Repossessed Spanish properties - prices drop by 65%

Prices of distressed Spanish properties are 65% below previous value

Spanish properties repossessed in 2012 are being priced at 65 per cent below their previous value, according to figures released by credit ratings agency Fitch.

The new market prices are relative to the value of the property when the initial loans were taken out, representing price falls of more than 50 per cent in many areas across Spain.

Spain’s economy has struggled with a second recession in three years, and unemployment currently stands at 25 per cent throughout the country, which is among the highest in Europe.

Allied to some areas of Spain that are experiencing a slack property market due to oversupply of unsold and unwanted new property, the situation nationwide has created a perfect storm for lifestyle buyers intent on snapping up a bargain.

The price drops are the sharpest experienced in Spain since the start of the crisis in 2007, when prices fell by an average of 50 per cent. “The gap between original valuation and the sale price is a reflection of a distressed mortgage market, characterised by high borrower indebtedness, constrained affordability and falling property prices,” said the Fitch report.

However, despite this latest price drop, agents and industry watchers in Spain’s strongest and most robust property market – the Costa del Sol – are confident that the bottom of the market has been reached. Prices are unlikely to fall any farther, and figures coming out of the region indicate that sales numbers are picking up as confidence, cash and foreign Russian and Chinese investors return to the market.