Banks to slash Spain property prices

Thursday, November 25, 2010

Banks to slash Spain property prices

Banks in Spain now recognise that they have no alternative but to reduce Spain property prices further if they are going to have any chance of attracting more buyers.

In the past, Spain property firms and banks have generally refrained from slashing property prices during a market downturn. But the current collapse in the Spanish housing market has prompted greater action, in a bid to avoid the existing slump continuing for many more years.

The Spain property market has endured a torrid time over the past three years. Residential prices have plummeted, as a consequence of a chronic oversupply of homes in Spain.

The Spanish banks now own tens of thousands of homes in Spain, after accepting properties from struggling Spanish property developers who would have otherwise faced bankruptcy.

But in an attempt to reduce their property assets, many banks reportedly plan to lower home values further in the hope of increasing sells and avoiding a Japanese-style slump that continues for years, according to Spain property firm Idealista. More banks may also start to offer up to 100 per cent loan-to-value mortgages.

Bargain basement Spain property prices are attracting more buyers, but not yet enough to clear the current backlog of unsold, empty, homes in Spain.


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