Some institutions are now selling properties at up to half the price of their valuation when repossessed, according to the study of 17,373 Spanish properties and 7,440 Portuguese homes.
Fitch says, "This highlights the dysfunctional state of the property market, characterised by a significant overhang of unoccupied properties, high borrower indebtedness and limited availability of new mortgage credit. The highest depreciation has befallen those properties associated with loans originated at the peak of the market in 2005, 2006 and 2007."
"As an example, properties in Portugal, which have been taken into possession by lenders, are selling at an average discount of 35% to origination valuations. The discount is lower than in Spain, as the Portuguese market does not suffer from an over-supply of property to the same extent. Nevertheless, the housing market is affected by limited availability of credit, previously inflated property prices and low consumer confidence." added the report.
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