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UK Banks to help Spain with their Property Crisis

The European debt crises is still looming, we may currently be hearing little news about Europe’s problems but that doesn’t mean they’ve gone away. It’s believed that Greece will inevitable go bankrupt. Yes, they have received huge bailout funds from the European central bank but behind the scenes these were only provided to help prop up Greece and pay their monthly debt bill so that the rest of Europe can reorganise themselves for when the inevitable will happen, probably later this year.

It’s now becoming more apparent that next on the list is Spain. They have recently reported  some awful unemployment figures which show that 25% of the country haven’t got a job. What analysts know is that unemployment figures are a huge measure of future growth and with these figures the future looks bleak. Not only that they are facing a huge house crisis which could really bring the the country crashing  down as will now be discussed.

A recent analyst report predicts that property prices in Spain could fall a further 25%. So if you are considering buying a house overseas we suggest you wait a bit and maybe jump into the bottom of their housing market. The big impending problem is that the Spanish banks are holding huge property portfolios which are in negative equity. Spanish individuals willing to sell their properties don’t have any more luck either, recent figures show that no one in Spain is willing to buy due to the recession and the high risk involved in such a fragile property market. For UK citizens willing to relocate to a sunny and weather friendly country this is definitely a great opportunity to sell their houses quickly and move to the Mediterranean. Small flats, apartments and 2-3 bedroom houses are now incredibly cheap since these where the most constructed during the past years and where thought to be sold to young first-time buyers which cannot buy them since the incredibly high 25% rate of unemployment. There are more than 200.000 brand new built houses, flats and apartments along the Spanish coast, Baleares and Canary Islands ready to be sold.

Spanish Banks to sell their property portfolios to the UK

The reason why house prices may fall so much in Spain is because they are currently planning on off loading their debts and effectively sell their assets very cheaply to some of our major UK banks. Banco de Valencia has a six Billion Euro portfolio and Catalunya Caixa has a similar debt. These are the two major banks who are seeking help with their property portfolios. The problem is if these portfolios are sold off to the UK Banks at very low prices then they may want some immediate return on their investments and further dump them onto the open market which could assist in triggering huge falls.

Spanish Government are trying

The Spanish Government are very conscious about the fact that the property market is one of the biggest issues that is dragging Spain to a black hole and are considering a financial reform to deal with the insolvency of Spanish banks as well as the huge amount of toxic assets that these accumulate. The Government also estimates that this reform and the invested 55 thousand million euros may be able to reduce the risk premium of Spain in around 50 points quite quickly. These measures, says Luis de Guindos (Spain’s Economy Minister), will also allow banks to separate their property toxic debt from their assets so that these can start giving credits and loans again which will eventually help the Spanish economy get back on its feet. Spain is taking very extreme decisions and these are probably necessary to avoid becoming the next Greece.

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