The Spanish bank Banesto, a part of Spains largest banking organization, Santander commented on Wednesday that it would sell 1,200 homes that have been repossessed with discounts of up to 40%.
This decision came hot on the heels of the news that the Bank of Spain intends to give banks double provisions to 20% for real estate on their books they have had for over a year, in order to free up the property market and force banks to be truthful about their losses during the boom times.
There have been worries that banks in Spain have been hiding their poor performing loan ratios by taking on real estate from real estate developers with problems who would ordinarily go bankrupt.
There are currently tens of thousands of properties falling into this catergory and this has therefore impeded the correction in the Spanish property market. There has been a reported decline in the property market of 14% since the height of the boom. There is now a huge interest in buying cheap property in Spain with a focus on repossessed or auction real estate and this flood of properties should offer buyers some real bargains. It will be interesting to see how this will subsequently affect property prices in each region.