Banks sell 10pc more repossessed homes in first half of year

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Spanish banks increased the amount of repossessed homes they sold in the first quarter of the year, in another sign that demand for housing in Spain is starting to recover.

Spanish banks sold 35,000 repossessed homes in the first half of this year, up ten per cent compared to the same period last year, reports the Spanish property portal Idealista.com.

Real estate still weighs heavily on bank balance sheets, but improving economic conditions and greater access to mortgage credit helped boost sales of homes repossessed by lenders during the crisis years.

“The big improvement in demand for homes has been noticeable,” Francisco Gómez, a director of Banco Popular, is quoted as saying.

INCREASING HOUSE PRICES

Furthermore, increasing house prices in recent quarters have left bank property portfolios more aligned with balance sheet values, which have been reduced gradually by periodic write drowns over the last seven years. If you accept that Spanish house prices are, in fact, increasing at a national level, which some people would dispute, then market values and balance sheet values are now closer than ever.

But banks still have 80 billion euro worth of repossessed homes, new developments and land on their books, according to figures from the Bank of Spain.

To reduce their real estate exposure, lenders like Bankia, Banco Popular and Bankinter are making a big effort to liquidate their property portfolios.

Bankia has increased home sales by 115% to 4,135 sales in the first half of the year, up from 1,919 in the same period last year. Popular has sold 7,576 homes, up 103%, and on course to turn over €2 billion on the sale of residential property this year.

Other lenders are reducing their sales efforts as the pressure on their balance sheets eases off, and offering less of a discount to buyers. “Discounts have gone from 40% in 2014, to 35% in 2015,” says José Antonio Álvarez, a director of Santander. Under less pressure to sell, Santander, Caixabank, and BBVA – the three biggest banks in Spain – have all disposed of fewer repossessed homes this year compared to the same period last year.

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