Average price of property in Spain falls

Spanish estate agents lower their prices in direct competition with banks and building societies

Now that banks and building societies are entering into the direct sales of properties with offers that include not only large discounts but also facilities for financing transactions property developers have been forced to react with even larger discounts. One property developer, Metrovacesa, is leading the way with discounts of up to 55% on some of its properties on offer. Smaller less well known companies are also trying to get rid of their surplus stock of properties by offering discounts of between 40% and 60%.

The association of property developers has accused banks and building societies of ‘disloyal competition’ firstly for valuing properties well under their asking price and secondly for offering better mortgage deals. In an attempt to counter act this situation property developers have decided to launch large discounts over and above the 20% that many have been offering up to now.

In fact last week Metrovacesa completed a campaign in which some flats had been reduced by 55%. Discounts for properties in Madrid went up to 30% and 35% in Barcelona while in the parts of the Valencian Region and Andalucia discounts were between 40% and 55% which resulted in the sale of a third of the 247 properties on offer in just under two weeks. A spokesperson for the company explained that this was not the first time such offers had been launched and said that the flats on offer were the last flats on sale from many of its promotions.

Large companies are not the only ones involved in offering significant discounts. A company called Roan offered a variety of properties on special offer in its Madrid office. Over a period of 4 days around 5,700 people visited the agency in order to find out more information on 500 properties which were in the hands of property developers, private owners and financial institutions on sale in Madrid and the Mediterranean coast.

As a result there were 184 sales but Roan believes that this number will rise to 300 and is planning similar events in other cities around Spain.

Spanish property developers are increasingly concentrating their strategies on direct discounts. The Business Group Ternum has reportedly obtained 1000 properties which it is planning to place on the market at discounts of between 35% and 40%. Furthermore, the buyer will not have to pay anything during the first year. Another formula which property developers are using to get rid of surplus stock is to auction them off.

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