Business World

Sunday 24 September 2017

Irish people with houses in Spain will be affected by its demise

SPAIN'S financial demise affects us in many ways. One obvious question is what it means for the thousands of Irish people who have the mixed blessing of owning villas or apartments out there.

The good news is that Spain's bust has not been anything as bad as our bust. The difficult question for many in the years ahead will be whether to sell their Irish or Spanish property to make ends meet.

In Spain, prices have tumbled an estimated 30pc since the high point and there are now somewhere between 700,000 and 1.4m unsold housing units there.

Vacant

Prices here are down about 60pc and nobody really has a clue about the number of vacant properties.

A recent Deutsche Bank report calculates, meanwhile, that property loans peaked at 77pc of GDP here but only 29pc of GDP in Spain and estimates non-performing loans stand at 52pc of GDP in Ireland but only 17pc of GDP in Spain.

There are all sorts of reasons why it makes sense to sell in Spain or here first but one thing is almost inevitable -- more taxes in both countries.

All the bailout countries have introduced extra property taxes since their bailouts were announced because governments everywhere like to tax assets in a crisis.

Spain is unlikely to be any different in the months ahead. Time to batten down the hatches.

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