could also be used for agriculture. In fact this was going to be done in the álora area some years ago. One of the reasons why it was not carried out in the end was because water treated in this way costs six times more than the water supplied to farmers from the Guadalhorce reservoirs area.
It must not be forgotten that farming is the activity that accounts for the greatest consumption of water. Moreover, because of the poor condition of the pipelines for watering in the Guadalhorce area more than 50 per cent of the supply is lost in leakages. This recycled sewage could also be used for watering golf courses.
These statistics always come to light when drought is severe, but they are shoved to one side once the reservoirs are full again. It is as if everybody, the authorities included, forgot that the province of Malaga periodically suffers from drought.
The Junta has stepped in as the local councils have done nothing. The Department of Public Works at the Andalusian Government has ordered the water and electricity supplies to be cut off at two building sites, one in the municipality of Alfarnatejo and one in Benahavís, both of which are in the province of Malaga, as they contravene planning regulations.
]]> The Junta de Andalucía has written to the two town halls for the order to be passed on to the companies supplying the public utilities.In Alfarnatejo the building site affected is in the hands of developers who have had planning permission since February 2005 for a camp site at El Cortijuelo. However non-building land at this site has been illegally divided up into plots with permanent prefabricated homes on them. These are on sale, according to the Andalusian Government. The Junta justifies its intervention by saying that “it is because the council is doing nothing”. The Junta de Andalucía says that to date 27 prefabricated houses have been erected on concrete slabs and metres have been installed for another 27 houses.
In Benahavís the steps taken by the regional Government affect some buildings to be erected by the developer Monte Halcones in an area programmed for development known as Briján. The work being carried out at the spot consists of the removal of part of the mountainside, the movement of earth and the creation of tracks for which no planning permission has been granted.
Although the Town Hall decreed that the work should be brought to a standstill and it started taking steps to penalise the developer, nothing was done to ensure that the planning laws were kept, according to the Junta de Andalucía.
The town planning agreements that Antequera Town Hall demanded from private developers who are interested in developing re-classified land under the new master town plan have now been signed.
The Mayor of Antequera, Ricardo Millán, made the announcement last week, adding that with these agreements the development of 70 per cent of this new building land will be guaranteed.
In order to secure the land the developers had to hand over collateral to the Town Hall which included, among other elements, three per cent of the cost of developing the land. It has also been stipulated that in a maximum of two years from the final passing of the new master town plan, this land must already be being developed.
A judge in Malaga has charged the owners of the development and real estate company Aifos. J.R.C. and his wife, M.T.M., with fraud after 16 clients reported that their contracts had not been respected.
According to a judicial decree dated February 27th, “there are sufficient reasons for considering that this is a case of a crime of fraud”, as this couple “sold to third parties, via different companies, numerous properties allegedly under construction when they did not even have the municipal licence to start building work, and this formed part of a pre-conceived plan to obtain capital illicitly”.
According to sources at the Association of Real Estate Market Users (Ausmin) and the Ríos Escobar lawyers’ office, the legal representatives of most of the property purchasers who have reported Aifos to the authorities, the case goes back to 2001. It could affect over 500 people purchasing property in Rincón de la Victoria, Torrox, Mijas and Fuengirola.
Through a spokesman the developers said that the delay in obtaining building licences and, therefore, in the construction of the buildings in question, was due to town planning problems, which are “on the way to being solved” in Rincón de la Victoria as the new master town plan is about to be passed. At the same time, they said that the company had put all the money handed over by the purchasers who had complained into a special account, along with the interest accrued.
According to Aifos the problem only affects “two or three developments” in Rincón de la Victoria.
The spokesman said that most purchasers had chosen to wait until the problem was solved and their property was ready although they had been offered their money back plus the legal interest or a similar property in a nearby development.
The case came to light in February 2004 after a married couple built a two-storey house, each floor occupying 200 square metres, despite having applied for planning permission for a warehouse on the land. López said, for his part, that although he did not remember this particular case, the council investigated all the building activities that were outside the law.
The Public Prosecutor is also calling for six months’ imprisonment and a fine for the woman who applied for planning permission for the house and a year’s imprisonment and a fine for her husband, who was, allegedly, in charge of the building work.
The Provincial Department of Public Works and Transport in Malaga issued a statement last week about the large amount of illegal property in the municipality of Cómpeta. The department said that the Town Hall, run by the Partido Popular (PP), “is issuing planning permission and passing schemes for land that it is not classified as being for building, despite being in possession of reports from the Andalusian Government stating that it opposes this conduct”.
The department has described the situation as “cause for concern”, but the Mayor stated that all the licences issued by the Town Hall had been passed at a town council meeting and were accompanied by favourable reports from the relevant technical experts.
López pointed out that the issuing of building licences is the Town Hall’s competence and not the Andalusian Government’s, although the Town Hall sends all these licences to the regional body.
According to the provincial department, the licences and schemes for building work that have been rejected by the Andalusian authorities, but which the council is allowing to go ahead, are practically all for single family homes on non-building country land in the municipality.
