Mortgages Blog

Finance Blogs » Mortgages » Spain’s answer to housing glut

Spain’s answer to housing glut

By Judy Martel · Bankrate.com
Wednesday, November 28, 2012
Posted: 6 am ET

Spain has come up with an attractive plan for foreigners in order to reduce its supply of unsold homes in popular tourist locales: Buyers will get residency permits if they purchase a home worth more than 160,000 euros, or about $207,500.

Spain's real estate market collapsed in 2008, but unlike in the U.S., the country has not seen any economic uplift since then. A double-dip recession and an unemployment rate of 26 percent is crippling the economy and causing more people to lose their homes.

According to The Telegraph, most of Spain's unsold homes are in the coastal areas that are attractive to vacationers. The move to offer residency permits is aimed specifically at Russian and Chinese buyers, a growing segment of second-homebuyers. From the height of the property boom in 2007 until this year, British buyers dropped from 17 percent of Spain's home purchases to 13 percent, while Russian buyers rose from 1 percent to 8 percent and Chinese buyers from 1 percent to 4 percent.

But as Spain scrambles to sell bank-owned homes to foreigners, there's a much bigger problem that shows no signs of subsiding: An increasing number of Spaniards who are unable to pay their mortgages are being evicted, according to CNBC.

Declaring bankruptcy in Spain does not let residents off the hook for mortgage debt, and borrowers are not only liable for the full amount but also penalty interest charges and court fees. Many of the evicted have resorted to squatting in vacant homes and apartments while the government tries to devise a solution.

Keep up with your wealth and mortgages, and follow me on Twitter.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
artist
November 28, 2012 at 10:08 am

They are offering residency if you purchase a home?

In a bankrupt country in a fiscal death-spiral?

Cool!