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delderek
24-11-2011, 20:31
Having sold my place last year at a good price, now maybe thinking of re investing as prices appear to be on a fairly steep downward spiral. Bearing in mind the letting laws and the amount of places coming to the market and the general situation in Europe, what's the feeling on how much further they are going to drop in the next year. I would think 15/20%. Anyone else have the same feeling?

tonypub
24-11-2011, 20:36
will be falling prices for a long time yet del.

CIM
24-11-2011, 21:09
The price that properties are selling at has fallen a lot. It will fall further over the next 12 months. The average price of property on websites hasn't fallen nearly as much though as there are still loads of out of date/old/expired listings cluttering them up and lots of property where the owners have unrealistic expectations but the agents (for whatever reason) keep them on their books.

Residential areas - possibly another 35% off before the bottom is reached, so a 200,000€ property could fall to as low as 130,000€. There is almost no demand due to the inability of expat residents and the Canarian population to qualify for mortgage borrowing. The bottom rung of the property ladder has been pretty much wiped out. Far too many still on 16 hour contracts or being paid all of their wages in black thus insufficient income for the banks to approve them. Unemployment is still incredibly high with no improvement in sight. The residential property market is in a lot of trouble and I really only see it going one way.

Residential complexes in touristic areas will fall but not as much due to ongoing demand from non-residents and those nationals who do have good job/salaries looking for holiday homes. But the bad press about letting fines could start some panic selling on complexes where illegal letting is more prominent and owners require the income to service mortgage payments. Prices now need to more accurately correlate to potential rental income and for the most part that is now only available from long lets which make a lot less than holiday lets. If a buyer wants to use it themselves part of the year then the ability to generate any return legally, is severely hampered as long letting is pointless. I have spoken with a number of owners already who want to know what they can price at to sell in the next 2 or 3 months. But there are always people wanting to move over or have a holiday home which they dont need to rent out and dont want to rent out to anyone but their family and friends so there will always be some level of demand.

Touristic complexes should fair better but will still fall overall as buyers expect serious reductions from the height of the market. The overall depression in the market could drag down buyers expectations on touristic properties as well especially if buyers look into the potential pitfalls of being at the whims of a sole letting agent who can dictate to you who goes in your apartment and how much you can earn from it.

Upside? Its not all doom and gloom, lower prices mean more people overall can afford to buy something and there's plenty of buyers around waiting for the right property to come along. I see much of the drop in prices as a correction rather than some sort of property collapse.

delderek
24-11-2011, 21:13
Thanks for that, a very comprehensive answer.

Angusjim
25-11-2011, 12:11
The price that properties are selling at has fallen a lot. It will fall further over the next 12 months. The average price of property on websites hasn't fallen nearly as much though as there are still loads of out of date/old/expired listings cluttering them up and lots of property where the owners have unrealistic expectations but the agents (for whatever reason) keep them on their books.

Residential areas - possibly another 35% off before the bottom is reached, so a 200,000€ property could fall to as low as 130,000€. There is almost no demand due to the inability of expat residents and the Canarian population to qualify for mortgage borrowing. The bottom rung of the property ladder has been pretty much wiped out. Far too many still on 16 hour contracts or being paid all of their wages in black thus insufficient income for the banks to approve them. Unemployment is still incredibly high with no improvement in sight. The residential property market is in a lot of trouble and I really only see it going one way.

Residential complexes in touristic areas will fall but not as much due to ongoing demand from non-residents and those nationals who do have good job/salaries looking for holiday homes. But the bad press about letting fines could start some panic selling on complexes where illegal letting is more prominent and owners require the income to service mortgage payments. Prices now need to more accurately correlate to potential rental income and for the most part that is now only available from long lets which make a lot less than holiday lets. If a buyer wants to use it themselves part of the year then the ability to generate any return legally, is severely hampered as long letting is pointless. I have spoken with a number of owners already who want to know what they can price at to sell in the next 2 or 3 months. But there are always people wanting to move over or have a holiday home which they dont need to rent out and dont want to rent out to anyone but their family and friends so there will always be some level of demand.

Touristic complexes should fair better but will still fall overall as buyers expect serious reductions from the height of the market. The overall depression in the market could drag down buyers expectations on touristic properties as well especially if buyers look into the potential pitfalls of being at the whims of a sole letting agent who can dictate to you who goes in your apartment and how much you can earn from it.

Upside? Its not all doom and gloom, lower prices mean more people overall can afford to buy something and there's plenty of buyers around waiting for the right property to come along. I see much of the drop in prices as a correction rather than some sort of property collapse.

I have discussed this with you a few times and agree the only way is down with prices. What does concern me is what is going to happen on many complexes especially residentials with the payment of community fees if complexes have many properties repossessed by banks and many owners who cannot afford to pay, is this becoming an issue yet on any complexes yet ?

tonypub
25-11-2011, 12:19
been happening on mare verde for years,now after 5 years of being president,mr smith is finally gettin through the courts,payments or orders for arrears to be paid.not sure about banks but owners are being forced to pay.during the times of non payment though the good payers have had to pay higher fees so as to keep the complex moving forward.oh and if your 1 day or 100 days late with your fees ,its an auto 12% added to your fees.thats keepin most payin up.

