British property buyers are now officially in high demand in Spain, after the Spanish housing secretary announced in March 2011 that Buyers from Britain are "our highest priority", and "those about whom we are most concerned".
The Bank of Spain is key to the rise in supply of 'discounted' housing stock. They have an official write-dwon on the value of bank-owned stock, known as provisiones. This is currently at 10% but an imminent hike is casuing some banks to drop the price on their repossessed stock early. The bank usualy evaluates property for a price by adding the loan to the developer to VAT and legal expenses. This price is then writeen down by the obligatory 10% of the property value to 20% for property held for more than a year. This is now expected to rise to 30%.
100% Mortgages
In the UK, the usual process is to raise a deposit, obtain a mortgage approval, and then start looking for a poperty to buy. In Spain, due to the high demand for buyers, and the excess of repossessed stock, banks are offereing as flexible terms as possible in order to offload property from their books. If you purchase repossessed property stock from a bank, it is likely they will offer a mortgage up to 100% of the purchase price. This is normally not the same as the 'valuation', as the property has been heavily discounted to encourage buyers.
The extent of this situation is unprecedented. A former advisor to the housing ministry, calculated that since 2004, 2.3 million homes have been started, but not purchased. In 2005, at the height of the property boom, 800,000 new homes where started, which is four times an average level for the UK.
Many banks have their own real estate departments to offload surplus stocks, some are listed to the right.
