The European Commission today approved the holding of five Spanish train corridors included in the design of the trans-European network should be operational by 2030. The Mediterranean Corridor, which originally included the province of Malaga, now appears to go from Almeria and Sevilla across the north of Andalucia to Antequera / Bobadilla.

The Mediterranean corridor, with an investment of 19,424 million euros, and is constituted as a multi-use corridor, both road and rail, which connect the French border to the main transport nodes in four regions of Spain along the Mediterranean Coast.

This set of infrastructure projects will connect the French border with Algeciras, via Barcelona, Valencia, Cartagena and Almeria, and will have a transverse axis between Granada and Antequera, where it forks to finish in Seville. All major ports along the mediterrean will connect to the new network (Barcelona, Tarragona, Castellón, Sagunto, Valencia, Alicante, Cartagena, Almeria, Malaga and Algeciras, etc.) and will feature the development of the Guadalquivir river corridor to the port of Sevilla

Along the Mediterranean Corridor, the European Commission has also approved the Central Corridor, the Atlantic Cantabrian-Mediterranean Corridor and the Atlantic Mediterranean Corridor. With these investments, Spain will get to perform the necessary infrastructure works to achieve a comprehensive network for both passenger and freight transport.

In all, Spain will invest 49,800 million euros between 2014-2020, in carrying out the works.

Development sources have indicated that this investment will take place under the state budget will mean an average cost of 7,000 million euros annually, which must be added between 10 and 20% of 31,700 million euros that contribute to a Europe-wide European Funds.

Spanish Article: Diario Sur

Europe is facing economic meltdown but the crisis hasn’t deterred British buyers from snapping up properties in Spain.

Italy, Greece and Bulgaria are also attracting British buyers seeking a bargain. But wherever you are buying, the advice is the same – do your homework to avoid pitfalls.

Mortgage funding
One of the effects of the global banking crisis has been that mortgages are more difficult to secure and borrowers must put down a bigger deposit to get a loan from banks overseas.

The growing debt crisis in recent months, particularly in Greece and Italy, has exacerbated the problem. A number of Greek banks have stopped lending for the time being.

Spanish and French banks will lend to those with only a 15 or 20 per cent deposit, but this could be tightened if the financial crisis takes a further turn for the worse in Europe.

Conn says: ‘Historically, European banks have been more conservative than their British counterparts. Britons applying for overseas funds will need a chunky deposit and must provide all relevant paperwork to show income and liabilities.’

Some British lenders allow homeowners to remortgage to fund a holiday home purchase abroad, but it will depend on individual criteria and borrowers will usually still have to have significant equity in their British home, even after they have released the funds, to qualify. For many, an overseas mortgage will be the only option, but rates in Europe and the US are competitive.

Frank Kyle, 32, an engineer in the oil industry, got a bargain when he bought his new holiday home in Murcia, south-eastern Spain, but he had to put down a bigger deposit than he had planned. Frank, from Glasgow, paid 112,000 euros (£97,500) for the two-bedroom property on a popular golf resort and he is confident he bagged a bargain. His neighbour in Murcia paid 170,000 euros for a similar apartment five years ago.

He had hoped to secure the apartment with just a five per cent deposit, but he paid closer to 40 per cent, securing a mortgage from a Spanish bank. Frank’s 4.5 per cent variable loan rate makes his monthly repayments about 378 euros (£326). Almost all banks now require borrowers to take capital repayment rather than interest-only mortgages.

Frank Kyle, 32, an engineer in the oil industry, got a bargain when he bought his new holiday home in Murcia, south-eastern Spain, but he had to put down a bigger deposit than he had planned. Frank, from Glasgow, paid 112,000 euros (£97,500) for the two-bedroom property on a popular golf resort and he is confident he bagged a bargain. His neighbour in Murcia paid 170,000 euros for a similar apartment five years ago.

