Editorial:
Rodrigo Rato falls: defeated finally by his own greed or maybe he was tossed to the indignant masses by an increasingly nervous Government? Either way, it's another example which rather highlights this Nation's penchant for corruption than for redemption.
Housing:
'The majority of primary homes on the market are still overvalued if compared to potential rental prices, finds a study by the Spanish Consumers’ Association (OCU). Carrying out research for a buy-to-let study the OCU has been tracking the relationship between house prices and rents for years in four Spanish cities: Madrid, Barcelona, Seville and Valencia...'. More from Mark Stüklin's Spanish Property Insight. In another article from the same site, there's this: 'The Spanish property market is turning round. It’s gone from depression to a timid reactivation seen in all the statistical gauges of its of health. Variables such as property purchases, new mortgages, construction (new-build licences), and even prices are all on the up. In the face of this new scenario, the following question begs answering: Is this recovery solid, or is there a risk of relapse?...'.
The Economist is quoted in El Confidencial to say that Spanish house-prices are still overvalued by between 8 and 18%.
'An increase in mortgage lending in Spain (Baa2, positive) over the last year could help the housing market to recover in 2015, Moody's Investors Service said in a sector comment. Rising mortgage origination will likely improve the demand for housing, which in turn could help lift house prices, the rating agency added. "Historically, there has been a high positive correlation between mortgage origination and changes in house prices. In our opinion, the increase in lending is therefore likely to translate into higher property prices this year,"...'. From The Financial Mirror.
'New rules mapped out by the European Union could make it much harder for thousands of Britons to snap up a holiday home on the continent from next March. The mortgage credit directive regulations may also make it more difficult for British workers who receive a portion of their wages in a foreign currency to obtain lending here, experts have warned...'. From This is Money. In short, the suggestion is that foreign exchange fluctuations may make European lenders think twice about signing mortgages to non-Euro based borrowers.
'Dream of moving to sunnier climes? The top destinations for emigrating Britons revealed (and Spain is only number three...)'. Headline from This is Money. According to which, '...just 52,000 Britons moved to Spain between 2009 and 2014, down from 124,000 in the previous four years...', behind Australia and the USA.
The town of Almuñecar (Granada) is a great place to live, not just to visit, says the candidate for the Partido Andalucista, pointing out the obvious fact that foreign residents are good for the local economies (well, it's not something you read very often in the Spanish press).
The price of a home across the World. How's Spain doing?
The long saga of Len and Helen Prior's demolished home is revisited in The Daily Mail and on Channel 5's 'Horror Homes'. One can only wonder how much this story has cost Spain? The usually idiotic 'comments' from Daily Mail readers include, in this case, the slightly forbidding: 'Our plan is also to retire abroad but stories like this make me think twice. I feel so sorry for this couple and I am hoping for a miracle that they will get their money back and get compensated'.
Tourism:
Last year, Britons flew 34.2 million times to Spain, up 4.7% over 2013, says Agent Travel here. Spain has been Britain's first choice for travel each year since 1980.
'The Minister for Industry, Energy and Tourism, José Manuel Soria, has spoken of '... the drive of this industry in Spain, which represents 11% of GDP, and covered 165% of the Spanish trade deficit in 2014. He also highlighted the progress in terms of job creation, with the sector representing 12% of total employment in Spain. The Minister also underlined that the positive trend in tourism-based employment is continuing into 2015, with March recording a 5.9% year-on-year increase. This is the highest figure for March since records began...'. Found at The Leader.
'It may not rival the Taj Mahal, Stonehenge or the Pyramids but Benidorm, home of the package holiday and the all-day English Breakfast, is making a bid for UNESCO World Heritage status. Plans to apply for UNESCO recognition were unveiled by Benidorm city hall on Monday evening...'. Story from The Local. (Huh?)
