I saw a Bank executing a debt of 9.000.000 € against a young developer yesterday and even when not surprised, it stirred me deeply.
Today I have read that Consultants Jimenez de LaIglesia has presented the first report that points how much the price of houses were inflated in Spain during the housing bubble and says that for the property sector to reach "equilibrium", the following reductions are needed:
-37% for house prices related to 2007 prices.
-53% for urban land related to 2007 prices.
-62% for developable land related to 2007 prices.
The report notes that "the subprime problem in Spain lies in its greater extent, in the developable land”.
"We're talking about 150,000 million of euros in loans for developable land which today has a quite different value from when it was funded".
Regarding the fall of prices Jimenez LaIglesia has assured that "we're still halfway in the fall of housing prices”, as prices have dropped so far:
-15% for house prices related to 2007 prices.
-21% for urban land related to 2007 prices.
-25% for developable land related to 2007 prices.
Jimenez de Laiglesia has also ensured that Banks will end up selling all the housing stock.
Just those developers who purchased land in 1999, 2000 and 2001 will be able to defend such falls in prices and almost all of those purchasing land in 2003 or 2004 will not be able to defend those drops.
Therefore, he adds, "this product is bound to be sold by banks," who "can indeed assume that price drop, since it eliminates the margin of the promoter and may even lower the price somewhat and, although not making any earning, to restore liquidity”.
Maria
www.costaluzlawyers.es
Visita a Cazorla by Maximo Lopez ( netsella) at Flickr.com