Spanish banks need to offer huge price discounts in 2010 to sell off massive stock of properties

Banks in Spain, now the country’s biggest property owners having re-possessed so many homes, will have to offer discounts of up to 50% in 2010 if they are to shift their stock of real estate, according to a new report.

Current discounts are simply not big enough to interest buyers, says the report from BNP Paribas Real Estate, the real estate arm of French bank BNP Paribas.

The prediction comes as analysts point out that it could take years for the Spanish property market to recover. According to Acuna & Asociados, highly regarded Madrid real estate analysts, it could take six or seven years just to clear the huge numbers of empty homes that won’t sell.

The firm’s annual report indicates there are 1.67 million properties for sale in Spain including 500,000 new builds, 500,000 resales and the rest are buildings that have yet to be completed.

Indeed, the latest report from BBVA, Spain’s second largest bank, also indicates that a recovery will be slow and drawn out over several years.

Spain’s Zapatero Says Economic Recovery “Imminent”

MADRID – “The growth train is very close,” Spanish Prime Minister Jose Luis Rodriguez Zapatero said on Thursday, announcing measures to improve economic competitiveness and labor markets in a country where some 4 million people are unemployed.

“If we do what we should and rigorously apply all the reforms in progress, this train will increase its velocity until it acquires that necessary to restore job creation,” the Socialist premier said in Madrid before leaving for Brussels to attend a European Union summit.

He pledged to push changes aimed at ensuring the long-term stability of Spain’s pensions system, as well as labor market reforms that “strengthen companies without weakening the workers.”

Conditions Worsening In Spain's Real Estate Market

Costa Blanca, Spain

Spain’s house price bubble burst a long time ago. The Bank of Spain’s figures say the peak was in early 2008 (based on official valuations). Realtors say the peak was in mid-2007 (based on offers-for-sale). Whichever is true, two years later, in Q3 2009, Spanish house prices continue to fall.

Official figures show the average price of houses in Spain at €1,903 per sq. m. in Q3 2009; down 0.94% from the previous quarter, 8% from the same period last year, and 9.45% lower than the March 2008 peak (Bank of Spain data). In inflation-adjusted terms, house prices were 0.52% down on the quarter, 7% on the year, and 10.58% from peak.

Spain 'to see return of investors'

Spain should see property investors returning in large numbers after experts said the market there has reached its bottom.

Writing for Spanish real estate portal Kyero.com, Martin Dell said the "word on the street" is that the period of falling prices is over.

He also noted the comments by Knight Frank last week that the market has stabilised - although price rises will have to wait until 2011.