Europe recession and the effects on the property market in France and Spain

It has been confirmed – the world economy is in a mess.  Not a day goes by without news from some one some where about the effect of the world economy.  It seems that the for those of us who are looking to make changes this year we are on the look out for any sign of good news, but at the same time we are stuck feeling that if we rush we might end up overpaying for something that actually we could get at a lower price a few months later.  The simple thing is we are all trying to second guess the future. As games of bluff and double bluff last longer and longer, we are left with the question – what is the right choice in the current market.

So what is the effects that we can expect?  Well I have not found anyone who thinks that there is much of a turn around coming soon.  The only glimmer of light that people are taking of is that with all the government money starting to be spent around the world, it looks like things are going to get worse at a slower rate for the next 6 months, and then finally turn upwards again in the third quarter or towards the end of the year.  So what happens between now and then?  Well house prices will continue to fall as long as more people are loosing there jobs than are being created, banks will not start to lend until they have got to the bottom of all the problems in the industry, and I am not convinced that this will happen any time soon.  The result: no change and no need for any one to rush into any decisions.  The simple rules do still apply though, if you find something you really like, you should probably take it, or risk loosing it.  That said, the agents we have spoken to have either been neutral at best when asked about other possible purchasers.  The only exception seems to be if you want to talk prices – but I guess that is estate agents. 

So what is the best time to buy – well if you are a cash buyer, you have never had it so good with regards to negotiating positions.  I can honestly say that as far as I can see we seem to be in the position of making any offer, no matter how low we thing it is, and having it seriously considered.

The simply guidance that seems to be fairly consistent, is that prices will continue to fall across Europe until the middle of 2009 at least (at differing rates depending on where you are) and then start to recover at least in some places in the second half of the year.  Spain is likely to be one of the last to recover, France probably a lot sooner.  This is partially due to the better shape of the French economy, and mainly due to the massive over supply of houses and constant scare stories coming out of Spain.  Recovery in France could start as soon as early summer – but as France is only just entering rescission, it is still at the point the rest of Europe was 3 months ago, when most commentators were still talking up things.  Spain is not expected to recover in 2009. 

 As always you can drop me a line at andrew@andrics.com