Banco Sabadell Promulgates End of RE Recession & Refuses Further Price Slash

25/04/2014 – El Confidencial

Banco Sabadell is the first entity to dare to announce the end of the real estate recession, given that housing prices should not fall more. In fact, it has decided not to cut its own dwellings´prices, even if that would mean lesser sales. Maximum discount the bank is ready to apply slashes prices by 40%. Moreover, Sabadell is going to finish its stalled housing developments.

Sources close to the bank say the 2014 target is to sell 2.200 units quarterly, juxtaposed with 3.000 properties sold every three months last year. “Facing growing demand, we do not need to abate prices in order to obtain bigger sales volume”. The decision was made after tha bank had sold 3.271 units during the first quarter of 2014 without slashing prices.

The new strategy will allow Sabadell to avoid huge losses, like the 2013 results showed. Moreover, the bank seems to have spotted the arrival of sovereign funds with long-term investment view instead of opportunistic ones that have been flying over Spain since the beginning of 2013.

On the other hand, return of retail purchaser particularly means good news, especially that this kind of sales may  “More and more couples visit housing developments at the end of the week”. It seems that the confidence is also coming back to Spanish minds who not only decide to buy a home for their own but also travel for holidays.

Moreover, in case of Sabadell and CaixaBank, default rate in mortgages fell in the first quarter and that encouraged Sabadell to invest in construction (through Solvia) and therefore develop 1.700 houses in 2014.

 

Original article: El Confidencial (by Eduardo Segovia)

Translation: AURA REE

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