Spanish property - Negative Equity

Spitroast

Hi, Hoping someone could help, or throw some opinions out there?

I have a 2nd property in Costal Del Sol. I unfortunatley purchased at the wrong time and if I sell now I stand to loose approx £50k. I can just about scrape by at the moment paying the mortage over there as it gets good rental income in the summer, but am literally unable to leave my house in the UK as I can't even afford petrol to go anywhere other than work.

What's everyones thoughts on cutting my losses now, selling up and being skint until the debt is paid off (approx 5years), or keeping hold of it and remain being skint for now (possibly forever)?

Thanks

StevieJ

So you can't afford to take advantage of the voids and fly over there for a break :eek:
Where is it ?

Spitroast

I know, shocking! It's in Benalmadena. We got it about 5-6 years back when house prices were high and still on the rise in the area. Got a good deal at the time off a Spanish family member, but as soon as the crisis came it was one of the 1st areas to drop value. I've heard the first to drop should be the 1st to go back up when it eventually turns around (same as UK I guess).

StevieJ

I have fancied buying something over there but more in the Spanish bit, the other side of Malaga or up in the hills by the lakes.

Lotus-eater

Spitroast wrote: »

I've heard the first to drop should be the 1st to go back up when it eventually turns around (same as UK I guess).

Don't get that, surely the first to drop will be the last to go back up?

leveller2911

My Wifes Uncle lives just up in the mountains from Benalmadena, village called Sedella(not sure of spelling)..We visited a few yrs back, lovelly village Fiestas and all the locals love children and are very family orientated.

The problem with that area is like many others in Spain its have vast amounts of buildings going up and its totally lost its soul.
The wifes uncles house was away from the village (about half a mile) now a few yrs later theres houses all round them.
The Ruskies have moved into Spain ,Big Time.........

Last time we visited we had an amazing chinese in Benalmedena, 6 courses for £5 and complementary drinkies at the end.That was before the € though..

HAMISH_MCTAVISH

Spitroast wrote: »

Hi, Hoping someone could help, or throw some opinions out there?

I have a 2nd property in Costal Del Sol. I unfortunatley purchased at the wrong time and if I sell now I stand to loose approx £50k. I can just about scrape by at the moment paying the mortage over there as it gets good rental income in the summer, but am literally unable to leave my house in the UK as I can't even afford petrol to go anywhere other than work.

What's everyones thoughts on cutting my losses now, selling up and being skint until the debt is paid off (approx 5years), or keeping hold of it and remain being skint for now (possibly forever)?

Thanks

I'm quite bullish on UK property as there is such a huge supply shortage both today and in the future versus our actual needs. The markets will always find a way to translate such a huge needs imbalance into effective demand.

However that does not apply to all markets, such as Spain and Ireland.

I have seen it posted elsewhere that Ireland built 70,000 houses a year over the last 10 years. For a population of just 4 million people.

The UK built just 150,000 to 200,000 per year, for a population of 60 million people, that is now growing by 400,000 people per year, and we only built 80,000 last year.

And from what I have read, Spain built the most of anyone in Europe. Mostly as holiday homes, so their market is flooded beyond belief.

I can't see Spain recovering to peak levels in any less than 5-10 years, and possibly much longer. It really does depend on Europe Wide economic stability, and I'd have to guess that people will want/need their own property markets to recover before they are in a position to buy in Spain.

It's not your primary home, so if you can't achieve more revenue somehow from rental, either longer periods or higher rates, or if there are no realistic prospects of your other income increasing substantially over the next few years to ease your situation, I'd sell and bite the bullet on the loss.

Spitroast

Apartment is just to the right of the marina if you're looking out to sea - 2nd line beach ...opposite a very good chinese in fact. Prices have changed somewhat since before the €, that was some time ago! It's same prices as standard UK towns now (not London prices) apart from drinks which are still half the price :beer:

In response to Lutuseater, not sure on the logic, but I've heard that from both UK and Spanish estate agents, my mortgage advisor also mentioned London prices being quick to drop but quick to gain also. Not sure if true or not myself - I guess time will tell.

So what's the thoughts on getting rid? I guess it depends on how the property market in Spain will fair over the next 5-10yrs?

hartcjhart

I personally would keep it and try to increase the rental income,perhaps by doing a long let,in my opinion and from what I have seen established properties in Spain are creeping back up in value.
Have you asked the mortgagees if they will accept interest only payments for a period of time

leveller2911

I'm no expert , there are far more knowledgable people on the recession forum than me.FWIW I think Spain is in a worse position than us given the fact that weve seen the end of cheap flights from the UK, less grants being given to Spain from the EU (most going to succession countries) and they are tied to the ECB for their interest rates.

People will look to buy property abroad in places not in the € like Turkey if at all.
Just my opinion though.

Wonder if its the same chinese? as you walked in the main door there was a big fishtank to the right, strangely with errrr fish in it..

Asheron

Sell, and except the Loss.

House prices are going to drop even more.