Spanish property clearout 'will lead to price falls'

Demand for property in Spain could be set to soar as banks move to sell off billions of euros worth of distressed property assets.

Analysts have estimated that financial institutions in the country control more that €100 billion (£86.7 billion) in real estate, The National reports.

Most are second homes in developments built during a ten-year construction boom targeting the same European buyers.

There are anywhere from 700,000 to a million empty apartments and villas in Spain, the majority of them in coastal areas.

"Banks will take years to clear [property] off their books," said Arturo de Frias, an analyst with Evolution Securities. "I think the big question is what is going to happen to real estate prices."

Home prices in the fourth largest economy in the euro zone have fallen 17 per cent since the market peaked in 2008, according to government data. But most analysts say the plunge have been much steeper.

Prices are likely to continue to fall anywhere from five to ten per cent in the next year, especially with more distressed and repossessed properties entering the market, analysts say.

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