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Solvia, the property sales arm of Banco Sabadell, sold an entire development of 138 apartments in Manilva in just one week in July. Was this a miracle? No
28.08.12 - 10:36 -
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Banks increase sales of properties by dropping prices
The stock of empty housing has dropped to a new low. SUR
Solvia, the property sales arm of Banco Sabadell, sold an entire development of 138 apartments in Manilva in just one week in July. Was this a miracle? No. It was simply a case of having set a price which people were prepared to pay for the properties. The apartments were snapped up at prices which were more than 70 per cent lower than the original off-plan ones. One bedroom apartments went for 56,000 euros; two bedrooms for 76,000, three bedrooms for 93,000 and four bedrooms for 123,500 euros.
This may be news, but it is not an isolated case. According to the National Institute of Statistics, about 80 per cent of properties which are sold by estate agencies which are linked to banks are repossessions. This means that about one thousand such properties in Malaga are finding new owners each month, because the purchasers are attracted by a drastic reduction of more than 50 per cent in prices and the mortgage facilities which are available to them.
The sector believes the second half of the year will be even better, because people will want to buy before IVA is increased in January 2013 and before the planned end to tax relief. This should benefit areas like the Costa del Sol, which continue to be attractive destinations for a second home. Although the figures for June were lower than those for May, Malaga is the province in Andalucía in which most properties have been sold and the number of sales is almost double those of Seville, which comes second. In fact, more properties have been sold in Malaga province than in some entire regions of Spain.
Marcos Beltrán, the real estate director of the southern office of Solvia, has spent most of the past month in different notary offices with purchasers of the aforementioned Punta Paloma urbanisation. These successful sales are an illustration of how to draw up a successful commercial policy. "We don't go by a valuation of a property; we carry out an evaluation of the market. We see what property transactions are taking place in an area and then we price the properties accordingly. What is important to the bank is to liquidate such assets."
Thanks to this strategy the company has placed about one thousand properties on sale in Andalucía so far this year and about 40 per cent of these are in Malaga. It aims to end the year with 7,500 properties sold on a national level, which would be one thousand more than last year.
With regard to prices, Marcos Beltrán considers that the market moves in micro-zones. "Prices will be adjusted to what the market can take. In some places there could be discounts of as much as 75 per cent, while in the eastern part of Malaga city they have dropped by 40 per cent and are already at rock bottom". In general terms, the average percentage of the discount has been 30 per cent compared with last year. "That is a big drop, but they have to be sold so they don’t incur any more costs", he points out.
The National Institute of Statistics, basing its figures on information from property registers, shows that in June a total of 1,413 sales contracts were signed in Malaga province. Although the figure does not include those for July and August so far, and these are proving positive months for the sector, it serves as a reference for the arrival of 'realistic' prices for the housing stock which has been accumulated by financial institutions in recent years.
Priority in mortgages
Marcos Beltrán recognises that all banks are giving priority to getting rid of their housing stock before granting mortgages for other properties. "Everyone gives discounts, but the banks have an extra tool, which is financing. They consider applications for mortgages for other properties, but the network of real estate offices offer the banks' properties to would-be purchasers."
This supports the sector's estimations that between 80 and 90 per cent of sales which are completed these days are of bank repossessions. Developers who work with Banco Sabadell also receive help to publicise their properties through its network of agents and to obtain the necessary financing.
With regard to the summer, Marcos Beltrán says there are more sales than last year, but at lower prices. He hopes there will be a surge in sales of new properties until the end of this year, partly because of the forthcoming increase in IVA (which will rise from 4 per cent to 10 per cent, or an average of an extra 6,000 euros) and because of the planned end of tax relief.
Carlos Rueda is the Southern Regional Director for Idealista.com, a website which specialises in sales of residential property. He has spent more than five years working directly with financial entities whose properties are based on the Costa del Sol and Costa Levante and does not hesitate in describing the banks as "the country's biggest estate agencies". He says the majority of properties sold by his company are bank repossessions, for two reasons: "The banks can reduce the prices of their housing stock and offer discounts of around 60 per cent, and they can also offer 100 per cent mortgages on these properties. Otherwise, the maximum they will give is 70 to 80 per cent of the value on the title deed".
Maximum demand
Carlos Rueda considers that demand is at its maximum now. "A lot of people want to buy; they are not in a hurry and they have been waiting two or three years for prices to go down". The key to a sale is the price, and this is also being set by the banks. "There was a steep drop in May and every time there is a movement in price it pulls the rest of the market with it. For example, a 150 square metre property in Malaga city should cost about 200,000 euros, depending on the area. Nobody is going to offer more, these days", he says.
Carlos agrees with Marcos Beltrán that the end of this year will be a good time for sales because of the abolition of tax relief and the increase in IVA. "We recommend that somebody who is selling their property should drop the price now and lose an extra 15 per cent because next year they will have to drop by something like 40 per cent".

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