Banks are keen to sell their repossessed holiday-homes before the market shuts down in the autumn, and before the creation of a ‘bad bank’ drives down prices even further.
Spanish banks owning huge stocks of repossessed holiday-homes on the coast are slashing prices in a bid to to dump them before the market shuts down after the summer, according to reports in the Spanish press. Some banks are offering discounts of up to 70pc in popular destinations like the Costa Blanca, in Valencia.
The properties that banks fail to sell before the onset of winter will hang around on their balance sheets until at least the Spring next year, when the holiday-home market gets going again. This stock is expensive to maintain, giving banks an incentive to drop prices now in order to make a sale.
The planned creation of a so-called “bad bank” after the summer, which will take over the impaired assets of Spain’s most sickly lenders, is also expect to drive down prices even further, so some banks are trying to get ahead of the market by reducing prices now.