Finance:
'Spain's national debt is now about 98% of the GDP, but after adding public enterprises, it now exceeds the threshold of 100%, the highest level recorded since the beginning of the 20th century. The indebtedness of the various public administrations has almost tripled during the crisis as a result of the brutal imbalance between revenues and expenditure. Indeed, after almost seven years of crisis, the public deficit touched 5.7% of GDP in 2014, without counting the cost of the rescue of the cajas, which translates into a hole of 60,187 million euros...', says Libre Mercado. This is the worst result of any Euro-currency country and the fifth worst in the World (behind Venezuela, Japan, India and Brazil). Mariano Rajoy says that Spain's deficit should fall to 2.8% by next year.
Hacienda says that Spaniards have 20,000 million euros stashed in Switzerland (that they know about), says Público here. Andorra has another 4,000 million and Gibraltar a modest 260 million. These figures come from information provided by taxpayers on the Modelo 720 for the year 2013. This year, some 197,000 contributors have admitted to investments and bank balances abroad.
The five regions of Europe with the highest levels of unemployment... are all in Spain, says El País. Andalucía (34.8%), The Canaries (32.4%), Ceuta (31.9%), Extremadura (29.8%) and Castilla La Mancha (29%) head the European list for 2014. The figures were released by Eurostat and show that Spain is still mired in problems. The European average for unemployment is 10.1% and in the Euro-zone 11.3%. Youth unemployment (15 – 24) has Andalucía as the third worst in Europe at a whopping 61.5%. Current Spanish employment figures will be released Thursday.
Politics:
A survey appears to suggest that the PP stronghold of Valencia could be falling to other parties. Figures released by El País say that the PP could fall from its current 55 deputies in the Corts Valencianes to just 28. The socialist PSPV would lose 10 and have 23 deputies, while the new Ciudadanos and Podemos parties would take 17 deputies each. Complicated.
The Town Hall of Valencia meanwhile could see the Partido Popular fall from 20 councillors to just eight, Ciudadanos 8, Valencia en Comú (Podemos by another name) with 6 and the socialists losing three to hold five. More here.
'Spain's Ominous Gag Law', says The New York Times, beginning its article with 'On April 10, a group called No Somos Delito or We Are Not a Crime, projected a hologram of protesting marchers filing in front of the Parliament building in Madrid. For the time being, virtual protests in the form of holograms are not illegal in Spain. Incredibly, however, almost every other kind of peaceful protest soon will be if a new law goes into effect as scheduled on July 1...'. The story appears in Spanish here.
Corruption:
The story broke in El Mundo. 'The Hidden Fortune of Rodrigo Rato', includes, says Hacienda inspectors, twenty seven million euros and a share in a hotel in Berlin. Later additions to this include two advertising agencies (here) and a real estate company in Sotogrande (here). Rato, says El País in English, faces charges of money laundering, tax fraud and asset stripping. ABC notes that the brief arrest of Rato last Thursday was improperly handled (that's to say, without a judicial order). The Guardian posts: 'Spain’s ruling party is scrambling to limit the damage after one of Europe’s most high-profile politicians was arrested on charges of tax evasion and money-laundering...'.
'Former IMF President, Bank-Bailout-Fiasco President, and VP of Spain, Long Untouchable by the Law – Suddenly Gets Crushed'. Wolf Street has the Rato story and the analysis here. A comment following the article above: '...a scapegoat, dramatically bound and sacrificed, had to be found. And we should note that the PP, amazing though it might be, is actually trying to re-brand itself as an anti-corruption party, one for all connoisseurs of cynicism!'.
'Spaniards don't punish corruption as they should, but they do applaud those that do', says El Diario explaining the Partido Popular's confusing behaviour.
The history of the somewhat colourful Rato family is recalled by El Plural here.
Following the excitement with Rodrigo Rato, Sepblac, the force which investigates money crimes is now looking at 700 of those civil servants, judges and ambassadors who took advantage of the recent fiscal 'amnesty' which... apparently wasn't! More at Vozpópuli.
'Rodrigo Rato: The Man who Would be King'. Video from La Sexta.
Elsewhere, it's business as usual... Headline at El País in English: 'Tax Agency uncovers alleged wind farm pay-off scheme in Castilla y León. Regional officials and businessmen may have received €110 million, say auditors'.
