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F....F...F...W...!

17/10/2008

'Property and the Essentials for Life', written in the middle of June 2008 after the delivery drivers strike, started with the phrase, "Well, that was an interesting experiment". Little did we know that it was just a 'taster' for the full scale chaos that we have seen over the last few weeks. It's one thing being without fuel, but quite another being without money. Banks around the world have crashed and nobody is lending to anyone. As I write, the long hard slog is commencing of reorganisation and effectively setting up a new world financial order, but it looks like taking a number of hard recessionary years before we can have confidence in the stability of the world's economies.

However, daily life must go on. If you remember that F.F.F.W. stood for fuel, food, finance and water. There are still perpetual concerns about them all and it seems that there is always a crisis in at least one of them. Bringing things closer to home, how do they affect property here? Location as usual as the principal factor affected. The Finance for Fuel for travel to and from home to get your Food and Water from the supermarket.

Fuel -- When looking at a property, there must now be greater recognition of how energy effective it is, both in the use of resources and the conservation of energy. We look at these few properties that they have been carefully built to cope with the realistic climate that we have here on the coast, being - three months of hot summer; three months on each side of that where the temperatures are perfect, but it can rain and storm; and the remaining three months of winter where it can be cold, bleak and much too much like Northern Europe. Traditional architects and contractors seem to concentrate on coping with the summer three months. By far the most common faults we see in our building surveys relate to water penetration, most commonly due to thoughtless design faults and poor workmanship in the application of damp proofing. The remedial costs of these defects can be considerable with waste of time, money and energy that could have been provided with an extra 15 minutes work and materials costing a few euros. In addition, lack of insulation accounts for excessive waste of energy both in air conditioning in the summer and heating in the winter. There is little point in governments stressing the need to use less energy when much of it is wasted to the free air. Most property buyers here can individually afford the wastage, but the world as a whole cannot. It's best to have a house checked for such matters before you buy and undoubtedly a well insulated and dry property will be more attractive to live in and sell and will be higher in our valuations.

Food -- Costs of the average shopping basket have risen substantially so it's likely that there will be more demand for properties to have the space to create a kitchen garden or even herbs individual vegetables on the balcony. Perhaps we will see more demand for allotments, which here tends to take the form of a family finca in the campo. There is likely to be more stress put by governments and individuals on reducing the transport of exotic foods and the ludicrous examples of elements of the staple diet coming from thousands of miles away when they could quite easily be obtained from the land near to the consumer.

Finance -- Well, what can one say? Who knows how it's all going to turn out and when? At present there are buyers out there with cash available to purchase properties and keep the market going. In addition, there are banks prepared to lend, but who've gone back to traditional standards with regard to the loan's percentage of value and realistic relationship to borrower's income. Many buyers though are either sitting waiting for the market to drop or offering well below the asking price in the hope of achieving a bargain. When the market still looks to be going down can be the time to buy. If the buyer waits until the market is seen to have 'bottomed' they could find that the seller decides to wait until the market rises up to their price. At present, sellers can only look to see prices falling farther into the abyss and so may be prepared to take money now even if it is well below their expectation. For the buyer, it may be that if they waited they could get slightly more off the price, but at least they will know that they have bought closer to the lowest price.

Bank repossessions are also becoming increasingly available. These can sometimes be bought at well below any market value, with the bank prepared to accept only the repayment of its outstanding loan. In addition, some will even refinance the property with the same loan amount, looking at it as a method of converting a bad loan to a good one. Lending is, after all, what they are all about and without that they have no business at all.

Water -- Availability of drinking water and agricultural droughts make the headlines and must always be considered. Also, as mentioned above, building/structural surveys show that the majority of properties suffer in some way or other from water penetration. An experienced eye and a good damp meter can ensure that even during the hot dry season, winter's damp, humidity, condensation and mould problems can be identified and be recognised in the price paid.

However, the most significant water for housing purposes is the sea! A sea view or frontline beach is still one of the highest on the list of priorities for buyers. Care must be taken in choosing a location to ensure that the view is not going to be blocked or that the house is not going to suffer from inundation due to winter storms or climate change.

Whilst all about us is doom and despair we are so fortunate in having to cope whilst living in this greening and pleasant land of milk and honey!

Copyright
Campbell D Ferguson
F.R.I.C.S. Chartered Surveyor
Survey Spain
00 34 952 923 520

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