Foreign investment in Spanish property continues falling
Foreigners spent 1.962 billion Euros on Spanish property in the first 5 months of the year, 13.2% less than a year ago.
Foreign investment in Spanish property has been falling consistently since a peak of 7 billion Euros was spent in 2003.
After growing by 22% in 2001, 28% in 2002, and 17% in 2003 (to 0.91% of GDP), foreign investment in Spanish real estate fell by 6% in 2004 (to 0.79% of GDP) and 17% in 2005 (0.61% of GDP). The total amount spent is on course to fall again this year.
Spanish real estate analysts blame high property prices and rising interest rates for the drop in spending by foreigners, along with increasing competition from other destinations such as Bulgaria and Turkey.
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Viva Estates drops commissions to 2%
Viva Estates – one of the largest estate agents on the Costa del Sol – has dropped the commission it charges on resale properties to 2%, partly in order to stimulate a sluggish market. Chris McCarthy – MD of Viva – has explained the reasoning behind Viva’s decision in Spanish Property Insight’s forum. Viva's move is not without its critics. Read thread
Euro base rates and Euribor continue to rise
The European Central Bank (ECB) raised base rates from 2.75% to 3% at the beginning of August, citing concerns over inflation. Consequently Euribor - the rate used to calculate interest payments for most mortgages in Spain – also rose in August to 3.615%, the 11th consecutive monthly increase, and the highest rate since July 2002. In percentage change terms Euribor has increased by 63% in the last year, pushing up mortgage repayments on all variable rate Spanish mortgages to the same extent. The ECB chose not to raise base rates at the end of August, but markets expect the bank to raise them again at the beginning of October. Despite the latest increase, real interest rates are still negative in Spain.
© Mark Stucklin of Spanish
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