Spain’s property market is “dropping fast”: ‘ Property fairs tout discounts of as much as 60% on new-built homes, or even “buy one, get one free” offers. “All the statistics show a fall,” concedes the housing minister, Beatriz Corredor. Yet pinning down just how big a fall is tricky. Tax-shy Spaniards do not always declare the true selling prices. the government’s main index, based on valuers’ estimates, shows a 1.3% nominal fall in the third quarter. most think the true figure is far bigger. the IESE business school talks of prices of existing homes falling by 8%.’
‘Private sellers cannot believe that their homes are losing value, according to Fernando Encinar, communications director at idealista.com, a property website. but developers know the game is up. Some deals are being struck at 20% below advertised prices, he says, a fact few developers are keen to broadcast. they do not want people writing off deposits on half-built homes and shopping around for something cheaper.’
Although the above may sound familiar to Americans, who saw their own housing market fall apart due to excessive mortgages owned by households, Spain’s problems are caused by ‘loans to builders and developers. more than 40% of property loans go to them, not to householders. And the numbers considered “doubtful” by the Bank of Spain rose by 60% in the second quarter, to reach 2% of all such loans. they now account for more bad loans than do household mortgages. Worse is to come. “Let no one hope for a price fall of 30-40% because, before that, I’ll be giving it all to the bank,” the head of the Spanish developers’ association, Guillermo Chicote, said recently.’
The good news? Those of us living in the northern (and northwestern) part of Europe enjoy visiting Spain during the summer: the weather is awesome, the surroundings are awesome; in short, it’s heaven. Many want to buy a summerhome in Spain, but prices rose significantly in recent years, making it unaffortable for most households. Now that the Spanish housing market is crumbling, however, more of us will be able to buy a second home in one of Europe’s most beautiful countries.
Source:myforeclosurenightmare.com
