Spain is very different today from the Spain we visited and lived in in the past decade. Experts predicted the current collapse of a country based on unsustainable debt and real estate speculation. They left Spain before 2008’s collapse. What is the truth and future of this once-hailed success story in the European Union? Read more now on Phuket property for sale
Spain has always been a country with potential. It is a large nation, but it has fewer people. The weather is warm all year long. The massive growth in what was once a rural backwater into a dynamic economy began in the late 90’s.
This “boom”, which was fueled by real estate speculation and the adoption of the Euro in Spain, as well as the relatively low wages of Spanish workers, before Central Europe joined the European Union, is a result of the stabilization of the Spanish economy, coupled with the relative low wage costs of Spanish workers.
Building and home ownership fueled a never-ending development of Spain’s famed coastline during this boom. Many saw it as an endless concrete jungle on the beach. The property prices soared as well as the ease of unsecured loans that were as risky and dangerous as “sub-prime” mortgages in the United States.
Few speculators, eager to profit from the lucrative business of selling “Spanish Dreams” of first and second homes, realized that the market had become flooded with empty, new properties as prices rose. The banks began to offer home loans to everyone with an income and even considered “generational loans.”
Andalusia is one such example. In fact, the majority of Spaniards earn less than 600 euros a month. They were encouraged to purchase a “home” and a car when they barely could afford to rent an apartment on their salary.
The lack of work and rising living costs killed the Spanish Dream for many expatriates. Young Spaniards protested in Madrid before the current unemployment crisis citing that they couldn’t live on 600 euros a month. Real estate agents in Spain promoted the idea that expatriates who are taking advantage of this boom were buying property in Bulgaria and South Africa.
The corruption also killed the economy. Prior to the 2008 crash, Spain was infamous for having three former majors and the police chief in prison at the same. All of them helped to create a mini boom in Marbella at the cost of “selling” land to favored investors and issuing illegal ownership documents. This corruption destroyed the trust in Spanish property ownership.
After the housing bubble burst, Spanish workers earn barely enough to cover their monthly rent or mortgage costs, especially if they have a subprime mortgage. Nearly 50% of young Spanish are unemployed. Many now depend on their families to support them. Spain has the highest official unemployment rate in Europe.
The Spanish economy was unsustainable and about to collapse, according to economists. As soon as the EU business grants ended, many of the small businesses that were the backbone of the Spanish economy shut down, leaving vacant properties in the city and town centers. This added to Spain’s unemployment problems.
Real estate agents who have survived this crisis insist that Spain still has a bright future. However, a business based on commissions will always require a positive attitude to sell products. That was the real problem with Spain.