Six Years of Spanish Property
October 6th, 2009
In Spanish Economy Showing Signs of Recovery, the Bank of Spain attempts to make soothing noises about various negative indicators slowing down. However, those indicators are still worsening and Edward Hugh concludes by calling for Spanish president Zapatero to be replaced by someone with a more pragmatic and commercial approach.
These thoughts are echoed in Zapatero: Conflict With Spanish Businesses as he continues to side with the unions regarding relaxed employment legislation. In doing so, he may keep the union vote and lose that of the rest of the country.
The bottom line is that Spain’s trade deficit is growing – because Spanish exports are not competitive – because Spanish labour costs and productivity are out of whack.
I predict that Zapatero will soon be replaced, labour laws revised and, temporarily, Spanish unemployment will increase even more. Hopefully, as productivity is improved, Spain’s exports will increase and unemployment will decrease. That’s my theory any way.
All of this has a bearing on the Spanish property market because it rises and falls in line with the economy itself.
On the housing front, the National Institute of Statistics, released their Q2 2009 figures this week as reported in Spanish Property Prices Down 7.7% Q2 2009. Again, there is much doubt about the accuracy of their figures as they seem to bear little relation to what’s happening in the ‘real world’.
Our own Spanish House Price Index for Q3 2009 was also released last week, but it also has little correlation with reality as vendors continue to advertise property at unrealistically high prices.
What property vendors are doing individually, Spanish banks are doing collectively. In Spanish Banks Avoid Property Losses, Spain’s major banks continue to value repossessed assets above current market value in a paper exercise designed to make their balance sheets appear healthier.
If you or I did that with our household budgets, it would be clear that we were deluding ourselves and that, one day, our self-deception would return to haunt us. A number of economic commentators believe that day is also looming for Spanish banks.
Last, commenting on the INE Q2 house price data, Spanish economists conclude that Spanish Property Prices Not Yet at Bottom.
In other news, Kyero turned 6 last week (September 25th to be precise), and we added a couple of articles from Peter Christian, author of Streetwise Spanish, about Driving in Spain and Getting away for the weekend in Spain – I hope you enjoy them.
I wonder what the next six years have in store for the Spanish property market?
Martin Dell, Kyero.com
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