Spanish bank repossessions more expensive

Properties repossessed by Spanish banks are 20 per cent more expensive than those on the open market, according to new research.

Analysis carried out by Users of Banks, Savings Banks and Insurance (Adicate) compared 96 properties offered by six banksin Spain, finding that repossessed homes cost an average of one-fifth more than those sold normally.

The hike in cost is mostly attributed to a "huge premium" charged by banks for mortgage financing, making money from buyers while still undercutting local estate agents.

The problem applies more to local buyers and agents than international investors, though, as overseas buyers snapping up holiday homes on the coasts are more likely to have cash to splash and not depend on lender's conditions. The amount of unsold stock on the market left over from the building boom that needs to be shifted is also helping to limit the extent of the bank's raised prices.

"Due to the lack of property information and photos on bank websites, it can be difficult for consumers to compare “like with like” which is confusing and increases the sales cycle for the industry," cautions Ashley Rigg of Global Edge.

"It’s not just banks competing unfairly on financing which is inhibiting international sales, it’s incompetent marketing too."