Bank Repossessions Murcia, Costa Blanca, Costa del Sol

Bad Bank could see Property Price Rises

Discounted Bank Properties at Condado de Alhama

The recent terms imposed by the EU for a bailout in Spain may lead to less choice and higher property prices.

The bank of Spain announced on 31st August that a bad bank would be created to take on any repossessed properties that the Spanish banks need to sell. The aim of the banking fund is to reduce the pressure on the Spanish banks who have recently slashed prices on their stock of repossessed properties.

Sales of bank repossessions in Spain have been buoyant in many areas, especially those where UK and international buyers are attracted such as the Polaris World golf resorts in Murcia. Prices are as low as one third their original price. However there are fears that the introduction of a bad bank to absorb the property stock could lead to the end of the mega discount.

The government announced its intention to run the bad bank for a period of 10-15 years and to make a profit for the taxpayer. That means selling the property stock at a higher price than which it paid the bank. Those banks already selling at 50%-60% discounts where properties are moving are only likely to hand over properties for which they can achieve a higher price from the bad bank. Add in a stated profit margin and it all adds up to higher prices on the stock that is currently on the market.

The introduction of the bad bank eases the pressure on selling the stock quickly. The government with several billion Euros of EU funding can afford to wait so does not need to be as desperate as the high street banks in dropping prices to accelerate sales.

Now is the time to buy in Spain before the introduction of the bad bank planned for mid November. Prospective buyers should call our experts in the UK on +44 (0)208 429 7115 for advice on the market and buying in Spain.

More information: The Guardian