Dear readers,

Please take some time to read this thread cos it is quite shocking in my opinion and shows how rising interest rates and credit crunches can leave you in a tricky situation. The Spanish market has moved into crash mode sooner rather than later.

....I took some time to translate from Spanish a report on 2nd quarter residential prices in Spain, sent to me yesterday by www.Idealista.com, the number one Property portal in Spain, a reliable source of info if ever there was one.

I´m describing the quarterly property price figures for the Madrid market only. I decided to concentrate on the capital which I thought would be the most resiliant place and thus don´t want to bore you with the facts of coastal properties which are sinking much faster in some locations.

All 21 districts fall in price for the first time in over 10 years: -

The smallest drop was in the chelsea of madrid known as ´salamanca´ district
where prices dropped by 0,3% to reach an average of 5.390 euros/m2.

The biggest drop was in the city´s cheapest district in ´villaverde´ which was 5,7% leaving the price at 2.792 euros/m2.

.............What shocked me was that I bought a flat in Villaverde 3 years ago!!! If it has fallen by 5.7% in only 3 months, I could be in for some nasty surprises before the end of the year!!

I honestly reckon that my apartment is worth less today than what I paid for it 3 years ago and the problem is that with 10% transaction costs for buying, I sure do have negative equity on my hands, something I would never have dreamed of!!

Not that anyone will buy the flat anyway if i wanna sell it, there are 10 or 15 within a 5 minute walking distance from here and noone wants to buy in this area now cause they are spoilt for choice in other areas!!

Its funny cos an underground station was being put in when i bought this flat but obviously that hasn´t had much of an impact or i presume it had already been put in the price when i bought, cos things got a bit silly here in spain. 200,000 € euros for veritable shacks in bad areas, well the crash had to come soooner rather than later.
It was common sense really.

Another big lesson for First Time buyers like me from all of this is always try to buy into a good area instead of taking risks on worse areas. It is a lesson learned. If i were to do it again, i´d buy a smaller flat in a good area and stay out of rough areas in suburbs, it could take ages to get out of this mess if i do wanna move and sell-up.

All the best,

Liam