November 5, 2010 at 11:56 pm #55950AnonymousParticipant
I have read that the banks in Spain are to commence releasing all the properties they have repossesed onto the market. Do you think that is good for people who are trying to sell and it will at least start things moving? Or do you think it will just make it worse? I mean I know they have to start selling them off sooner or later but just wondered what your opinions are on the matter.
November 7, 2010 at 1:35 pm #101438adiepParticipant
Hi ethnatkev, do you have a link where you have read this? Or just word of mouth? I think we’d all love to know how many properties the spanish banks own, and how they plan to dispose of them.
I doubt more properties on the market will help the market unless there are big price drops and banks start lending.
I was thinking about this, and I’m now convinced more than ever that we are going to see 20% drops in asking prices and valuations. The money the banks were using for these 7/8 multiplier of salary and 100% mortgages are a thing of the past, as such the vast majority of properties on the market are too expensive for mere mortals. People dont have the cash to buy them, or to give a 30% deposit and the banks are not lending 100% on anything much apart from their own repos and with pretty dodgy terms.
Theyre not even worth it from a BTL perspective with terrible yields.
Its a ghastly mess, and the only cure is a big drop in prices.
November 8, 2010 at 4:52 pm #101451AnonymousParticipant
Yes, I will put a link if I am allowed to, but it is on a site which I assume is this sites competitor, so I don’t want to upset the moderator! But, yes I have read it on 2 other sites, so not just word of mouth: I have pasted it onto here:
Toxic Time Bomb to Hit Spanish Property Market. (november 5th 2010)
A new wave of cut-price properties is about to flood the Spanish market after the country’s local banks announced last week that they have finally decided to recognise and “remove” toxic assets from their balance sheets.
There is a toxic time bomb ticking away on the balance sheet of virtually every major Spanish bank because of the huge volume of foreclosure properties in Spain that they have seized in the past two years. Hardly any of these negative assets have been fully declared by the Spanish banks in their annual reports.
They now need to recognise these below market value liabilities in an attempt to clean up their overloaded balance sheets.
For instance, Banesto Bank, a subsidiary of Santander, announced last week that it is selling 600 homes at 50% below the market rate.
Spain’s regional Cajas, which are similar to a saving bank or local building society, are also expected to release their real estate assets onto the market according to a report in the Financial Times.
According to Mark Wilkins of Crest Group International this influx of properties will have an advantageous effect for those looking to invest in Spain. “Traditional models of supply and demand were placed on ice during the recession as people waited to see what the banks were going to do. In the US banks made this move at a much earlier stage, and we’re now seeing properties appearing on the market for 60 to 70% less. The same thing will happen here. If a property has already come down by 15 to 20% it will probably come down by another 15 to 20%.”
Wilkins is keen to stress that serious offers will still have to be made, saying “it’s not a fire sale, but there is well priced property available on good terms. There was a series of overvaluations, and what is happening now is that the fat is being taken out of the market”.
Elsewhere, there has been a 145% year-on-year rise in interest in the Spanish property market according to figures released by Primelocation last week which looks set to continue as prices fall further. Wilkins says “property prices will come down appreciably. In terms of investment potential, we’ll see nothing like the upsurge in value we saw during the 1990s. It will level out during the course of 2011 and 2012, and there will inevitably be some rise as overseas markets recover and demand rises in the next 3-5 years.”
The customer base has remained broad, according to Wilkins, but there is fewer people looking to invest. He says “we’re seeing a lot of family groups, and the bulk opportunities are starting to increase.”
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