He had hoped to secure the apartment with just a five per cent deposit, but he paid closer to 40 per cent, securing a mortgage from a Spanish bank. Frank’s 4.5 per cent variable loan rate makes his monthly repayments about 378 euros (£326). Almost all banks now require borrowers to take capital repayment rather than interest-only mortgages.

‘I am often away on oil rigs and ships, so I have never bought property in Britain,’ he says. ‘I’m hoping to get out to Murcia at least four times a year. Hopefully, I’ll get my golf handicap down to single figures.

‘My plan is to hold on to the apartment long term so I’m not worried about short-term dips in prices or the volatile euro. I may be working for a French company soon too and it will pay me in euros, which removes the currency risk on repayments.’

Watch out for the currency risks
For many British buyers a euro loan will present currency risk if they are paid income in sterling. This is something buyers must bear in mind, particularly in the current uncertain economic climate.

Most overseas mortgages, like Frank’s, are also on a variable rate and not fixed, so buyers must be aware that monthly repayments could rise.

Typical mortgage rates in Spain and France are between three and four per cent variable. But the rate offered will always finandepend on a borrower’s circumstances.

Exchange rate changes are a cause for concern, especially for those about to make a large transaction. But buyers can lock into a rate ahead of a property purchase.

Full article

The decree on the illegal properties was meant to have been ready within six months of its announcement back in March but is still not ready and the provincial delegate for Public Works and Housing has stated that will not be ready until November, more than likely December.

So there are still around 50,000 home owners of illegal properties in Andalucía that will have to wait several more months before the new regulations come into force. Once they are it is hoped they will be able to start the process of legalising their properties.

According to the Junta de Andalusia’s legal department, they have only started to study the recommendations recently as the information was presented to them in July. It is expected to take several more months as the relevant legal experts have to make sure that the new decree will not contravene any existing documentation. Once they have confirmed this, it will then more onto the Junta’s Government Committee to approve it.

In the meantime, while the affected property owners wait, they are still in the situation where they do not even know is the new decree will even benefit them. Although a minority, there are property owners who cannot show any documents showing they bought in good faith. If these properties comply with the safety and habitation conditions and were built long enough ago that the period of legal action has expired, then those properties will be moved into a special property classification.

Unfortunately, although I hope I am wrong, I do not think this will end well for all 50,000 property owners.

Regards
Andrew Bellés

On a national level property sales decrease in May by 18.3%, due to a sharp decrease in new build sales. Malaga province has been has been at the other extreme and seen an 18% increase in new build sales.

Compared to 2010, the province of Malaga has seen total property sales increase in January by 6%, February 1.8%, March a 9.7% increase and May a 7.8% increase. The only aberration was April which saw a drop of 24.5% drop compared to the previous year.

These decreases followed a positive start to the year with February registering an increase of 10.5% and a 19.6% in January, which broke the decreases of the last four months of 2010.

As of May, sales along the Costa del Sol are up 0.8% compared to the same period in 2010.

Of the 30 797 residential sales transactions recorded in May, 7.3% were social housing (VPOs), compared to 13.4% for all of Spain.

Regards
Andrew Bellés

This is the third consecutive month where sales of Spanish properties have decreased year on year with April suffering a drop of 29.7% and 11.9% in March.

These decreases followed a positive start to the year with February registering an increase of 10.5% and a 19.6% in January, which broke the decreases of the last four months of 2010.

On a positive note, sales in May have grown by 27.8% compared to April.

Of the 30 797 residential sales transactions recorded in May, 13.4% were social housing (VPOs).

Regards
Andrew Bellés

According to the Ministry of Housing the accumulated stock of new properties on the market decreased at the end of 2010 by 0.08%, the first decrease seen since 2005. It is hoped there will see further improvements in 2011 but the high level of unemployment and the lack of lending by banks is still handicapping the Spanish property recovery. It also needs to be pointed out that compared to 2010, the first 3 months of this year have seen a decrease of 43.8% in the sale of new builds, not an auspicious start to the year.

Of course we are talking in general and can expect the housing stock to decrease faster in certain areas than in others, with prime locations seeing a higher demand for properties.

