Prices of repossessed homes fall 65 percent

The drop represents the sharpest decline in prices since the financial crisis began and suggests prices have fallen more than twice as much as government figures show.

Decline
The decline is relative to the property's value when the initial loan was granted, with the average price of repossessed homes having fallen 50% since 2007. “Fitch believes that the factors weighing on the Spanish residential property market will continue to deteriorate,” the report states. “The gap between original valuation and the sale price is a reflection of a distressed mortgage market, characterised by high borrower indebtedness, constrained affordability and falling property prices.” More than a million new homes remain unsold in Spain, while Spanish banks have seized more than 200'000 residential properties, leaving the market saturated.

On top of this is the increased difficulty buyers are facing when trying to obtain a mortgage.
According to the Ministry of Public Works, Spanish house prices have fallen 25.5% since the 2008 peak.
Last month, central government unveiled two new initiatives to clear the country's property mountain.
The first was another promotional tour of key markets to promote the properties standing empty across the country in an attempt to attract overseas investors.

Foreign buyers
The second plan, which has yet to be approved, is to provide foreign buyers of properties over a certain amount, immediate residence in Spain.
However, the latter idea is being hotly contested by the real estate sector and the government has been threatened with legal action should it proceed with the plan.