I notice I have written an article about Las Hurdes without telling you where it is, which is a bit silly; so, here is an addition to last week’s blog.
Las Hurdes is a mountainous region to the south-west of Salamanca. I did get a map image from Google, but obviously forgot to insert it in the last post. Sorry about that.
Okay, back to today’s post.
With all the dreadful news around, is Spain really a disaster zone, or not?
I have always maintained that the disaster in the Spanish property market is largely confined to the tourist spots, where there has been a massive overbuild, and they have quite simply run out of buyers. On the other hand, the spill-over has left many normally sellable Spanish properties in a state of limbo. What to do?
A telling indicator is a graph showing online searches for Spanish properties for sale. It’s been going down for the past five years, and looks to be going lower.
These things happen, and there is nothing we can do about it. The fact is, Spanish builders went mad, building far too many properties, and it is going to take a long time to sell them all.
Then of course there is all the nonsense with the banks, and the politicising of the euro. The EU banking system has to re-schedule €8 trillion worth of debt over the next fifteen months. That is not feasible. The system is broke. The only way that level of debt can be dealt with is by default, or by printing money to cover the hole. Default will lead to a massive loss of money. The debt will be written off. That funding will be sucked out of the system. Such a result would be deflationary, and will make borrowing money even more difficult.
Money printing will eventually lead to inflation, higher interest rates, and the erosion of wealth generally, including house values. This will effect the whole of the euro-zone.
In neither scenario is holding real estate the best investment policy. By all means hold onto your Spanish property if you have low or no debt levels. If the Spanish house is your home, then I guess you have not much alternative but to sit tight. Things will get better, however, it may take some time. If you can, hold on. Prices can go lower, but probably not much lower. They will eventually recover.
The only good thing about any of this is that most of you who’ve been regularly reading these bulletins have already bought in the right places. A lot of you have bought in one of my favourite spots in Spain, down in the far south in the province of Cadiz. I think most of you will escape the worst of this downturn, and anyone thinking of buying in this area may well be surprised at what can be found. It’s also a good lifestyle down here, and there is a lot going for it. Meanwhile avoid the tourist zones of the Costa del Sol and the Costa Blanca. The overbuild there is so vast it will take a decade at least to clear. To those who are still thinking of buying, look inland at the towns where real people live and work, and leave the holiday black spots well alone.