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Unsold Housing Inventory May Tripple In Spain Next Year

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http://noir.bloomberg.com/apps/news?pid=20601010&sid=aqVwPTMwc4oY

Foreclosed Homes for Sale in Spain May Triple in 2011

By Sharon Smyth

Nov. 25 (Bloomberg) -- The number of foreclosed homes for sale in Spain may triple next year as new accounting rules prompt lenders to dump their depreciating assets, according to the co-founder of a website that advertises repossessed properties.

About 100,000 houses and apartments owned by banks are now on the market, Fernando Acuna said in an interview. A quarter of them are listed on the website operated by his Madrid-based company, Pisos Embargados de Bancos, on behalf of 25 banks.

Spanish lenders have a total of 181 billion euros ($242 billion) in “troubled” construction and real estate loans, the Bank of Spain said last month. Since Sept. 30, the banks have been required to account for falling property values more quickly, encouraging them to shed assets without waiting for the market to recover from a three-year decline.

“Lenders took on an immense amount of property from developers and homeowners and now they’re being forced to offload the deadwood,” Acuna said.

About 2,600 real-estate and construction companies have gone out of business in the past two years, according to credit insurer Credito y Caucion, while unemployment has more than doubled to almost 20 percent since 2007. The cost of cleaning up the banking industry’s books has so far been about 70 billion euros in the form of government bailout funds, asset writedowns and use of reserves, according to the Bank of Spain.

Price Reductions

“By changing the rules on provisions, the central bank has really put a shotgun to their heads,” said Fernando Rodriguez y Rodriguez de Acuna, founder of Madrid-based property adviser R.R. de Acuna & Asociados. “The banks will have to cut their price expectations more aggressively to reduce their stock of homes.”

Property values will fall 20 percent over the next five years, Rodriguez y Rodriguez de Acuna estimates. Most of the declines will come in 2011, he said. Since the Spanish market’s peak in April 2007, home prices have dropped 22.5 percent, according to a survey by real-estate website Fotocasa.es and IESE Business School.

Under the changes introduced by the Bank of Spain in September, lenders must take account of a drop in value of at least 30 percent if they keep the assets for more than two years. They must also make provisions for bad loans after 12 months, rather than as long as 72 months.

The new rules will lead to an average increase in provisions for 2010 of 2 percent, the central bank said in May. They will also knock off an average of 10 percent from the pretax profit that lenders generate from their Spanish businesses, the Bank of Spain said.

Missed Target

Banco Santander SA, the biggest Spanish bank, said on Oct. 28 that it set aside 472 million euros to account for impaired assets and will miss its 2010 earnings goal because of the changes.

“Banks are in a delicate position,” said Fernando Encinar, co-founder of Idealista.com, Spain’s largest property website. “They’ve realized that it’s probably better to get rid of their real estate rather than prolong the problem.”

Idealista currently advertises 29,334 bank-owned homes in Spain. In 2008 it didn’t list any.

About 280,000 people in Spain will lose their homes this year, according to Spanish consumer protection association ADICAE.

Does anyone think the BoE will do anything like this? Doubtful I suppose.

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http://noir.bloomberg.com/apps/news?pid=20601010&sid=aqVwPTMwc4oY

Foreclosed Homes for Sale in Spain May Triple in 2011

By Sharon Smyth

Does anyone think the BoE will do anything like this? Doubtful I suppose.

How strange in my copy of Euro weekly news this week here in Almeria hass an article with headline Santanders400 bargain - 'The bank has put 400 used houses on the market with discounts of up to 58% on their website www.aportucasa.com . Interested buyers can choose amongst an assortment of more than 1000 properties of all types to suit all pockets'.

Iam sure that Santander is a well funded ,leading bank and that this will clear any problems they have !!!!

We are renting here and its like a ghost town with nice weather,so many cranes and shells of buildings . I wonder who loaned all the money for these unsold properties.

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We are renting here and its like a ghost town

Wasn't that one of the selling points at one time of Almeria - the place they filmed the Spagetti westerns, a true desert?

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Wasn't that one of the selling points at one time of Almeria - the place they filmed the Spagetti westerns, a true desert?

At least its warm and is not snowing plus the lack of people is just one of the benefits of having a corrupt local government who took cash for permission to build all this stuff. Unfortunately there has been a supreme court judgement last week that said that the (new)local goverment was correct to bulldoze peoples homes built on land with the (old) government planning permission, With that authority I now suspect that there will be mass destruction orders after christmas, these primarily affect those poor old ex pats who bought a dream home here . I suspect that there will be many ex pats returning penniless to UK next year :o

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At least its warm and is not snowing plus the lack of people is just one of the benefits of having a corrupt local government who took cash for permission to build all this stuff. Unfortunately there has been a supreme court judgement last week that said that the (new)local goverment was correct to bulldoze peoples homes built on land with the (old) government planning permission, With that authority I now suspect that there will be mass destruction orders after christmas, these primarily affect those poor old ex pats who bought a dream home here . I suspect that there will be many ex pats returning penniless to UK next year :o

Good job. Drove through Spain in 2006 and was appalled at the insane level of building ruining the look of the place. Didn't actually know about their housing boom back then, but could easily tell it didn't add up. Having said that, Portugal was even more appalling, a planning clusterf4ck.

Edited by General Congreve

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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