The Zombies of Spain


Desolation and Despair

Desolation and Despair

Believe it or not there are around 40,000 zombies walking the Spanish streets; they are mostly invisible as they hide in their flash cars and behind the high walls of their plush homes. These zombies once feasted off their shareholders, home buyers and lenders.

A zombie in this case is a developer that only has enough income to pay the interest on its loans. These Loans enabled the zombies and another 50,000 construction companies to destroy both the Spanish countryside and the economy. 20,000 of these property businesses have hit the wall since 2007. Domestic renting is not big business in Spain as home ownership stands at a massive 80%. Only those developers with commercial property such as retail units and offices are in a position to carry on paying their debts.

Spain joined the Eurozone in 1999 and immediately took advantage of access to cheap loans. As a result house prices rocketed 55% until the bubble finally burst in 2008. Since then prices have fallen by an average of 45%. Average is the word as more than half of the new properties were built on the Costas and aimed at foreign buyers, where prices have fallen much further. Between 1999 and 2006 Spain built 675,000 new homes a year. That’s more than France, Germany and the UK combined! Construction once accounted for 20% of Spain’s economy a figure now down to about half that.

There are lies, damn lies and statistics, so estimates vary between 2 and 3 million for the number of empty homes in Spain, 700,000 of these are new builds and about half of these are basically unsold apartments by a beach somewhere. It’s estimated it will take up to 13 years to get rid of these properties. Traditionally Spanish don’t commute to work so unless it’s for a holiday home there’s no point in a Spaniard buying a beach view property as their job is more likely to be inland. So that leaves Johnny Foreigner to slowly pick up the slack. 80% less mortgages were granted last year compared to 2006, loans which enabled 275,000 homes to be bought.

Spanish unemployment is over 26% with 56% of the under 25’s out of work. This is a damning figure as 40% of these young people were college educated. What a horrific waste of talent which will have repercussions far into the future. Only Greece as the slightly sicker European man fairs worse with 2 out of 3 of its youth jobless!

The sums involved in the property bubble are mind boggling with apparently about 325,000,000,000€ in outstanding property related loans. One good thing the Rajoy administration has done is to make banks assume 80% are bad loans rather than the 31% the banks were trying to brush under the carpet. 100€bn has been borrowed from the ECB though estimates suggest another 400€bn may be needed to save the Spanish banking system.

Madrid seems to exist on a different level of consciousness as the rest of us mere mortals. On one hand there is the Rajoy administration sabre rattling over Gibraltar potentially alienating British home buyers and over at the Bernabeu; Real Madrid think that paying 100,000,000€ and erecting a stage to show off their new striker Gareth Bale is right and proper in these austere times. To try and explain the offside rule as it were; Spain’s entire toxic loan book amounts to 3250 Bales or just 1300 Lionel Messi’s if ever his mega bucks buyout clause were activated at Barcelona. No wonder UEFA is introducing financial fair play rules next season!

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About findmeahomespain

In Almeria since 2006 set up findmeahome to give a personal service suited to clients needs rather than sell what earns the most commission.
This entry was posted in Bureacracy, Current affairs, Politics, Spain, Uncategorized and tagged , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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