The Guardia Civil traffic police are complaining – understandably – that they must issue at least fifty multas a month to collect a 'productivity bonus'. Story at VozPópuli.
José Antonio Griñán, one of the senior ex-Junta de Andalucía politicians enveloped in the ERE scandal, announced abruptly on Tuesday that he is quitting politics. Will Manuel Chaves follow the same course? More here.
Various:
Bank accounts in Spain could be blocked at the end of this month unless some information is provided – apparently 'to stop money laundering and terrorism' (sic). Some banks are sending out forms to their clients demanding this information, but other banks apparently are not doing so. Everyone with a Spanish bank account should be aware of this requirement. There a link here which explains more. Rankia seems to have a useful explanation of what's going on and what to do about it (Spanish).
The European Court of Justice has ruled Spanish inheritance tax, with variations for residents and non-residents, to be illegal. Non-residents who have been discriminated against by paying more tax than Spaniards for inheritances or gifts of property must be given a refund of the difference, says the Court. Hacienda is studying the ruling. More here.
'A pair of British ex-pats say they are ‘trapped’ in southern Spain amid an ongoing legal battle with the local town hall over a luxury bed and breakfast they once operated.
Patrick and Valerie Jubb are attempting to sell the four-bedroom property where they currently reside in Jimena de la Frontera, but it is now on the brink of being torn down.
The retired couple told Spain’s Olive Press news website that they have done nothing wrong but face losing the estate over illegal additions made by a previous owner...' over twenty years ago. From The Daily Mail. As always with this newspaper, the 'comments' are illuminating.
Here's part of the video (from MSN) about the bad conditions for workers in the plastic farms of Almería 'Surrounded by the fresh food they pick to send to supermarkets, but living in flimsy shacks, workers in Spain tell Siobhan Kennedy how their dreams of better lives are crushed by the grim reality of exploitation'. Local farmers are not amused (includes another similar video in English) by this 'brutal attack' and say their quality and employment controls are high.
'There will be a general national strike at Correos, the Spanish Post Office, taking place on several different days: 5, 15 & 22 May there will be a general strike called. Expect post offices to be closed across the country and no delivery that day. 30th April, 14 & 22nd May, there will be a “go slow”. Most post offices will be open but delivery will affected. The strikes are against a change in working conditions'. (From David Jackson)
Spanish students leave schools at an early age, leading the trend across Europe according to El Mundo here. Around 22% of all youths between 18 and 24 years old abandon their studies against the European average of 11%. Spain's failure rate is down from 30% (2006).
The municipal Radio Manilva has started a regular Friday broadcast in English (11 – 12 midday) called Manilva Lifestyle. The Manilva (Málaga) Town Hall hopes to start a similar program on their local TV as well. (Press Release)
There are around 200,000 Spaniards living in the UK. Here's an interesting info-graphic about them from El Northern. (Let's hope it's more accurate than the information that the Instituto Nacional de Estadísticas has on the Brits living in Spain – indeed, another source claims just 85,000 Spaniards resident in the UK).
What would happen if Britain left the EU? Asks The Guardian. '...'Brexit' would mean visas for visits to France, annual driving tests for the British inhabitants of the Costa del Sol (if they’re allowed to stay at all), and could well reignite calls for Scottish independence...'. Another, more useful article, comes from EU Law Analysis (May 2014), which asks 'What happens to British expatriates if the UK leaves the EU?' here. One alarming quote (of many): '...In principle, according to the EU’s Returns Directive, British citizens who did not, or no longer, had a right to stay in the EU would have to be expelled from the territory, by force if they did not go voluntarily. To facilitate their departure, they could be detained for up to six months, or up to 18 months if there were complications with their removal...'. After all, would the EU treat Britons well if the UK treated Europeans badly?
The unused airport at Ciudad Real is to be auctioned at a starting price of forty million euros. Anybody? Story here.
