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As one of the most moribund housing markets in Europe, Spain has become a magnet for global bargain hunters. Real estate prices are down as much as 50 percent from their peak during a housing bubble, and investors from Asia to the United States and Britain are flocking to Spain to try to catch the uptick.

169 300x174 - Spain: Magnet for Global Bargain HuntersBritish Airways flights to Madrid are packed with London-based real estate executives. The hedge fund Baupost is buying shopping centers, Goldman Sachs and Blackstone are buying apartments in Madrid, and Paulson & Company and George Soros’s fund are anchor investors in a publicly listed Spanish real estate investment vehicle. Kohlberg Kravis Roberts just bought a stake in a Spanish amusement park complex. Big-name private equity firms and banks are teaming up with and competing against one another on huge loan portfolios with names like Project Hercules and Project Octopus.
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Despite reports of foreign buyers snapping up bargain properties in Spain, the country’s real estate market will not recovery fully until banks relax their lending rules, it is claimed.

house in benahavís 300x199 - Still Waiting for a Fully Recovery of the Property MarketCurrently the maximum loan to value for non-residents in Spain is around 60% but a buyer also needs to pay up 15% of the purchase price in taxes and fees so some considerable upfront outlay is still needed to buy a dream home in Spain.

The latest official figures confirm that mortgage numbers in Spain have dropped for the 46th consecutive month up to February 2014. Experts believe that the country is in no danger of a full recovery, let alone a property boom, as average house prices have fallen by 30% since 2008 and mortgage lending dropped from a peak of €173 billion in 2007 to just €26 billion in 2013.
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More foreign buyers are buying property in Spain but the traditional purchasers from the UK are in decline, according to new data from property lawyers.

home in spain 300x199 - More Foreign Buyers in Spain but Less BritsAccording to a new report published by Spain’s Notaries the number of foreign buyers increased by 9.8% in 2013 but the proportion of British buyers continued to fall.

Foreign purchasers accounted for 21.4% of all Spanish residential sales or 55,187 transactions in 2013 and it also highlights the areas that are popular with overseas buyers.

A breakdown by nationality showed the number of homes purchased by British buyers accounted for 14.7% of foreign purchases compared to 34.3% prior to the financial crisis in 2007.

Instead, French, Russian, German and Belgian buyers increased in number in 2013, rising by 10.9%, 8.2%, 7.8% and 6.9% respectively.
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Housing prices dropped again in the last three months of 2013, representing an accumulated fall of 37 percent since the highs of 2007.

calpe 300x225 - Housing prices register fall of 37 percent since 2007 highsBut the International Monetary Fund (IMF) as well as ratings agencies such as S&P warn that prices in the Spanish real estate market must fall even more before the sector will reach a full adjustment.

According to the Index of Housing Prices, updated by the National Statistics Institute (INE), average house prices dropped 7.8 percent between October and December 2013 compared with the same period in 2012. This decline is one-tenth of a percentage point lower than the previous quarter, and represents the smallest drop since the summer of 2011.
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The Catalan government has approved a draft bill on taxing financial institutions in the region for leaving housing they own empty for more than two years.

Homes in Catalonia 300x225 - Catalonia to Tax Banks for Keeping Properties EmptyThe bill will be sent to the regional assembly for approval before the summer and will take effect from the start of next year. The levy will range from 850 to 1,650 euros a year per house and will affect 15,000 housing units in 70 municipalities in the region.

One of the first measures that the ruling center-right nationalist CiU group - led by regional premier Artur Mas - took on attaining power was to strike down a law introduced by the previous Socialist-led coalition that forced banks to rent empty homes. In the wake of a spate of home evictions, pressure groups demanded that Mas restore that law.
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