It should also be points out that many ‘experts’ have been claiming that it will take between 3 and 5 years for the market to absorb the stock for the last several years.

Regards
Andrew Bellés

ACCUMULATION OF UNSOLD NEW PROPERTIES

The (minor) drop seen in 2010 continues a trend of the last few years which has seen a decreasing amount of new properties coming onto the market. This combined with the increase in Spanish property sales, is what has lead this decrease.

PERCENTAGE CHANGE OF NEW BUILDS ON THE MARKET

The accumulated stock decreased in 12 regions across Spain, notably in Extremadura (-30.17%), Cantabria (-26.08%) and Navarra (- 17.26%).

Currently approximately 50% of all new properties can be found in the 3 regions as of 2010: Valencia (19.35%), Andalusia (16.33%) and Catalonia (15.03%)

TOTAL PROPERTY STOCK BY COMMUNITY

Regards
Andrew Bellés

Some savings banks, such as La Caixa, CAM and Bancaja, are also offering 100% mortgages over 30 or 40 years.

The Bank of Spain figures show that loans exceeding 80% of a home’s value accounted for 11.9% of total loans in 2010, representing a level similar to that of 2008, and around 50,000 of all mortgages granted.

Analysts have interpreted the fact that banks are willing to issue loans they would have trouble selling on as a sign of the pressure some institutions are under to remove direct exposure to homes on their balance sheets.

Families Spend 27.3% of their Income Buying a Home
Spanish families who purchased a home in the first quarter of the year spent 27.3% of their annual gross income on the purchase (counting tax incentives). This figure represents one tenth less than the same period of 2010 and more than seven points less than in 2009, according to latest figures published by the Bank of Spain.

From January 2011, the Government limited tax incentives for the purchase of housing to incomes lower than 17,707.20 euros gross per year and phased them out progressively up to a threshold of 24,107.20 euros gross annually.
However, the Bank of Spain reported that this measure does not affect family aid because, while the average total household income exceeds 24,107.20 euros, estimated respondent income is currently below 17,707.20 euros and it is only when that upper limit is reached that the tax change will have an effect on family aid.

Another interesting fact the Bank of Spain notes is that families who bought a home in the first three months of the year will require 6.5 years of gross income to pay for their apartment or house compared to a peak of 7.6 years which were needed between 2006 and 2007.

Source: kyero.com

Source: Spanishpropertyinsight

Monthly, annually, whichever way you look at it, the Spanish property market had a good month in August (at least by recent standards).

The Spanish property market grew robustly in August, according to the latest figures from the National Institute of Statistics (INE).

Excluding social housing, there were 39,250 house sales in August, up 1pc on July and 26.6pc on the same month last year.
As you can see from the chart above, the market is clearly recovering from a bottom last year, and the second half of the year could be the best since 2007.
In particular, resale properties had a good month in August, with sale up 34pc compared to last year. New build sales were up by a quarter.

The following table shows sales and rates of change in the year to August over the last 4 years.

Despite growth of 12pc this year, the market is still 24pc smaller by transactions than 2008, and 45pc smaller than 2007.

Assume that prices have fallen 20% since 2007, and that means the market is down 56pc by value compared to 2007. August may have been a good month for sales by recent standards, but the Spanish property market is still worth less than half what it was just 3 years ago. That has big implications for the Spanish economy.

And finally, the following table shows you the change in selected regional markets in the year to date. Barcelona is doing best, up 44pc on the same period last year, and Las Palmas in The Canary Islands is doing worst, down 15pc.

Source: Spanishpropertyinsight.com

There are plenty of variations on the theme. But the general argument goes like this: “We live on a small island, our population is growing, and there just aren’t enough houses to go around.”

And the rebound seen in the market last year simply seems to confirm this view. There aren’t enough houses – so you can’t go wrong with bricks and mortar.

The bulls have got it right in one sense. House prices are indeed all about supply and demand. But it’s supply and demand for credit, not houses.

If you want the proof, just look at Spain…

What’s propping up Spanish house prices?

