Property prices are still falling in Spain with international buyers cashing-in on bank-controlled discounts and 100%-plus mortgages in some prime Costas.
With house prices continuing to fall in Spain, more international buyers are tapping the Spanish bank repossessions sector with its even lower prices and bigger loan to value mortgage deals.
The latest Knight Frank Global House Price Index, Q1 2011, shows that in Spain average prices are down 4.6% year on year, but drastic discounting on repossessions and developments controlled by banks has forced prices down a further 4% so far this year. This has resulted in the highest-ever LTV advances - some as high as 110% include most of the buying costs.
The general IMIE (Spanish Property Market Index) for May recorded a higher year-on-year price decline to 8.1% compared with 6.4% in April for villas and apartments on the main Costas. But while the official cumulative fall in prices, showed 21.5% and surpassed the 20% mark for the first time, hefty discounting in some Costas resulted in average prices 34.5% lower than the peak year 2007.
There are plenty of bargain properties in the main Costas with discounts on book price ranging from 16% to 53% that come with guaranteed 90% mortgages and others with 80% mortgages and interest-free, repayment -free offers for the first three years.
One of the best deals for key ready property is at Mojón Hills, Costa Calida, where a bank-controlled developer has slashed prices by almost half to EUR 135,000, supported by the bank with 107% mortgages that include Government tax. There are similar deals at Coto Real Duquesa, Costa del Sol where 50% price cuts are supported by 100% mortgages.
In Mallorca, one bank has forced the distressed owner to cut EUR 500,000 from the asking price of EUR 1.7m on the sea-view finca estate near Pollensa.
Bank property specialists, PropertyInSpain.Net have reported sell-outs on developments offering big discounts and top-level mortgages as developers sought to meet their bank loans and bankers reduced the level of toxic assets under the orders of regulator, the Bank of Spain.
Buyers mainly originate from Scandinavia, Belgium, Holland and Russia with Britain, mistrustful of banks, bringing up the rear – and missing out on many of the best deals.
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