Property investors are exploiting the dire state of Spain’s property market by demanding hefty discounts on asking prices.
According to one Spanish property website, pisos.com, the gap between what a vendor asks and the buying price is widening and has now reached an average of £36,000.
People looking at selling property must also contend with a continuing slide in prices with average values for flats falling from £188,000 in 2009 to £145,000 last year.
One reason put forward by the site for the increasing demand for discounts is that Spanish buyers don’t have the budget to buy at market values.
A spokesman said: “The economic crisis has affected the buying power of Spanish families and they can’t get the finance that was once available, so they are demanding lower prices which they can afford to pay.”
Spain’s property market is still in the doldrums with news from the Bank of Spain that bad loans have now reached 11.4% of debts, according to the most recent statistics for November.
That’s a record high for the country and would be worse if the government hadn’t created a ‘bad bank’ to absorb much of the nation’s toxic debt.
Bad loans have been on the increase since June 2011 and show no sign of stopping soon.
Underlying Spain’s poorly performing property market is news that unemployment has now reached a record high of 26%, with 5.97 million people out of work. That’s twice the European Union average, while the unemployment rate for young people is now 55%.
Unemployment is the highest it has been since the mid-1970s and comes after Spain’s deep spending cuts and a long recession.
Economic experts say the trend will continue into 2013.
Second home demand
Things are so bad economically that Spain is on the verge of another financial bail-out with around £1.6 billion being earmarked for clearing bad loans and tackling bad property debt which, in theory, should help the country recover and grow again.
However, it’s not all doom and gloom with some Spanish property selling strongly.
A report from the Real Estate Agency says the demand for second homes in Spain, particularly in the tourist-strong areas of Costa Blanca and Costa del Sol, is picking up.
Buyers from Sweden, where the economy is doing well, are heading to Spain to pick up bargains which has helped sales rise by 90%, says the agency.
Their report is underlined by Taylor Wimpey Espana which has seen sales increase by 52% year-on-year helped by buyers enjoying the bargains and discounts to be had on some Spanish property.