The department started investigating 29 cases of alleged building offences in Cómpeta last year. The Town Hall was instructed to start proceedings to penalise those involved, and to adhere to the town planning laws in six of these cases. In addition, in another 15 cases, the order was to check the planning permission granted as it had been issued illegally.
In total the provincial department contested 60 building licences in Cómpeta last year, “as the Town Hall is doing nothing with respect to this”.
Moreover, so far this year the department has contested, in a court of law, nine building licences granted by Cómpeta council for the construction of houses on non-building land. The Town Hall has, once again, been instructed to start proceedings to penalise those involved in five cases. In addition, in another 20 cases, an order has, once again, been given to check the planning permission granted as it has been issued illegally.
Property growth forecasts by leading Spanish banks were spot-on at 12 per cent for last year and they are forecasting the same again for 2006.
]]> House prices in Spain rose by 12.8 per cent in 2005, according to the latest official figures from the Government - who welcomed the first general slowdown in the property boom for four years.New government figures for new build and resale homes showed the increase was significantly lower than in 2004, when house prices went up by 17.2 per cent. Not since 2001, when house prices went up by 11.1 per cent, has the average yearly increase been so comparatively low.
Figures showed that up to December 31, 2005, the average house price across the whole of Spain including all in-demand second coastal areas was EUR 1,824 per square metre.
Rafael Pacheco, director general of architecture in the Spanish Ministry of Housing, said the figures were as expected and more reasonable house prices should follow in 2006.
The official figures match similar reports by the Spanish Real Estate Society, which said recently prices rose by 10 per cent last year, but proved the accuracy of forecasts of leading banks CAM and Caja Murcia who said they expected 12 per cent for 2005 and are now forecasting a similar growth for 2006.
Based on the latest figures, online specialists PropertyInSpain.Net forecast the lead price for 2006 for a typical 2-bed, 2-bath apartment in prime second home locations would be EUR 166,000 (£113,000).
"That is still affordable for new buyers as the mortgage interest rate is still around 3 per cent and last year's buyers will be delighted to learn their investment property has increased by over 12 per cent - despite seemingly better deals from the so-called rival emergent countries," said Terry Walker from PropertyInSpain.Net.
Hotspots for 2005 were the Valencia region, which saw the highest price rise last year with 16.5 per cent, followed by Galicia and Castilla-La Mancha, where average increases were 15.1 per cent and 14.6 per cent respectively.
PropertyInSpain.Net established an affiliate office in Valencia in 2005 and plan to offer 20,000 new homes in the Costa Azahar - tipped for exceptional property growth - following sales and marketing agreements with the area’s leading developers.
Cantabria saw the lowest increase of 6.6 per cent, followed by Castilla y León with 7.5 per cent, then Catalonia at 8.8 per cent. The most expensive place in Spain is Madrid, where average prices are EUR 2,748 per square metre. In the Basque Country the figure is 2,585, while in Catalonia it stands at EUR 2,092 and in the Balearic Islands the price was EU 2,025.
]]>Government statistics show that house prices in Spain increased by an average of 12.8 per cent in 2005. This is admittedly down on the 17.2 per cent increase in 2004, but it has been welcomed by government officials and investors alike.
The director general of Architecture and Housing Policy, Rafael Pacheco, has celebrated "more reasonable" increases while property investors appreciate that a 12.8 per cent rise shows that the market is remaining strong and has avoided a crash.
Furthermore, with developing property markets such as Bulgaria providing increased competition, Spain now has to prove it can remain competitive, so the more sensible price increases may prove to be beneficial to the long-term strength of property investment within the country.
Significantly, investment in Spanish property is also likely to be made more desirable because of the decision by the European Commission to refer the Spanish government to the Court of Justice because of allegations of prejudiced property tax laws.
At the moment, Spanish residents are required to pay 15 per cent tax on gains from property sales, whereas non-residents are taxed at rate of 35 per cent. If the Court of Justice rules that this is indeed discriminatory, investors from abroad will look forward to much lower taxation levels which will clearly benefit those hoping to sell on properties in Spain.
According to propertyinspain.net, it is currently an extremely good time to invest in a Spanish house, with high construction standards across the country creating a good reputation and making the process of reselling much easier.
Predicting that the lead price for a typical two-bed, two-bath apartment in a prime location will be around £113,000 during 2006, the company's Terry Walker has said conditions for buying a house or building a property portfolio are ideal.
"That is still very affordable for new buyers as the mortgage interest rate remains around three per cent, which when factoring in the still low inflation of Spain is actually much less in real terms," he said.
"The typical second home development is also better value as they are designed and built better, with specification and standards raised every year to a much higher level. Marble finishes, added air-con, two bathrooms, increased security and smart home technology are becoming the norm, while sunshine space such as terraces, balconies and solariums are bigger by demand," he added.
The likes of Bulgaria and Cyprus will inevitably chip away at Spain's dominance of the market, but UK investors have shown few signs of turning away from their favourite property investment country. With Barcelona and Valencia continuing to attract interest and the tourist industry in the Costa del Azahar growing in popularity each year, it would seem Spanish mortgages will remain prevalent for a long time.
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