Spain has had a horrendous recession. It’s on the infamous “PIIGS” list of threatened peripheral eurozone countries. It has unemployment of around 20%. And there are myriad horror stories of Britons who bought property in the country only to find that their homes were subject to legal disputes, or simply that their pensions couldn’t sustain them when the pound slumped against the euro.

And yet, just as we’ve seen in the UK, the market seems to have managed to take the strain. In the second quarter of 2010, Spanish property rose by nearly 25% to just under 150,000, according to the Housing Ministry. The rise was driven mainly by growth in “second-hand” home sales – up nearly 50% on the quarter, compared to just a 4.6% rise for new home sales.

That may sound impressive. However, sales are nowhere near their bubble-era peak, when figures would have been more like double that. Yet, the toll on house prices hasn’t reflected this. As Fiona Maharg-Bravo puts it on Breakingviews.com, “the Spanish housing bubble isn’t in a hurry to deflate. Prices have held up and are now just 12% off their 2008 peak.” That’s comparable to Britain – if you use Nationwide figures, we’re around 10% off the 2007 peak price for the average British home (and closer to 16% if you look at Halifax).

Yet there are estimated to be about a million empty new-build homes in Spain. Says the FT, “most experts say it could take another three to four years to absorb surplus stock.” And that’s despite a collapse in the number of homes being built, from 800,000 in 2006 to fewer than 100,000 this year.

So what’s behind the surprising resilience of Spanish prices, if not a physical shortage of property? Obviously there are pockets where things are worse – all those horror stories from expats having to sell at huge discounts, for example.

But by and large, what’s propped up prices in Spain is the same as what saved the British property market from harder falls – interest rates being slashed.

Source: www.moneyweek.com

Out of a total of 168,532 property transfers, 82,623 were actual property sales with the remainder being donations, swaps, inheritance, etc…

According to the INE, property sales are up 2.2% compared to March 2009 and down 5.3% compared to February 2010.

Of the 82,623 property sales, 88.5% corresponded to ‘urban’ properties, of which 37,561 were dwellings. The sale of dwellings has increase by 9.0% year on year and decreased by 8.5% month on month for March 2010.

Of the total dwellings sold, the trend of near parity between new and resale properties appears to be continuing with the level of new builds making up 48.9% of the total sales. With total sales of new build standing at 18,349, this is a decrease year on year of 4% and a month on month decrease of 14.1%. This month on month decrease can be explained due a ‘spike’ in new build completions from the month of February. The resale market has faired better with 19,212 sales in March, a year on year increase of 25.1% and only a drop of 2.3% month on month.

Of the 37,561 urban dwellings sold in March, 10.5% were protected housing. Of the total 33,632 ‘free’ properties that were sold, Andalucía accounted for 19.03% (or 6,343) of the total. Unlike the national statistics, that show an even split between the sale of new build and resales, Andalucía had 54.9% (3963) new build property sales and 45.1% (3256) resales. The higher percentage of new builds in Andalucía as compared to the national statistics can be primarily explained by the ‘property investment’ boom over the last decade.

Regards
Andrew Bellés

But villas and apartments on the Spanish Costas are suddenly hot property again as Britain’s second-home buyers rediscover the attractions of life in southern Spain.

Fresh from a chilly, dismal winter, drawn by falling prices and apparently undaunted by the low sterling-euro exchange rate, a new generation of would-be buyers has descended on Spain, according to the Spanish division of Taylor Wimpey.

Typical holiday home buyers are no longer “stereotype retirees”, the UK’s biggest house builder said. Instead, executives with families who spend an average of 60 days a year in Spain have emerged as the dominant British buyers in a region that enjoyed huge popularity during the credit-fuelled boom years.

Since then, the most oversupplied holiday apartments in Spain have suffered price falls of about 50 per cent. Properties in Palma and Mallorca were among the world’s biggest fallers last year, sliding by 22 per cent and 17 per cent, respectively, according to Knight Frank, the estate agent.

