Euro Zone’s Poorest Face Rising Home Foreclosures
By EurActiv
While a survey of the property market reveals global investors’ growing appetite for repossessed homes, it also shows that Europe’s poorest countries are worst off as they face rising repossessions while investment falls away.
The countries in the eye of the EU’s economic storm – Ireland, Spain and Portugal and Italy – have “the highest net balance reading for likely forced selling,” the survey conducted by the Royal Institute of Chartered Surveyors (RICS) reads.
In a worsening investment climate this is not good news for the EU’s periphery.
In plain language, the RICS survey means that the property market in these countries is riddled with both a high number of foreclosures and brand new homes which can’t attract buyers.
To boot, investment funds have lost interest in these markets as their economies try to balance bank bailouts and rising government deficits.
Ireland, whose property bubble has left whole housing estates unfinished and uninhabited, has the highest projected number of foreclosures and sales by owners who cannot meet rising repayment fees.
Under pressure from their eurozone partners, Ireland and Portugal succumbed to loans from an EU/IMF bailout, while Spain and Italy could be forced to follow suit.
Nevertheless, investor demand everywhere else is picking up and even exceeding the rising supply of foreclosures, most prominently in Germany, Poland and Russia.
Commenting on the survey, the institute’s chief economist, Simon Rubinsohn, said that on the whole it reflected “a measure of confidence in the outlook for the real estate sector despite the volatile economic context”.
“However, it needs to be borne in mind that the results still show generally negative numbers, especially for those markets where the economic pain is most intense,” the economist continued.
The Irish property market has begun to face up to the fact that those who cannot pay may have their debts completely written off.
A mediation NGO called New Beginnings has helped seven homeowners to cancel their debts in exchange for returning property to the lender.
The group’s lawyers told the Irish press that they were in the final stages of agreeing to write-off a €780,000 mortgage in Dublin’s wealthier suburbs.
NGOs have cropped up in Spain too, where the housing market crashed like in Ireland during the crisis.
La Plataforma de los Afectados por la Hipoteca, or PAH, has managed to prevent lenders from foreclosing a handful of properties by getting hundreds of volunteers to form barricades around them.
Homeowners in these countries are not only facing rising mortgage fees but also big dips in employment, making repayment impossible for some.
According to figures from a Spanish consumer rights group, Adicae, rising unemployment in Spain may lead to 300,000 foreclosures between 2011 and 2012.
