Life after Coronavirus - Page 3

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LeckyLes 

A lot depends on a bunch of different factors. How long and to what extent the lock down will last for, both here and around the world. Much of which depends entirely on how fast they re-open the world economies. Many people have lost and will continue to lose their jobs as many small businesses go bust. When the crisis hit, the people stopped shopping, but the bills kept coming in. For some in this area specifically, many were already struggling and their ability to stay open will depend on the above and how much savings they have. Obviously this has a knock on effect in that if a business goes bust, then their staff get laid off, and those same people are the people who can now no longer afford to pay the rent or mortgage. I think you can see how this can cause a chain reaction and result in a glut of empty properties. I also expect the tourism sector to take a hit. This again will result in a glut of properties not being rented, and as Movington said, cause a cut throat situation where prices tumble. If people can't rent their properties, many may wish to sell up, as the rental was a means to subsidise the costs of that property. Add to the fact that properties and still being knocked up here even in lockdown, further increasing the amount on the market, prices will drop further. I see that as the most logical result in all this.

You could look further into the future (the worst case scenario but still very probable) and assume that if the current trend continues, and the economies are not opened soon, we will see a depression that makes the great depression seem like a walk in the park. I personally don't think that the true economic hit of what this crisis has done so far will be felt properly until 6-12 months down the line. If there is a depression, then there will be a fire sale on everything, of which the financially well of and super rich will be able to buy it all up for cents on the dollar.

As one example, the US alone, so far during the crisis, increased it's unemployed by about 16 million people. It doesn't take a economic genius to figure out that if the US economy folds, the whole lot will come crashing down. I don't expect the euro to survive either as it's pegged to the dollar. Admittedly that's the worst case scenario but i think people would do well to bare it in mind and plan accordingly.

As someone who has played with the idea of selling my property, i am clearly interested in the values rising, but one has to be logical and realistic.

It will be mainly the cheaper accomodations that will suffer price/ demand decreases in my opinion.

The more expensive villas and golf-resort properties will suffer far less. People will still want to golf, and it are mainly Scandinavian, Icelandic and Benelux families who are renting/buying these properties on the Costa Blanca. Most will have (cash) reserve built-up and will not need nor want to sell their dream property because of Covid19.

The most severe-hit countries in Europe, France, UK, Italy, Spain are not that much into the premium property market on the Spanish Costa Blanca, with most UK interest into the more budget properties. These properties will indeed suffer most in my personal opinion.

Anyhow, there is NO vast overbuilding, the situation is temporary and people still will crave holidays and their golf experiences.

People WILL want to go on holidays.

Once again, this is my opinion, I am not British and see things from a Continental Europe point of view. Everyone I know is absolutely craving a holiday right now. It might not be a cruise, safari or tour of Asia, but Spain does offer people an affortable, beautiful holiday that is safe and within Europe.

Have you seen what has happened to global stock markets? I doubt the worst has yet been seen as many companies will go to the wall due to draconian lockdown.

Property markets everywhere will suffer because of this.

We were in the process of buying in Spain in mid-Feb. Got home and pension fund had reduced by 30% (where the money was coming from).

It has recovered slightly but is still significantly less than it was before.

People simply don't have spare cash and won't for a fair while yet. 

Plus Spain's excessive response to the "pandemic" will probably put a lot of people off going there too. 

I agree - people wax lyrical about the Scandinavian buyers but there comes a point where people, regardless of where they are from, either have money or they don't. My investments, which were relatively cautious given I'm 4 years away from 55, are down around 12%. 

I suspect that those in other countries have seen their reserves diminish and their incomes threatened. Banks latch onto this and restrict funding for property whilst increasing the deposit amounts required. Money will likely be less abundant and asset values will likely go down. Not to forget that there will unlikely be any revenue from this years tourist season.

Germans aren't selling cars and Norwegians have seen a drop in the value of oil - we are now in this together and I reckon at least 15-20% will evaporate from property values in the holiday/ leisure areas of Spain and other parts of southern Europe.

Yes i read that Sweden who has not implemented lockdown has comparable infections/fatalities, when baring in mind the differences in population numbers, to those countries that had lockdown. If true, then lockdown has made no difference what so ever.

Personally, i believe we had the worst of it here the end of last year months before we heard about it on the news. I remember going to the pub and everybody seemed to have this 'awful' cold that they couldn't shift for weeks. 

It is widely accepted that new property prices have overheated in recent years. Driven by various factors but mostly one of architecture: People want the new "fancy" non-traditional designs. Even in secondary locations, some new prices to 2nd hand are running at an 80-100% premium. In turn, this raised price expectations for the 2nd hand market. Result: Property prices in the last 18 months have over-heated. New prices didn't drop, but many developers started to offer discounts. 

So, according to many actual Spanish property experts prices were already too high before corona virus. 

With no tourism market this year and more than likely a depressed market in 2021, rental incomes have tanked with little sign of improvement until the third quarter of 2021. If the owners have invested their own money they might as well leave it in the property, as it's unlikely they'll get any real return in any other sector. If the owners have loans to fund the purchase of their rental property and need rental income to cover their liabilities, in short, they're screwed. 

The key is... How much debt is there on rental property in Spain and how much of that debt needs rental income to service it? This I don't know. If it's low then the knock-on effect to property prices will be small, if it's high it will be devastating. I suspect it's somewhere in the middle, so I suspect the loss of tourism and thus rental income for c.18 months will impact price negatively by 10-20%. IMO.

This is on top of any drop in property values due to a weakening of the economy.

I'm no expert, but I would have to say that anyone who thinks property prices in Spain won't drop in the next 18 months is most likely up to their nuts in property debt and is trying to fool themselves. Or, they are involved in the real estate sector and is spinning a story. 

Spain has a pretty precarious property market right now (see first paragraph) and (I think) is going to get hit hard. 30-50% is what I'm expecting to see. The cheaper the property to start with, the greater the drop. Post property bubble burst (c.2008) prices might not be far off where things land.

Parts of GB will see similar I think. Particularly the south-east. Where I live prices have stagnated for the last 14 years, dropping some 10-20% in certain parts of the market, so I suspect we will only see another 10-20% reductions in the next year or so.

In short, any country or region that has seen substantial increases in the last ten years will be hard hit. if the underlying economy is weak then it'll be harder hit. If tourism is a factor in property prices it'll be worst hit. Sadly, I think Spain ticks all these boxes... So it's going to be messy. Very messy.

Personally, I actually think everyone should take a chill pill and stop being so pessimistic. 

Things will work out ok and life will actually go on , as it always has for Centuries past, following any National , or indeed, worldwide downturn.

Please dont be so defeatist ! 

LeckyLes 

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Hi Roach, totally agree with what you say, hopefully we can overcome this sooner rather than later, but so much damage done to the economy i fear it may take 2/3 years to recover, regards`   Derek