The drop in house prices in Spain will tend to pick up speed, the joint estate appraiser, Euroval, reports. (the statement had been released before the Spanish bailout was announced two days ago).
The study said that Spanish banks are managing their portfolios ‘more actively’ and that they have begun to sell adjudicated housing and mortgage loans. This is expected to have an effect on funds and demand from investors.
The clean up process aimed to speed up sales
A Royal Decree requiring clean up of the financial sector was approved at the beginning of last February. This provides for a downward adjustment in the value of real estate assets, as it affects the balance sheet and the capital requirements of financial institutions, the report went on to say.
This will also influence the market value of property, because financial institutions will, in many cases, be driven to dispose of real estate assets that are highly valuable since these absorb capital.
The report indicates that the Spanish property market has not yet seen sufficient ‘price contraction’ because buyers are waiting to take advantage of lower prices, while sellers are trying to avoid selling at a loss.
The latest data from InmoCoyuntura, Real Estate market situation report May 2012, dating from the second half of 2011,confirmed a ‘slow and steady decline in residential property prices,’ showing that maximal prices have been reduced while the prices at the bottom end of the market have remained low.
Jose Antonio Jareno, the CEO of Euroval, explained to the Spanish news agency Efe that the sector had 100, 000 homes completed in 2011, compared with 700, 000 in 2007, though it has reduced the number of new housing builds. This is expected to result in a reduction in new-built inventories from 2012.
Second quarter data show a fall in sales of 21.1% compared to the same period of last year, although this increase is pushed by the new 4% rate of ‘super-VAT’ is due to be applied to the sale of new builds.
Other articles of interest:
- Homes Sales in February 2012
- 10 facts about the Spanish property market in 2012 !
- New PM To Reduce Tax Pressures For Property Buyers
- Can Property Prices Drop by 75% because of Ageing?
- FREQUENT QUESTIONS AND ANSWERS ABOUT SPANISH PROPERTY 2012