The property strain in Spain

The G20 circus has left town with a trillion dollar legacy to re-stoke the dying embers of world trade, after failing to achieve this in the earlier multi-trillion dollar “fiscal stimulus”. Useless banks benefitted from the first effort, but did little apart from boosting their own coffers and handing chunks of cash over as a pension to the world’s worst banker, Sir Fred Win-win.

Meanwhile, the property market continues to decline in the UK and elsewhere. That’s the same property market that’s supposed to promotes universal feel good for owners and gets them spending down the High Street or bickering over prices, fixtures and fittings as buyers and sellers struggle to get a deal done and dusted.

We are, of course, in a property crash - the consequences of which are likely to last for some years. Nothing emerging from the G20 summit suggests there will be any direct help to kick-start the market, nor was there any suggestion of when the crash might end.

No sooner had Air Force One left Stansted Airport than the fallen Halifax bank announced a further decline in UK property prices, despite, the previous day, a rival claiming prices nudged upwards. On their recent performance and current credibility, what would they know anyway?

Over in Spain the property crash has hit developers, promoters, agents and businesses in many unrelated industries. Cafes and bars are selling fewer café con leches, restaurants less food, TV/newspapers less advertising and El Corte Inglese less over-priced fresh fruit. Property is at the core of personal wealth and the housing crash is a big strain in Spain

The UK property crisis is due to a lack of market confidence and useless banks hoarding their bail-out billions and refusing to offer a decent mortgage service after driving up the prices for a decade with irresponsible lending practises. They were aided and abetted by the Bank of England and the FSA.

The Bank of Spain kept Spain’s banks away from toxic debt and warned for the last five years property prices were 25 percent too high. The property crash was caused by a range of factors from massive over building, a misunderstanding of what the market wants/needs and the world credit crunch.

There was an element of graft and corruption in some town halls where mayors allowed development where no development should have been allowed. Now the Spanish Government is cleaning out the stables, confidence is already returning to the market where savvy Russians and sun-starved north Europeans are grabbing the bargains that come from Spanish bank repossessions and distressed sales from over-stretched owners.

It may be that the strain in Spain will be over long before the UK market recovers and the magic potion of sun, sand, sangria and safe property bargains will attract more buyers from Easter – traditional start point of the property sales – onwards.

Doubtless, UK buyers will be trying to elbow their way to the front of the queues to grab their share of bargains before prices start to rise again…