Banks at root of declining housing market in Spain.

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Banks at root of declining housing market in Spain.

News Article Date: Wednesday 22nd of July 2009

Banks at root of declining housing market in Spain. As the financial crisis deepens more sales are failing at the eleventh hour with purchasers facing unforeseen circumstances. Chris Mercer, Director of Spanish property specialists Mercers, comments, "We’ve certainly spotted a marked trend for house sales that are near, or at, completion and then break down at the final hurdle. The reasons are varied, but most relate to the current precarious global economic situation. Banks may withdraw their mortgage offer at the last minute, the purchaser perhaps suddenly loses their job or simply gets cold feet at the enormity of the financial commitment. This trend is disturbing for the agent and the purchaser and particularly the vendor." A would be buyer may feel coming in quickly after a sale has failed could clinch them a deal, this might be the case as many vendors, here in Spain, are quite desperate to sell as pressure is continually put on them due to the bank or the growing uncertainty of employment. This of course gives the buyer more negotiating power. Recently, for example a 5,101m plot with a large house built on it first on the market in summer 2008 at 595,000 euros, was sold, subject to contract, only for the buyer to withdraw from the deal two days before the contract was signed. If you have the cash you could pick it up for 470,000 euros. The housing market in Spain is still in a state of flux and the banks, here, have said massive reductions are necessary in the overall prices of property to really start the market moving. Recently they have relaxed some of the strict criteria for those seeking a mortgage. However, there are still over a million unsold houses in Spain (many financed by the banks) not to mention the many hundreds of thousands that are stood unfinished, making some of the country look like the scene from a nuclear holocaust movie. So for investors it may be better to wait, but for those looking to buy a dream home, a home that is unusual and to your taste nows a good time.
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