Bank repos in Spain have fallen in value by 43% on average compared to their original mortgage valuations, according to new research by the rating agents Fitch, reported in the Spanish press.
Values have fallen by between 20% and 58% depending on the lender, location, and condition, and by 32% on average since being repossessed. Fitch analysed more than 8,000 homes repossessed by Spanish lenders to reach these conclusions.
BBVA is the most aggressive bank when it comes to discounting the price of repossessed homes, and sells quicker than most as a result. BBVA discounts its repossessions by 58% on average, compared to an industry average of 43%, with an average time-to-sell of 11 months compared to an industry average of 13 months.
Santander, Spain’s biggest bank, discounts by 43% and sells in 14 months on average.
Fitch also warn us not to expect the credit crunch to ease up next year, as Spanish banks are only lending to people who buy one of their properties.
More falls to come?
Banks will continue discounting their properties in 2012, if the new Government has its way, according to a recent article in the Spanish financial daily Expansion.
The Government believes that banks will have to discount their prices by another 20% on average, to bring their property portfolios in line with market realities and gain credibility with financial markets.
In which case, it’s not unreasonable to expect property prices to fall further over the coming year.
Visit Mark Stucklin’s Spanish Property Insight website for a range of up to the minute news and independent reviews on the state of the Spanish property market.