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JANUARY 2009 - PREDICTIONS OR (CONTRA)DICTIONS |
Predictions or (contra)dictions… Written by Martin Bright of Tropicana Properties
This month sees much more talk of doom and gloom, with the US based Business Week analysts cautioning that if… "2008 was the year that subprime borrowers and speculators got hurt by the real estate crisis. 2009 could be when everyone else gets hit." Added to which, the International Herald Tribune’s bloggers – "Raising the Roof" take a wry look at the world property market. Aware that investors are looking and buying, that constructions are still going on and that in some parts of the world "its business as usual."
As a flavour of the trends outlined in the blog it is clear that certain characters and personalities will make their mark in 2009. The speculator who buys 2 or 3 properties without viewing, hoping to sell them again for a quick return is extinct! As real estate begins to take on failing blue chip investments then investors, especially in the mid price range, see overseas properties as a more realistic long-term investment for their portfolio and long term retirement. The end of the "off-plan" as fewer buyers are available to purchase from developers; preferring to see the actual rather than the conceptual. Not to be overlooked is the Obama effect which will almost certainly impact in global discussions by the US as never before – usually in times where there are hard economic decisions to be made eco-policies fall to the ground – but this could all change as the US changes its direction on green issues. And with the dollar appearing to gain once more on world currencies – could this herald the welcome return of American buyers in Europe?
Weather wise this month villagers and farmers on the Costa Tropical report a sustained cold snap the likes of which has not been felt or seen for more than 30 years; with the snow line returning to the southern most slopes of the Sierras and temperatures well below the seasonal average, many locals are already suggesting that these conditions always foretell of a blisteringly hot summer… lets hope this is one prediction that bears fruit!
01/2009 - The Great and the Good… [sic]
With many real estate agents locally lamenting the poor sales figures of 2008, not to mention those agents who have closed, then the few that have survived 2008 appear keen to develop even greater collaborations. Many of the local agents still operating in early 2009 are looking to develop their relationships in an effort to consolidate agreements and provide even better market confidence for both vendor and buyer alike. We hear that informal discussions between some established agencies are already in the pipeline; and we too welcome such talks.
Spanish property prices generally fell by 7.8% in 2008, according to the Spanish house price index published by Tinsa, suggesting that Spanish house prices are back to the level they were in Spring 2006, and consequently cutting the capital gains of the last two and a half years.
As reported last month, in Almuñecar, the governing party (who had initiated the controversial rubbish tax early in 2008) has supported a PP (conservative party) proposal to return to the status quo, and withdraw the separate rubbish tax collection at the end of 2008 and include the subsequent cost of rubbish collections within the existing IBI charges (municipal rates). It is likely that this will offer a saving of about €900,000 to the local taxpayers. This seed change in approach by the ruling party is an acknowledgment to the numerous protests received concerning the basura tax. However, at the same reunion the council also approved an increase of 5.3% in the IBI rates for 2009; a decision which is in line with Spain's official inflation rate for the period 31 July 2007 – 31 July 2008.
Last month I mentioned the planned local referendum concerning the town halls PGOU plans (ie: urban planning developments for the next decade) … with adjustments having been made to ensure that the Almuñecar PGOU falls within the limits imposed by the Junta de Andalucia's Regional Development Plan. The Junta imposes strong restrictions on the development of new golf courses and urbanisation projects; and originally the proposed Almuñecar PGOU, first presented in 2006, contemplated 2 golf courses surrounded by several urbanizations, 2 marina projects, 4 hotel projects, and a commercial centre. Residents are now being asked to vote to approve or reject the plan in an attempt to re-enforce local government authority over the Junta's – however if you want to see a copy of the plan then I suggest you go to the town hall’s architects department; and there you will be told that for the moment it is still not ready for publication! Strange, when the referendum is planned for February 28th 2009.
Good news for Spanish residents and anyone owning property in Spain – in 2009 there is no longer any requirement to pay Spanish wealth tax or even file a wealth tax return. The abolition of wealth tax in Spain from 1st January 2008 was approved by the Council of Ministers on 18th April 2008, although approval by the Spanish parliament has yet to be confirmed. The liability to pay wealth tax was eliminated through a 100% wealth tax relief. Note that this measure will apply for the Spanish tax year 2008 - for which returns are due in 2009.
Wealth tax is a tax on assets held as at 31st December each year. Residents are taxed on worldwide assets and receive deductions. Non-residents are taxed on Spanish assets without allowances. The tax rate ranges from 0.2% to 2.5%. However, do not forget that there are still various other taxes due on your Spanish property.
A recent survey by the Spanish RAC reveals that the N-340: between kilometeres 296.3 to 312.9; at the end of Nerja, Malaga province to just beyond La Herradura, Granada has identified this stretch as a high risk accident spot… for many residents this is an unsurprising statistic given the amount of bikers using this particular stretch of coastal road as an (un)official weekend race circuit!
Finally, last week, Jose Luis Rodriguez Zapatero, the Spanish Prime Minister, calculated that the country's economic downturn would begin to recover in the second half of 2009 after the difficulties of the last 6 months. He told press that, "We are going to go through some bad months, but there is certain and solid recovery on the horizon," and that, "In the second half (of 2009) we are going to have some data that points to a recovery.... "We are going to emerge strong from this crisis." He added that predicted inflation would drop to under 2% by the end of 2008 and to 1% "at the most" in 2009. All at a time when reports suggest that more than 1.5 million new built properties in Spain remain empty (or un-sold) – representing a back log of more than 5 years sales by current growth… Welcome to 2009! and a Happy New Year to all.
Martin Bright moved to this area in 1995 and has more than 30
years experience in the service and tourism sector. He joined the team
at Tropicana Properties in Almunecar in January 2000. For more
information on property sales contact Martin on 0034 958 630 320 or
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Martins´ current article can be seen here .
Other articles by Martin Bright can be seen here
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