Banks forced to sell properties in Spain cheaply.

April 5, 2012 – 3:09 pm

Banks forced to sell properties cheaply in Spain and Tenerife

Banks are going to be forced to sell properties in Spain cheaply, accelerating a four year decline in residential property values that are already 30% below the peak reached in 2007. Most Spanish property market commentators agree that home prices in the country still have a long way to fall. But despite historically low demand and a glut of homes on the market, vendors, residential developers, estate agents and banks have been reluctant to slash property prices sufficiently to meet today’s perceived market value, in order to avoid major losses.

But Economy Minister Luis de Guindos is now leaning on lenders to make €50bn (£42bn) of additional provisions and capital charges for losses linked to real estate over the next two years. Consequently, residential property prices are now poised to fall the most on record this year, leaving a quarter of all home owners in negative equity, as the government forces the banks to sell real estate holdings.

According to research conducted by advisory firm R.R. de Acuna & Asociados, the average price of a home in Spain will fall by 12%-14% this year. That’s the most since the National Statistics Institute started tracking values in 2007.

Based on an analysis of 800,000 mortgages, Standard & Poor’s forecasts borrowers with negative equity may increase to 25% this year, up from 8% in 2010. “There will be more serious price drops this year because of the government decree,” said Fernando Rodriguez de Acuna Martinez, a partner at the Madrid-based firm. “Banks are now prepared to incur big losses on real estate to shift all they can.”

By Angela | Posted in Economy, General, Holiday, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , , , , , , | Comments (0)

Cheaper homes in Spain as sellers try to attract more buyers

February 17, 2012 – 2:33 pm

Cheaper rental and sale property prices in Tenerife and Spain

Resale Spanish property asking prices continued to fall last month, as more vendors slashed prices in a bid to secure a sale. The latest home price index published by idealista.com shows that the average price of a home in Spain depreciated by 9.4% compared to January 2011.

The figures provided by the Spanish property portal reveal that January 2012 was the worst month since the Spanish housing crisis started four years ago. On a month on month basis, asking prices of homes in the idealista.com database depreciated by 1.9% to an average price of €2,045sqm (£1,712sqm) suggesting that homeowners are becoming more realistic about the need to reduce property prices if they are going to have any chance of attracting more home buyers.

It represents the biggest fall in asking prices since idealista.com started publishing the index before the property crash got underway in 2008.

On a monthly basis, prices fell the most in Castille La Mancha (-2.3%), followed by The Balearics, Asturias and Andalucia (-2.1%).  With property prices falling, housing affordability has somewhat improved in Spain, based on average property prices versus average gross annual household income, which has fallen from 7.7 years at the peak of the property boom to a current rate of 6.2 years, according to the Bank of Spain.

Spanish families might welcome more affordable housing,  but housing is still much more expensive than it was before the boom, when it cost just 4 years gross annual income or less.

“There are several reasons why the affordability ratio has not improved more with falling property prices, including higher mortgage borrowing costs and lower household income, said Spanish property commentator Mark Stucklin.

He continued: “None of this really applies to the cost of holiday-homes on the coast, where prices have fallen substantially more than the national average, and where foreigners with higher incomes than the Spanish national average tend to buy.”


The average cost of renting a home in Spain also fell last year as rental prices depreciated in 77% of Spain’s primary rental markets, the latest to data from Idealista.com and the Public Rental Company show.

The greatest rental price decline was recorded in Toledo by 8.7%, followed by a 6.8% drop in Oviedo. In Spain’s largest cities of Barcelona, Madrid and Valencia rents fell by 3.1%, 1.3% and 4% respectively.
However, rents actually increased in Lleida, Bilbao and Alicante rentals, rising 11.2%, 4.2% and 4.1% respectively.

These rental price declines follow on from falls in 2010, suggesting that Spanish homes are becoming cheaper to rent, as well as buy.

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Almost 1 in 5 Spanish mortgages signed between 2004 and 2008 are or will become delinquent

November 24, 2011 – 10:11 am

1 in 4 Spanish mortgages in Tenerife and Spain in trouble

Almost 1 in 5 Spanish mortgages signed between the bubble years 2004 and 2008 are or will become delinquent, according to a study by an association of home owners facing foreclosure (AFES).

AFES calculate that more than 700,000 families will have had their homes repossessed by 2015.

Specifically, there were 4 million home purchases between 2004 and 2008,  the bubble years of the Spanish property boom  of which 170,000 have already been foreclosed, another 170,000 are in process, and another 375,000 are expected to be repossessed by 2015.

All this at a time when there are more than 3 million empty homes in Spain.

The victims of this drama “borrowed more than they could cope with based on false expectations of rising property prices and employment,” explain AFES. “They never imagined they would lose their jobs and that property prices would crash.”

AFES propose partial or total debt forgiveness by banks, more mortgage lending, and lower property prices to making housing affordable. “The big social drama is that after losing their homes people are saddled with debts they can never afford to pay,” said Carlos Baños, President of AFES.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , | Comments (0)