Distressed properties in Spain to triple this year

The number of foreclosed or distressed properties on the Spanish market is expected to triple by the end of 2011, it has been suggested.

Madrid-based Pisos Embagados de Bancos has claimed that there are currently 100,000 foreclosed homes on the market and by the end of the year this figure will rise to 300,000.

Greg Butcher, founder of Fairhomes Ltd, believes that this problem is only being fuelled by the country's banks which, he says, are still continually overvaluing their stock.

"The problem is that the balance sheets of the banks still look quite healthy as they routinely overvalue their foreclosed property stock," Mr Butcher confirmed.

"In order to do this, however, they’re inflating market prices by 25 to 40 per cent which is not, realistically, going to help shift a glut of hundreds of thousands of homes. Neither is it going to enable us to judge the real price of property in Spain today."

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