With Spain’s real estate market expected to take years to recover from the global economic crisis, Spain’s banks — which now are the largest holders of property — are expected to offer discounts as high as 50% on repossessed properties in 2010. With more than 1.5 million properties on the market, and double digit unemployment rates, analysts predict that property prices in Spain will continue to fall through at least 2012. For more on this, see the following article from Property Wire.
Banks in Spain, now the country’s biggest property owners having re-possessed so many homes, will have to offer discounts of up to 50% in 2010 if they are to shift their stock of real estate, according to a new report.
Current discounts are simply not big enough to interest buyers, says the report from BNP Paribas Real Estate, the real estate arm of French bank BNP Paribas.
The prediction comes as analysts point out that it could take years for the Spanish property market to recover. According to Acuna & Asociados, highly regarded Madrid real estate analysts, it could take six or seven years just to clear the huge numbers of empty homes that won’t sell.
The firm’s annual report indicates there are 1.67 million properties for sale in Spain including 500,000 new builds, 500,000 resales and the rest are buildings that have yet to be completed.
Indeed, the latest report from BBVA, Spain’s second largest bank, also indicates that a recovery will be slow and drawn out over several years.
It says that Spanish property prices were 30% over-valued but have only fallen 10% so far and they need to fall another 20% before reaching bottom.
It predicts that prices will fall by 7% this year, 8% next year, and 5% in 2012 when they will start to stabilize.
The biggest price falls will be in the coastal areas where the most building has taken place in recent years.
This includes around Madrid and coastal regions such as Malaga, Castellon and Tarragona, the bank says.
They are likely to fall the least in Orense, Navarra and The Balearics.
Rising unemployment is hampering a recovery. It is set to rise to 22% next and as more people lose their jobs, more properties come onto the market.
Other experts are also saying that prices have not yet fallen enough.
According to Luis Garicano, Professor of Economics and Strategy at the London School of Economics (LSE), prices are down very little compared with other countries like the US where they have dropped 50% from peak.
The latest Tinsa property price index for November shows that average prices fell by 6.6% over the last 12 months, down from 7.4% last month.
But many in the industry point out that the index does not reflect what is actually happening on the ground as it is based on valuations, not actual transaction prices.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.