view of Spain’s property market'
The confusing picture generated by the property market in Spain is being put down in some quarters to the negative impact property sales by bad bank Sareb are having.
According to ratings agency Fitch, the offloading of so called ‘bad’ assets by Sareb, which was specially set up to dispose of the property and loans that were adversely affecting the banks’ recovery, is flooding the market with supply of stock.
Following classic ‘supply and demand’ economic theory this can only have the ultimate result of forcing prices down even further. However, this also ties in with the view from Goldman Sachs, as they recently stated that values needed to fall another 10% in order to kick start a true recovery.
Fitch believes Spain will continue to have an oversupply throughout the period that Sareb attempts to dispose of the assets, and that the process will continue over a period of many years.
Estimates of the total number of unsold new properties in Spain stands at around 700,000 units, and this doesn’t include more than 600,000 properties built since 2004 as coops, self-construction or unfinished developments.
The efforts of Sareb to clear its books are tied in with targets set by the government as part of the country’s 'bailout' deal. Only 550 homes were sold by the bank in the three months from late February. However, with pending sales this could rise to 3,550 quite soon.
Fitch released a statement saying that there may be "increased selling by banks, some of which have already begun lowering prices and accelerating disposals in anticipation of supply from Sareb depressing prices further".
It continued: "However, Sareb and the banks will want to find the right balance between speeding up the pace of asset sales and causing prices to fall."
If you want to send money from UK to Spain, which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.