Property surplus in Spain

Report forecasts a surplus of over a million properties in Spain

A report compiled by the consultancy agency Forcadell together with the University of Barcelona (UB) presented last week by the expert and professor Gonzalo Bernardos, states that ‘practically nobody is selling anything’ and stresses that there is no lack of properties in Spain. In fact, according to the report by the end of this year there will be almost a million surplus properties for sale.

Forcadell believes that the steps that need to be taken are primarily to assess the real situation. It also believes that possible solutions lie in not trying to stimulate the production of more flats but to allow for a cooling off period in which a large part of the actual stock could be absorbed into the property market.

Forcadell proposes a packet of measures. Firstly, the opening of a period of ‘indefinite’ sales in the prices of properties something which would imply a substantial reduction in current prices and would be uniform for each city.

It has also suggested that the special promotions included in the campaign of sales should be financed under special conditions. According to the consultancy agency the cost of the subsidy in the interest rate, which would be guaranteed over a period of five years at 2.5% and which would also include loans of up to 100% the value of the property should be shared by property developers, banks and building societies.

In recent reports Forcadell gave clear warnings over the difficulties the property sector was facing. According to its forecasts the price of property in Spain will go down on average by 20% between 2007 – 2009, a fall caused principally by the excess number of available properties and a significant drop in demand for properties. In his opinion, speculators and investors will not get good results which will lead many of them pull out of the property market all together and invest there money elsewhere.