Spanish Property: And Now for the Good News
March 16th, 2010
In a bumper news week, there’s good and bad news for Spain. Let’s get the bad news out of the way first – and end on a high.
Remember my soapbox rant last week about how public sector striking will only add to Spain’s woes? Well, the public won, and the government caved in over pension reforms.
This is particularly bad news for Spain – who already have precious-few financial tools left to deal with their twin problems of mounting debt and growing unemployment. I have no doubt that whatever they next suggest as a solution will be opposed – and most likely defeated.
Unsurprisingly, buying into Spanish government debt via bonds is now seen as a risky business. Advising investors, a Merrill Lynch spokesman said:
It’s going to take a very long time – half a generation – for Spain to fix the structural issues they have. Rather than a spectacular short-term event, a more likely outcome is a death-by-a-thousand-cuts-type scenario.
My prediction is that Mr Zapatero’s aversion to taking on the unions will cost him at election time. The incoming government will make drastic changes – and suffer temporary unpopularity by doing so – and Spain will eventually enjoy a more sustainable foundation for financial growth. Until then, it’s “death-by-a-thousand-cuts” for Mr Zapatero and the nation he’s supposed to be leading.
And now for the good news – and there is a fair bit of it. Last week I boldly proclaimed that we had already passed the bottom of the Spanish property market. It seems that I’m not the only one who thinks so.
In Spanish Property Recovery Begins, Mark Stucklin adds some data to that assertion but warns that the recovery is not happening uniformly throughout Spain, nor across all types of property.
Mark’s summary is backed up by the latest TINSA house valuation trend too. No-one is predicting a spectacular U-turn in the fortunes of Spanish property – and you wouldn’t believe them if they did. Even so, any kind of a recovery is welcome news right now.
There are also hints that Spain’s building societies are playing their part in the fragile recovery. An update on lending in Spain provides the cheery news that:
Spanish Banks are slowly relaxing their lending criteria with one or two offering more attractive deals and higher LTV’s.
And finally, in the fairly unlikely event that you’re a higher rate tax payer and employed by a Spanish company, you can now benefit from the same tax breaks as David Beckham.
Martin Dell, Kyero.com
