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Last year represented a high point for distressed property sales in Spain, with 2016 to be the year that the mountain of bad-loan properties erodes.

The number of distressed properties up for sale in Spain is set to fall this year as the mountain of ‘bad loans’ built up during the recent recession begins to collapse.

Across Europe, sales of repossessed homes will reach around €70 billion in 2016, down from €93.5 billion last year, which was the peak of the distressed property crisis…

Data from New York analyst Cushman & Wakefield shows that Spain leads the way in terms of planned or closing deals, with Spanish bank Bankia already set to offload €4.2 billion worth of property from its books.

Europe’s leading banks were forced to take on thousands of bad-loan properties between the years of 2009-2013 as the dreams of many overseas property investors turned sour.

Struggling to pay their mortgage, stuck in negative equity and unable to sell, many homeowners had to foreclose on their properties, with many banks – particularly in Spainstepping in to take on the debts.

And in order to offload this weight of property, most homes were marketed at extreme knockdown prices by the banks, hence the ‘distressed’ tag.

But since 2013, the recovery of the Spanish property industry has meant that the banks have been able to slowly erode their portfolio, and as prices have risen, mortgage lending has improved and interest rates stabilised, the industry has become a much more attractive place for investors and your average homebuyer.

The report by Cushman & Wakefield said that Spain will still experience high levels of activity in this market for 2016, but overall transactions are unlikely to reach the peaks of last year.