Perhaps in search of a bargain, Rightmove Overseas, the website, said that the number of searches had risen by 60 per cent compared with March last year. Portugal was its most popular search among buyers of holiday homes, it said.

Primelocation.com reported a rise in searches for international property of 72 per cent between February 2009 and 2010, with France recording the biggest annual rise of 113 per cent. Spain remained the most popular country, accounting for 32 per cent of all searches, compared with 29 per cent for France.

Savills’ office in Sotogrande, Andalucia, also said there had been a rise in inquiries from British buyers, even if many were still reluctant to commit to a purchase. James Stewart, head of the division, said: “Prices are coming back for traditional-quality properties but not in the more credit-squeezed areas. Trading is still slow but people are once again having a good look.”

Taylor Wimpey, which has offered discounts of about 30 per cent on some properties, said that 75 per cent of buyers of its apartments, which cost about €200,000 for a two-bedroom flat, were executives aged between 35 and 50 with children. Interest had been strongest in the Costa del Sol, particularly in and around Marbella, as well as the Balearic islands. The group sold one third of its newest development, just outside Marbella, offplan within a month of launching the scheme, a performance that it said was “significantly ahead of expectations”.

A spokesman for Taylor Wimpey, which began developing in Marbella for the first time in three years last month, said: “Marbella is like the South East of England rather than Salford. It was not a volume market and didn’t suffer the same over-development as other areas. Prices, therefore, did not fall as much as in other parts of Spain.” Interest in apartments in the Costa Brava in towns such as Alicante, where oversupply is a bigger problem, had been slower to pick-up.

Revenue at Taylor Wimpey España was largely flat between 2008 and 2009, at £59.8 million and £61 million, respectively, but the division made a narrower operating loss last year, at £1.4 million, compared with £2.4 million in 2008.

‘I LIKE THE WEATHER AND THE LIFESTYLE’

Derek Parrott bought his holiday home in Marbella last July as the pound slumped towards parity with the euro and Britain was in the thick of recession.

But the 61-year-old managing director of a construction company knew that with prices down by 30 or 40 per cent in Spain, there was a deal to be done — and besides, he said, he bought his three-bedroom, €270,000 apartment for the lifestyle, not as an investment.

“I just wanted to spend time there,” he said. “I like the weather and I like the lifestyle. The exchange rate did make me think twice and I went in knowing that prices will now at best remain flat for a while.”

Mr Parrott and his wife have already visited their new holiday home in Los Robles de Los Arqueros half a dozen times and plan to go six or seven times a year. “I particularly like this area. We watched the development go up and I know it has been done properly and is managed properly.

“It is not a development from hell, like you see on the television programmes.”

Times online

Main Results

• The annual variation rate of the HPI is –4.3% in the fourth quarter of 2009, almost three points higher than that registered the previous quarter.

• The interannual variation of new housing increases half a point to –5.1%, thus registering the first increase since the first quarter of 2007.

• Second-hand housing registers an increase of almost five points in the annual rate, from –8.3% to –3.5%.

• The quarterly variation of the general index is –0.4%.

Interannual variation rates

• The interannual rate of the Housing Price Index (HPI) in the fourth quarter of 2009 increased almost three points, standing at –4.3%.

• By type of housing, the annual variation of new housing increased from –5.6% in the third quarter of 2009 to –5.1% in the fourth quarter, representing the first increase since the first quarter of 2007.

• In turn, the annual rate for second-hand housing increased almost five points over the previous quarter, standing at –3.5% in the fourth quarter of 2009.

Results by Autonomous Community. Interannual variation rates

• The greatest increases in annual variation were in Comunidad de Madrid, with more than five points, from –11.0% in the third quarter of 2009 to –6.6% in the fourth quarter, and in Cataluña, which stood at –7.0%.

• In turn, the only annual variation rate that decreased as compared with the previous quarter was observed in the autonomous city of Melilla, which decreased eight tenths, standing at 3.0% in the fourth quarter of 2009.

Source: Housing Price Index 4th quarter 2009