CIM
26-11-2011, 00:46
I have discussed this with you a few times and agree the only way is down with prices. What does concern me is what is going to happen on many complexes especially residentials with the payment of community fees if complexes have many properties repossessed by banks and many owners who cannot afford to pay, is this becoming an issue yet on any complexes yet ?

Yes, definitely becoming an issue. I have seen this on a few complexes. I generally de-list when that happens unless there is something at a very low price and even then it is a case of examining whats happening with the community and seeing if it looks likely it can recover or it will end up as a dead complex in a constant state of deterioration. Orlando is a good example. Loads of repos on there a while back, owners not paying community and the place looked terrible. But it has turned a corner, repos have been sold and lots of work done on the place which has drastically improved it.

Another complex I had two repos and it looked fine, but looking at the community, loads of arrears. A short while later, repos went through the roof so I delisted it until I can find out what the future is for the place.

Just had another repo bargain (30% lower than the current best price) apartment. Nice complex in a good area but there is a debtors list on the community board and the figures are horrific so as good as it is I am reluctant to list that one as well until I can find out more.
i think wherever you see a lot of repos on one complex you have to be cautious. Its not always a sign of impending doom but is certainly something to be wary of.

chris
26-11-2011, 02:46
Yes, definitely becoming an issue. I have seen this on a few complexes. I generally de-list when that happens unless there is something at a very low price and even then it is a case of examining whats happening with the community and seeing if it looks likely it can recover or it will end up as a dead complex in a constant state of deterioration. Orlando is a good example. Loads of repos on there a while back, owners not paying community and the place looked terrible. But it has turned a corner, repos have been sold and lots of work done on the place which has drastically improved it.

Another complex I had two repos and it looked fine, but looking at the community, loads of arrears. A short while later, repos went through the roof so I delisted it until I can find out what the future is for the place.

Just had another repo bargain (30% lower than the current best price) apartment. Nice complex in a good area but there is a debtors list on the community board and the figures are horrific so as good as it is I am reluctant to list that one as well until I can find out more.
i think wherever you see a lot of repos on one complex you have to be cautious. Its not always a sign of impending doom but is certainly something to be wary of.

is Orlando a tourist complexe?

CIM
26-11-2011, 02:49
No. Orlando is residential. Used to be a lot of holiday lets on there, dont think there are too many now though.

seanocelt
26-11-2011, 11:54
Echoes of the boom/ bust i witnessed in Florida CIM- i was offered my one bed rental at discounted price of $137,000. Selling now at $55,000 B U T; community fees of 600 a month as the arears are enormous due to repos.

Peterrayner
26-11-2011, 12:02
Echoes of the boom/ bust i witnessed in Florida CIM- i was offered my one bed rental at discounted price of $137,000. Selling now at $55,000 B U T; community fees of 600 a month as the arears are enormous due to repos.

but if the banks reposses in Tenerife they start paying the community fees and pay any outstanding debts for the the year of purchase and the 1 previous year. Any other outstandinf debts are written off.

seanocelt
26-11-2011, 15:21
never knew that Peter, so if a crash does happen the banks will cop for a ton of debt, never to be recouped?

LeFrunk
26-11-2011, 21:59
we are in the same , if not worse , position than any . Marina Palace , the electric has been cut off (as far as i no) , due to the electric company investigating if the power supply was redirected unlawfully to Marina, there is a water bill of hundreds of thousands of euros , the Mafia (as far as i know)and according to the local papers where doing our money in , and you think your doing bad with your wee Apt in the sun . HELP !

Ren้
26-11-2011, 23:15
but if the banks reposses in Tenerife they start paying the community fees and pay any outstanding debts for the the year of purchase and the 1 previous year. Any other outstandinf debts are written off.

Not automatically. The rest of the debt can still be claimed, but only from the previous owner(s). The decision to write off the debt or to continue the court case against the previous owner(s) is up to the board of proprietors.

seanocelt
30-11-2011, 15:05
we are in the same , if not worse , position than any . Marina Palace , the electric has been cut off (as far as i no) , due to the electric company investigating if the power supply was redirected unlawfully to Marina, there is a water bill of hundreds of thousands of euros , the Mafia (as far as i know)and according to the local papers where doing our money in , and you think your doing bad with your wee Apt in the sun . HELP !

Sorry to hear that, really shoking. All the best, Sean.

YOUNG GOLFER
30-11-2011, 18:39
we are in the same , if not worse , position than any . Marina Palace , the electric has been cut off (as far as i no) , due to the electric company investigating if the power supply was redirected unlawfully to Marina, there is a water bill of hundreds of thousands of euros , the Mafia (as far as i know)and according to the local papers where doing our money in , and you think your doing bad with your wee Apt in the sun . HELP !

Sorry mate about your bad news.....only last night i got a call from someone to list their property a 1 bedroom with sea views only 50.000€(said he wanted a quick sale) but unfortunately due to the problems on this complex we think it's best to steer clear for now.
Once again sorry about your news mate i met you and you are a nice guy.