South Africa is not alone in experiencing a severe slump in its residential property market.

Bloomberg reports that mortgage bond foreclosures in Spain may triple next year.

However, the worst appears to be over in the South African market in terms of home repossessions although house price growth is still erratic.

FNB Home Loans expects the average price of houses to decline next year after an expected increase of 6.4 percent this year compared with last year. Absa has forecast average nominal house price growth of 7 percent year on year for this year and says it is expected to remain low next year.

Bloomberg reports that the forecast tripling of foreclosed homes in Spain next year by Fernando Acuna, the co-founder of a website that advertises repossessed properties, is based on new accounting rules that prompt lenders to dump their depreciating assets.

Acuna said about 100 000 houses and apartments owned by banks were now on the market, with a quarter of them listed on the website operated by his Madrid-based company, Pisos Embargados de Bancos, on behalf of 25 banks.

Spanish lenders have a total of e181 billion (R1.7 trillion) in “troubled” construction and property loans, according to the Bank of Spain.

Since September, 30 banks have been required to account for falling property values more quickly, encouraging them to shed assets without waiting for the market to recover from a three-year decline.

“Lenders took on an immense amount of property from developers and homeowners and now they’re being forced to offload the dead wood,” said Acuna.

About 2 600 property and construction companies have gone out of business in the past two years, according to credit insurer Credito y Caucion, while unemployment has more than doubled since 2007 to almost 20 percent.

In South Africa, the number of registered estate agents fell by more than 50 percent to 38 000 last year from about 84 000 in 2007 as the slump in the residential property market and low sales levels led to agents leaving the industry.

“By changing the rules on provisions, the (Spanish) central bank has really put a shotgun to their heads,” said Fernando Rodriguez y Rodriguez de Acuna, founder of Madrid-based property adviser RR de Acuna & Asociados.

“The banks will have to cut their price expectations more aggressively to reduce their stock of homes.”

Property values will fall 20 percent over the next five years, De Acuna estimates, with most of the declines coming next year.

Since the Spanish market’s peak in April 2007, home prices have dropped 22.5 percent, according to a survey by property website Fotocasa.es and IESE Business School.

About 280 000 people in Spain will lose their homes this year, according to Spanish consumer protection association Adicae. – Roy Cokayne