See Spain
Thirty photographs to make you fall in love with Extremadura. 'Extremadura is a Spanish region with fascinating history, amazing food, 3 UNESCO sites and many charming little villages, but is also one of the least visited areas by foreigners. If you need inspiration for your next trip to Spain and want to go away from the masses, here you have 30 images to fall in love with Extremadura...'. From Piggy Traveller.
The Olive Press takes a taste-bud tour around Spain: Who eats what, where?
Lenox took a short trip up to Trevélez in the Granada Alpujarras. At Spanish Shilling here.
Tenerife is the star of a blog called The Red Queen's Musings.
More on Population and the Housing Sector
by Andrew Brociner
In the last issue, we started to look at how population affects the housing sector. In this issue, we continue looking at the problem of the stock of new unsold houses.
We saw how the decreasing population would lessen the demand for houses over the coming decades. As we noted, there were 474,000 new households set up in Spain in 2007. The latest INE statistic has just come out for households set up in Spain in 2014 and it shows a mere 85,800 new households. This is even lower than previously thought and only confirms the very slow rate at which the outstanding stock of unsold property will be absorbed.
As a consequence and despite what some might claim, prices are not really significantly picking up. From the heady days of the 1st quarter of 2007, when the price index in Spain stood at 13.1% on an annual average, to the 2nd quarter of 2008, when it plummeted to – 0.3% and on to its trough in the 3rd quarter of 2012 at – 15.2%, it has since recovered somewhat. But, it was not until the 2nd quarter of 2014 that it emerged above zero and is now still at only 1.8% (in the 3rd quarter of 2014, it was still at only 0.3%). Just as during the days of the boom, when prices were already high, to keep this price index increasing so much, the gains in house prices were extraordinary, now that the base level of prices is so low, a small movement reads as something which looks more significant than it really is. Let's consider just one example in more or less rough terms, but in keeping with the national averages: suppose a house was valued at €300,000 in 2006. In 2007, it would be re-valued at €340,000. By 2012, the same house was worth approximately €200,000. Today, it would be worth €202,000. It is positive, but only in the context of a very depressed market; after more than seven years, we are still only at the very beginning of trying to recoup the initial loss.
If we look at the existing stock of new unsold dwellings, defined as being less than two years old, in the chart below, there were still 563,908 such dwellings outstanding at the end of 2013. In 2012, there were 583,453, so the decrease is exceedingly slow. Looking at the different regions, we find that a whopping 101,266 of these are in the Comunidad Valenciana, followed by Andalucia at 91,212 and then by Cataluña, with 85,307 and with Barcelona accounting for half of these. So these three regions alone contain one half of the stock of new unsold houses in Spain. If, incidentally, you wanted to go to the region with the least amount of these vacant houses scattered across the land, you would go to Extremadura. This large stock, therefore, if we were to visualise it, goes from North to South, all along the Mediterranean coast and then into Andalucia.
From 2004 to 2009, the stock of new houses increased by a mammoth 532%. And in a single year, from 2004 to 2005, it increased by 89,9%, as can be seen in the chart below. As we saw in the last issue, the construction activity went far beyond what was necessary. The entry for 2009 is as at the 31st of December, so that is a full two years after the boom ended. It is just this lack of limits which is responsible for the impasse we are in now; had just enough untis been built to meet demand, we would not have to wait so very long for the housing sector to pick up again, for while the price has decreased enormously, the dwellings still remain. So far, the glut has lasted much longer than the period of expansion.
In stark contrast to the pace of this building frenzy, in the four years from 2009 to 2013, the stock of new houses outstanding decreased by a mere 13%. Just look at the difference between how fast things accumulated and how slow they are to roll back. Although in 2010 the stock begins to fall, in 2013 the absorption of the stock actually decreases, as the number of new unsold houses falls by half of what it did in 2012, so the trend is not even continuous. At the current pace, it will clearly take a very long time for this stock to decrease, hindering prices.
Finally:
The Top Ten YouTube videos about Spain, according to About Travel here. There's plenty of other tourist-related material on the same page.
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