In 2006 the real estate market peak in Spain. In eight years time, house prices have quadrupled in some locations and the annual production of houses and apartments increased to over 700,000 units. By comparison, this is more than the total production of Germany, Great Britain and France combined. Since then, prices according to official sources declined by about 12%, while unofficial sources, however, speak of an average price reduction of at least 30%. The question now is, from the last estimate, whether the time is an investment in property in Spain to consider? First some facts:
1. The offer
Estimates of the number of houses and apartments that are vacant vary considerably. Again, official sources speak of a stock of about one million units, while nationally operating agency of the double speak. He added that certainly 300,000 units under construction. At the current sales pace, even the official stock brokers enough to the 7 to 8 years trying to keep.
2. The price level
The messages that buying real estate prices have fallen about 30%, cause potential buyers jitters and obviously necessary for some of them already enough to get on. Calculating back from the record prices of 2006 seems a discount of 30% natural lot. Prerequisite for this thinking is that the principle of reasonable and healthy 2006 eight. The latter is now very difficult, since the peak of each cycle is created under the influence of extreme optimism, supported by an irresponsible banking sector, coupled with historically low mortgage interest rates up to 120% of the purchase price.
3. Houses Cycle
Supporters of the 18-year business cycle that the last cycle started around 1992, culminating in a peak in 2006/2007, after four years of the recession cycle perfect. This implies that in 2011 the starting year for the next cycle. Economist Fred Harrison 300 years history has been studied to verify this theory and found that only under extreme circumstances such as war, the normal 18-year cycle is interrupted. The crisis of 2008, however, is often compared to war.
4. Accredit
Each tree house is associated with broad and flexible loans. The crisis of 2008 abruptly put a stop to it and it does not appear that the restoration of credit around the corner. There are indeed increasing capital requirements for banks. Reason is partly that Spanish banks particularly exposed to the consequences of further price declines and thus require a larger buffer.
5. Strong hands?
Much of the housing stock is owned by banks and supervisors, with the help of the government and the ECB has so far been able to keep the price somewhat. The festering crisis sovereignty (insolvent countries) that can sometimes support a rapid end. Then banks and supervisors have difficulty renewing their loans, making sales is essential.
6. Customers
To what extent can we expect a strong recovery in demand? Foreigners in the past could rely on the strong domestic market, for example, second mortgages possible. The credit lines are tightened internationally. In domestic demand due to the persistent high unemployment can not expect much. Only at a dramatically lower price level homeownership again the liberty costs.
In summary, we can say that given the huge stocks, still historically high prices, tough credit conditions and the absence of willing buyers a recovery of the real estate market in Spain is still far away and that further price reductions are needed to recovery. The cycle in this difficult time argument is a weak argument.