Idiocy in Spain: Bank Proposal to Build More Houses, Issue More Mortgages, Despite Massive Inventory and Enormous Drop in Sales
Idiocy is running rampant in Spain. The Association of Spanish Banks (AEB) thinks the solution to the debt crisis is to build more houses in spite of the fact sales are down by as much as 85%.
Via Google translate, please consider Nonresident aliens buy 85% fewer homes than before the crisis.
Throughout the first half of this year only 1,363 homes were sold to foreign residents in Spain, far from the 9407 transactions in the same period of 2006, before the bursting of the housing bubble.
As pointed out shortly after the prime minister, Mariano Rajoy, the government wants to dispose of the stock of unsold homes, an issue that the Ministry of Public Works had already made clear in the Plan for Infrastructure, Transport and Housing (PITVI ) 2012-2024. This reflects that “demand by foreigners is critical to recovery and sanitation sector”, which has barely managed to reduce their unsold stock in 8000 from their peak levels in 2009 to about 680,000 homes.
- The ministry of public works says “demand by foreigners is critical to recovery”
- Foreign demand is down by 85%
- There are 680,000 unsold homes
Permanent Residence Offered to Foreign Home Buyers
Also via Google translate, El Economista reports The government granted a residence permit to foreigners who buy homes of more than 160,000 euros
The government granted a residence permit in Spain to foreigners who purchase a home whose price exceeds 160,000 euros, as announced by the Secretary of State for Trade, Jaime García-Legaz.
“In a few weeks it will launch a reform of the Aliens Act for granting residence permits to foreigners in Spain who acquire a property from a price level [of 160,000 euros]”
The aim would be to reduce the “stock” of existing homes in Spain, where there currently “is not much purchasing power due to lack of credit. “
In light of the massive overhang in unsold inventory of homes, the position of the Association of Spanish Banks wins the blue ribbon for stupidity.
Please consider “More Brick“, also via translation, this time from El Blog Salmon.
I said a few days ago and now I repeat: we have learned absolutely nothing from this crisis. Michael Martin, president of the Spanish Association of Banks (AEB), said today that the solution to all our problems in Spain is very simple: build more houses and provide more mortgages to keep families were rendered homeless.
As they read. The magic formula to end the crisis of this man and, therefore, the association president, is simply to follow step by step the same manual that has led to the declining economic situation: for all credit and brick. Martin, at a time of unprecedented lighting, dares to ensure that this would be the right way to end the social exclusion of our country.
Not if it happen to you but I read these things and I have stupid face: They ignore that in Spain there are between 700,000 and a million empty properties. That of “housing never goes down” is now part of our past. The Spanish have opened my eyes and now only see a situation of oversupply estate brutal. People do not want houses that are waiting for prices to sink and touch ground .
And if that was not enough he finishes calling back the debt. For years private debt has grown at an annual rate of 10% above the GDP to go from 100% to 200% of GDP between 2001 and 2008. We brought money of the future without shame for the sole purpose of being rich in this. Currently, a problem suffered very serious private debt and financial leverage out of this situation will be slow and painful.
Inflate the housing bubble again is not the answer, however much certain stakeholders are mouth-watering thinking that cheap credit flowing again through the arteries of the system.
That translation is a bit choppy, but surely you get the gist. I am obviously in agreement with the author of El Blog Salmon.
Mike “Mish” Shedlock