Is Spain selling out European strategic interests by wooing foreign investors with residence permits?

Spain's measures against the country's real estate crisis are getting ever more desperate. Now the government hopes to lure foreign investors with promising residence permits. However, critics strongly condemn the plan.

The initiative is primarily aimed at Russian and Chinese investors who would otherwise need a European Union visa.

The houses are on the Spanish coast, around big cities, or out in the countryside. They stand in various states of completion after first going up during the boom years. Today, they are a symbol of the country's deep crisis.

In 2006 alone, some 900,000 apartments were built in Spain. Back then, real estate agents and construction companies cashed in on the boom, people were eager to buy, and prices for houses and apartments went through the roof. After all, banks were handing out cheap credit. Even people who didn't have any capital of their own, and essentially couldn't afford to shop for real estate, got credit from the banks. Most buyers simply assumed that prices would continue to rise. But then the bubble burst. It's estimated that around 1 million apartments are empty. Since the beginning of the crisis, prices are estimated to have dropped by more than 30 percent.

Spanish Prime Minister Mariano Rajoy believes "the building sector has to get ahead again. The buildings have to be sold - and at proper prices."

Juan Rosell, president of the CEOE trade association, welcomes the plan, saying, "We've got to look into everything that could increase the real estate business."

However, the CO union sees things from the point of view of class politics. The government would make access for wealthy foreigners easy while curtailing the rights of foreign workers.
The opposition isn't sold on the plan, either. Marisol Perez Dominguez, immigration spokeswoman for the socialist PSOE party, accuses the government of linking residence permits with economic interests.

"Instead, they should stem the tide of immigration so we won't have more and more empty apartments while more and more people are on the street," she says.

Immigrant organizations have also criticized the idea.

Note EU-Digest: the European Parliament should look into this. If other cash strapped EU countries start allowing this the EU could eventually find itself being controlled by foreign interests. Instead non EU investors could be provided with national residency papers instead of a EU wide residency status.

Read more: Spain woos foreign investors with residence permits | Europe | DW.DE | 24.11.2012

Netherlands: Housing market under stress

Home owners who bought their property in 2008 when house prices were at their height will make an average loss of over €81,000 if they sell their property now, the Volkskrant reports on Thursday.

House prices have fallen by an average €51,000 since 2008 and households spent a further €31,000 on legal fees and doing up their property, the paper says. It bases its claims on figures from the Kadaster land registry office.

University of Amsterdam professor Johan Conijn estimates some 700,000 households would make a loss if they sold their home tomorrow. ‘And that figure is rising sharply because house prices are continuing to fall,’ he told the paper.

Many people who are forced to sell their home because of divorce or unemployment are now faced with finding tens of thousands of euros to pay off the negative equity.

EU-Digest 

US Housing market: Homebuilder Confidence in U.S. Unexpectedly Decreases - by Bob Willes

Confidence among U.S. home builders unexpectedly dropped in January to the lowest level since June, a sign the housing recovery may stall in coming months.

The National Association of Home Builders/Wells Fargo index of builder confidence decreased to 15 from 16 the prior month, the Washington-based group said today. Readings below 50 mean most respondents view conditions as poor.

The report showed traffic slowed to a 10-month low, indicating the government’s extension and expansion of its first-time buyer program has, so far, not drawn in new demand after propelling total sales to an almost three-year high in November. A projected record 3 million foreclosures this year may also pressure prices, making it more difficult for homebuilders to turn a profit.

For more: Homebuilder Confidence in U.S. Unexpectedly Decreases (Update2) - BusinessWeek

Freep.com: U.S. housing values decline by trillions since the 2006 peak - by Dan Levy

For the complete report from the Detroit Free Press click on this link

U.S. homeowners have lost about $5.9 trillion in value since the housing market's peak in March 2006 as mounting foreclosures and the recession weighed on prices.Almost half a trillion dollars was wiped out this year through November as housing headed for a third-straight annual decline. New foreclosures and higher mortgage rates in 2010 may hinder a rebound, the property data service said Wednesday in a statement.

"A phenomenal amount of wealth has been erased since the housing bust," Stan Humphries, chief economist for Seattle-based Zillow, said Tuesday in an interview. "For many households, most of their wealth is tied up in real estate." The net worth of U.S. households at the end of June fell 19% from two years earlier to $53.1 trillion, according to Federal Reserve data.