Spanish Banks Reduce Property Prices
From October 2016 the Bank of Spain has requested that the Spanish banks reduce their repossessed property prices even further which could mean an even bigger saving to buyers.
The Spanish press have reported that the banks are not happy about this as in effect it is forcing them to write off even more debt already accrued on these properties and the smaller banks will take the biggest hit. There were massive write offs for the banks at the end of 2015 totalling a staggering 84 billion euros.
Cheaper Property in Spain?
So, does this mean you are going to bag an even cheaper bargain in Spain? Well, it really depends where in Spain you are looking. Typically foreign buyers look for property in the popular resorts along the coast and there is high buyer competition in the popular Costas and Barcelona so it follows on that prices will not get any lower with many people after the same property.
New developments that have been completed by the selling bank are generally sold out before the first brick is laid so there will be no change there.
Inland Spanish Property.
The less popular inland towns and less desirable property is probably where you will see reductions but this could create some excellent opportunities for investors who want to improve the property to sell on or let out, or for any individual who would like to live inland in the many Spanish white villages.
Barcelona is the place to be?
Apart from being on the coast with a seaside setting Barcelona is a multi cultural cosmopolitan city with so much to offer, it has an established entertainment industry and distinctive cuisine, Barcelona is experiencing a steady recovery from the 2008 property crisis and is proving as a promising market for property investors.
Interest Rates on Spanish Property.
One of the main reasons why Spain is an attractive proposition to buy a bank repossessed property is because of the low interest rates.
The EU mortgage rate is based on the Euribor and in March 2016, it reached a negative value, in June it fell to – 0.018%, where it exceeded 5% during the 2008 crisis.
Non resident mortgages are 70% LTV (loan to value) at 4% per annum, while a residents mortgage can be up to 80% LTV. The National Institute of Statistics reveal that in March 2016 the amount of loans provided increased by 14.5%. If the trend continues the transaction volume in Spain will increase and therefore property prices will increase.
The Spanish property market in general is recovering and Barcelona shows the biggest increase compared to the national level. Buyers from China are also investing in Spain to obtain the so called Golden Visa.