Are property prices about to fall in Spain ?

From Lenox Napier a subscriber here:  http://businessovertapas.com

 Banks in Spain may be left with no alternative but to cut the price of repossessed Spanish homes on their books in order to attract more buyers, as part of the Bank of Spain’s plans to force banks to reduce their real estate exposure.

From 1 October, Spanish banks will be required to increase provisions against their repossessed property portfolios and real estate divisions, with the regulator planning to increase their property sales rates, which they can only do by lowering prices...’.

From Property Investor Today. 

Cutting prices won't help, and will only give ignorant would-be buyers the impression they can get their hands on a decent property for next to nothing, thereby stagnating the market further. DEMOLITION is the only answer to the majority of the bank stock - most of it is unsaleable at any price. IMHO!

Cutting prices further will only perpetuate the threads relating to cheap property, evetually everyone will be able to afford a property in Spain. What will happen will happen, foolishness started it, greed will finish it, I'm only pleased that I don't have to worry.

The system in the UK works well, banks send properties to auctions and they sell at what someone is willing to pay, instead of holding on to properties for years in the chance they might go up ( then they dont ) instead of getting rid and moving on.

Prospective  Buyers beware!!!!!,extra tax payble to Spanish  Authorities due  to low  price of the Property in  relation  to   the Housing Market value.

Why on earth then has there been a 12% increase in the Spanish residential construction sector?

Is this a positive move for the Spanish to finally be able to afford properties at realistic prices (in relation to their earning capacity) or are these repossessed properties not of interest to many of the Spanish nationals due to their awarenesses of extra taxes and poor build quality?

This message was last edited by ads on 29/09/2016.

These properties in question are mostly unsaleable due to the fact that they are in the middle of nowhere. It's got nothing to do with affordability compared to wages, more to do with the fact that they are nowhere near where the wages are being earned. Sit on the AVE for a couple of hours between Málaga & Madrid, and you will see for yourself what I'm talking about. 

Demolition is the only answer, these properties will not even sell at auction. Even squatters aren't taking up residency.

Are these properties not suitable for short term holiday lets which in turn may boost the local economy and encourage better affordable transport links, or would that be counter productive to the regions Spanish hotel economy?

If you can remember back when the Spanish banks went bust,and the EU had to bail them out with billions of EU money .The banks in question were ordered by the EU to dispose of the vast property holdings that they had in the form of Repo's and the likes ,These banks in question still have not done so  ,what the bank's have been doing is only releasing a few properties for sale on a monthly basis ,the reason behind this is if they flooded the housing market with cheap property then this would cause a property price crash this is a wise thing for the banks to do, the so called EU political establishment do seem to understand this basically because they only understand politics and don't have a clue how business works.

I recently watched an episode of A Place In The Sun, where a couple were looking to buy an apartment for a maximun price of £40K, they actually found a really dross one at £35K. Two things come to mind, 1) how much further can they drop? and 2) why was it still standing?

The very old front line beach property is being demolished close to where we stay, with state of the art developments  replacing them, as Roberto says, the only future for the inland unsalables is demolition. 

Rather than demolition why not get the councils / govt to buy them at a very low price and provide social housing for the homeless etc.

"Are these properties not suitable for short term holiday lets which in turn may boost the local economy and encourage better affordable transport links" - short answer, No. Any property that is suitable for anything has probably already been sold at knock-down prices. The remaining stock is largely in locations where people do not go on holiday. Better transport links? Like the ghost airports of Castellón and more specifically Ciudad Real? The reason I mentioned the AVE is because from the train you can see entire villages lying empty because nobody wants to live there - and an entire airport costing billions, lying obsolete because nobody lives there to use it! There's more to Spain (and the construction boom) than the Costas.

"why not get the councils / govt to buy them at a very low price and provide social housing for the homeless etc." Again, because they're in the wrong places. Even homeless people need some basic services, such as places to get food! There are refugee camps in Jordan with better infrastructure than these places. Demolition is the only answer, and at least it will provide some temporary jobs!

"These banks in question still have not done so  ,what the bank's have been doing is only releasing a few properties for sale on a monthly basis ,the reason behind this is if they flooded the housing market with cheap property then this would cause a property price crash"

They still carrry these properties on their balance sheet at notional 2007 valuations. If they marked to market (realistic valuations) every bank in Spain would be insolvent. This would be the case even if they could sell all their properties tomorrow for what they are getting for "the few properties for sale on a monthly basis", ie no market crash. They are still only gettinng 50% of the valuation on their books. Thy cannot afford to crystalise this loss as then their market capitalisation  would be far below the minimum required by EU banking regulations. They can only extend and pretend.

Thinking outside the box but this maybe contentious..... could these properties act as ready built homes to house a quota of genuine existing refugees currently in Europe perhaps (security checked), with EU grants made available in the immediate interim to support necessary local infrastructure (schools and small commercial facilities) with local travel links and agricultural redevelopment options (or other local work options/industry) to act as employment/reskilling/growth opportunities both for unemployed Spanish nationals and refugees alike? It seems crazy to demolish existing infrastructure when refugees in Europe are desperately seeking homes and work and these are structures already built.....likewise opportunities for unemployed Spanish nationals.

Just a thought. (Please don't shoot the messenger ;)!!!

Well ads,

After reading GuyT's post I fear that your very well meaning suggestion would put paid to the existance of the Spanish banks that are heavely involved in the financing of these properties, due to the debt being settled in total too quickly.

Other than that good on you for caring. 

Thanks Destry,

" After reading GuyT's post I fear that your very well meaning suggestion would put paid to the existance of the Spanish banks that are heavely involved in the financing of these properties, due to the debt being settled in total too quickly. "

Would this be the case if the Banks rented out these properties (once infrastructure/work options etc were in place and with strict EU contracts in place so the Banks weren't at liberty to abuse the EU grants), as opposed to being purchased outright, so a potential steady flow of income (albeit guaranteed low income for a pre-determined timeframe built into EU contracts, so as not to leave occupants vulnerable and open to abusive rent rises)? Better than no income at all?

Nice idea, but what you're proposing sounds a little too much like a ghetto to me. 

I know what you mean Roberto, but if this was for genuine refugees and unemployed Spanish nationals willing and keen to reskill etc (maybe attached conditions to rental), it wouldn't have to be would it?

This message was last edited by ads on 30/09/2016.

ads,

In the real world the banks are willing to write the property values into their books at knock down prices that they hope will be achieved eventually. Renting out will bring in income as well as heavy wear and tear that would require them to continually keep on writting down the value. As an ex property landlord who specialised in renting out very nice apartments in good areas to young professionals, I well recall the damage that these guys could cause, god only knows what these refugees would do.

Just a thought.