Amid speculation as to the true value of Spanish property, it is certainly true to say interest and enquiries are picking up in this much-loved holiday home destination. So let’s take a look at what is happening.
According to The Economist, Spanish house prices are still adjusting and at the end of 2013 they were still 10% overvalued relative to wages. A year previously this estimate had been 20%, so there are indications it is moving in the right direction. To put it into context, the same calculation shows that the UK property market is 26% overvalued relative to wages.
Spanish Bank Repossessions
Turning to a sector of the market which has generated a lot of interest, some Spanish Bank Repossession properties can be more expensive than properties sold on the open market. What’s more Adicae (a financial services consumer pressure group) concludes that some banks charge a premium for the mortgage finance, associated with property on their books, as it is not always easy for property buyers to compare lending terms on the open market.
This might not necessarily be the case for overseas property buyers, as they tend to have higher deposits, or come as cash buyers, meaning banks have less pricing leverage. Having said that it is possible some banks may charge more for the property because a buyer is not taking a mortgage. That flies in the face of common sense in many respects, but the finance is where a bank makes its money.
Spanish Bank repossessed property – where does SAREB fit in?
Setting up SAREB* was part of the European financial assistance for bank recapitalisation in 2012. It was set up to assimilate the property assets transferred by four nationalised Spanish financial institutions although it doesn’t have a banking licence, so cannot lend money like other banks. SAREB deals with institutions and not the retail, general public end of the market.
After successfully selling 9,000 properties worth 700 million euros in 2013, SAREB envisages building out about 3,000 homes in 2014 on about 130 developments. The conclusion is it is better to finish partially-completed developments in order to facilitate selling the homes.
Gazumping – buying a Spanish Home – what to watch for
Banks selling their own repossessed stock prefer to sell volume or bulk deals, as opposed to one or two properties. As such they are more likely to deal with an intermediary or agent, who can feed through a number of deals regularly, rather than dealing directly with members of the public. Where individual sales might be possible, there is a lot of paperwork required and this can frustrate the process if the correct information or document is not supplied in a timely manner.
Due to the lack of property information and photos on bank websites, it can be difficult for Spanish home buyers to compare ‘like for like’. Banks are not, after all, geared up as Estate Agents or Property Agents.
And the picture changes weekly, if not daily. When a bank is successful in selling some of its property stock, it then revises its prices and this can be upwards these days. So an investor might book a trip to buy a Holiday Home in Spain and then arrive to find it has gone up by €10,000. There have been instances of bidding wars being sparked, playing one agent or home buyer off against another, in order to strike the best deal on the most attractive properties. This is where deals can be lost or buyers sucked into a price war unnecessarily, or being gazumped.
Property Venture® works with a network of both local agents and banks, which means we can cut through to the reality of what is happening on the ground and keep you up to speed with which bank repossessions are good value and help work through the paperwork.
As ever it is advisable to get the up to date picture and get help wending your way through the Spanish property maze if you are looking to buy through the bank repossession route.
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Property Venture® is an award-winning, UK-based agency for overseas property who helps people buy investment property and holiday homes in Europe, more easily and safely than they can on their own, because we offer grounded common-sense advice.
The focus is mainly greater Europe: Poland property, UK investments, Spain property, Turkey property, Cyprus property
On the Advisory Board and a Member of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. Take a look at what our clients say
Featured or Mentioned in: The Sunday Times, The Times, The Daily Telegraph, Sunday Express, Daily Express, The Mail on Sunday, Daily Mail, The Independent on Sunday, The Independent, Evening Standard-Homes & Property, Homes Magazine, Property Wire, International Estate Agent Today, Property Overseas Today, Overseas Property Professional, HSBC Liquid Magazine, easyJet Magazine, London Homes & Property, A Place in the Sun, Buy Association
* SAREB = (Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria-Society for the management of assets proceeding from the reconstruction of the Banking System)
Tags: Coastal Property, gazumping, holiday home, new build, Overseas finance, Spanish Banks