In this latest Spanish expat interview I continue talking to Nick Snelling who lives with his wife and two children in the mountains near Valencia.
Nick is an author and writer who has written three books about Spain. This is part two of our interview – did you miss part one about his move near Valencia?
Nick you have plenty of experience of the Spanish property market can you help our readers with any insider advice.
Oh absolutely. The main thing is to understand the market and to be very sensible and cautious and not just to rush in and buy the first thing you see on impulse.
I find people who are well travelled are more cautious and really do their homework before buying.
Frankly the Spanish property industry has got a bad name which is fully deserved. A long time ago I bought and traded antiques from Romania and Hungary. I was dealing with gypsies and mini mafia types and quite honestly I would prefer dealing with them as at least there was greater clarity and you knew where you stood!
Look, of course you can buy in Spain and have no problems at all, you just need to check everything out very thoroughly.
Remember that when you come across a fellow Brit that he or she is NOT your friend. The stakes in the property market are very high. Selling a €500,000 property with a 5% commission is worth €25,000 to the agent -that’s a lot of money.
Buying on land that has been urbanised shouldn’t present any problems. The problems have been with people being sold properties that the owners, estate agents and even lawyers knew were illegal or properties that were built on rural land which could in the future incur charges. Buyers just have not been made aware of what could happen.
The much published land grab has been misunderstood at times. Of course there have been abuses but in rural areas buildings have sprung up over the years when they shouldn’t have. Then the government has said look, we need to put in infrastructure and tidy this all up.
The buyers haven’t paid the premium that people normally pay for building land. So they are each given a bill towards the cost of urbanising and in some cases lose part of their land where roads need to be placed.
Clearly when buying you need to understand that if an area has been urbanised you are ok, if not then you need to be aware that if the property seems cheap and is on land that hasn’t been urbanised you are prepared for the fact that some time in the future you may be hit with a rather large bill that really you avoided paying in the first place.
What are you seeing in the Spanish property market right now?
It’s very tough of course. Prices have really come down. There are some fantastic deals to be had. I’m seeing €350,000 villas now for €250,000.
So perhaps now isn’t the time to buy property in Spain if house prices are going to keep coming down?
Not necessarily, I think there is going to be a window of opportunity for people looking to buy at rock bottom and that could pass quite quickly. This year could just be THE time to buy, I’ll explain why.
This year there are likely to be many distressed sellers who simply MUST sell. Once people have got used to surviving, for instance they may have taken on three jobs, slashed their overheads but have clung on to their house, they may say to themselves we will simply not sell for what we consider to be a ridiculously low price and simply stay put.
If an urbanisation has houses which are basically the same and they sell for €300,000 and a distressed sale is on the market for €250,000, then effectively the price of every house on the urbanisation becomes €250,000 also. But once those distressed sales have been gotten rid of and everyone then sits tight and holds on, the price goes back up to €300,000.
This is a good time I think to mention your new book, How To Sell Your Spanish Property In A Crisis. Can you just give up a brief synopsis for anyone interested?
The book aims to help people sell their property. In this crisis it is so important for people who perhaps cannot afford to keep paying their mortgage to sell quickly or perhaps people want to move for personal reasons but find themselves stuck.
Whatever the circumstances, my book helps people bearing in mind there is a huge glut of unsold properties right now. I’ll show you how to leapfrog your competition and give you the best possible chance of selling and for the maximum price.
There are many different channels and ways these days to sell your house, some of which you may not be aware of. You need to be proactive and I’ll show you how.
How bad are things looking right now for Spain?
I think we are heading into a catastrophe with the fallout from this credit crunch. Construction is 91% down in this area and I’m sure this area isn’t any different to the rest of Spain. Everything ultimately is indirectly connected to the construction industry which accounts for 30-40% of GDP in Spain.
Then the tourist industry which of course is also very important to Spain will be very badly affected this year, especially with the drop in the Pound compared to the Euro and internal tourism will also be well down.
Unemployment in Spain is 13% and I’m sure will go to 20%. There could be a lot of social unrest with people getting angry at the situation which has been clear as daylight to governments, banks and financial institutions.
To me it was obvious it was coming, I’ve been saying it for years. It was like a train coming at you. I’m so angry that decent working people like us have to carry the can for those higher up.
And now the very people who have caused the credit crisis are the ones entrusted with fixing it!
Mark if you had a debt to pay off would you go to your wife and suggest going on a mega shopping spree blowout?
But that is exactly what the government is suggesting we do to solve the financial crisis – to spend more money when we should be battening down the hatches. It just doesn’t make sense to you or me does it!?
I just wish people would stop talking things up and just say it the way it is. I think people have to stop looking at property as an investment and growth vehicle.
The shame of this credit crisis is that it is not a natural disaster that just happened out of nowhere. It is a human catastrophe that could have been averted if the governments had just put the brakes on the runaway train.
What about the fact interest rates in Spain have been slashed to virtually zero – could that have a rapid rebound effect for Spain and the property market?
I don’t think so. Look at Japan, they had zero interest rates for decades and still they haven’t recovered. People who have a debt, say for example the owner of this restaurant, well that has to be paid down and people are just going to rein in their spending and pay their debt down slowly, not spend more, no matter what the rates are!
And just as the credit crunch hits in 2008 we had the most completed buildings finished just when they are least required. I think it will take at least five years to clear the backlog.
I look back at the 1990’s to see how things might go. Back then house prices dropped sharply and then for five years they stagnated, hardly moving at all, then they slowly started to rise and then of course they rocketed up sharply but that was a full 10 years on from the drops into negative equity.
Why should this be any different? If anything it stands to be even worse because the excesses appear to be even greater.
Many of our readers are people who would like to move to Spain what advice can you give them under the circumstances?
Well it depends on their situation. Certainly if you are retired and on a pension I would say get over here, there is every reason to come over, the quality of life in Spain is so much better.
To anyone younger then come over to Spain only if you have skills that are needed. Find a problem and then offer a solution. Opening a bar or restaurant in Spain – forget it.
Be realistic and recognise the problems. Realise that running a business is not easy. Of course you get the situation where a truck driver moves out and runs a bar. There are so many things involved in running a business that it is no wonder that so many people who start a business they know nothing about end up failing.
In some ways everything has changed and nothing has changed. Spain is still the same. It still has the same proximity to the United Kingdom, the wonderful climate, less crime and trouble.
Really everything is here for the grabbing and people will still have the same desires for a better life. The credit crunch is international so it isn’t as if things are not equally bad elsewhere. If you have a means of supporting yourself then why not move to Spain?
The Spanish ex-pat interview above was recorded on the 21st of January 2009.
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