Spanish property price inflation slows to 10.8%
The
average cost of property in Spain has risen by 10.8% over
the last 12 months to the end of June 06, according to
the latest figures from the Spanish Ministry of Housing.
This represents a modest fall from the 12% Spanish property
inflation rate clocked up in the 12-month period to the
end of March 06.
Annual Spanish property inflation rates have fallen
every quarter since the end of December 04, when the
rate of property inflation was 17.2%.
If Spanish property inflation continues to cool at this
rate, then Spanish property price increases will fall
to general inflation levels of around 4% sometime in
2007. When property price changes are equal to the consumer
price index, real property price increases are effectively
zero.
Antonia Trujillo – Spain’s Minister for
Housing – has stated her department’s objective
as gently taking the heat out of the Spanish property
market without putting household economies or the national
economy under stress. According to Trujillo, “the
government is on the right path, as it is now clear that
a soft landing for the property market is under way.”
Leading Spanish bank sees increasing risk of property
crisis
The latest property market report from the research
department of BBVA – one of Spain’s leading
banks – has
warned that the probability of a crisis or ‘hard
landing’ in the medium term for the Spanish property
market has increased to 10%. The authors of the report
worry that Spanish property prices are rising at an unsustainable
rate against a background of rising interest rates, rising
household debt, and rising housing starts that increase
the supply of property in Spain at a time when demand
is under pressure. The report forecasts that, if a hard
landing takes place, it will happen during the next year
and a half, and will result in a sharp fall in property
prices and construction activity. If property prices
rise by 20% or more in 2006, then the report increases
the possibility of a hard landing from 10% to 40%. “We
are worried by the evolution of the property market in
the last few months, it has taken us by surprise,” commented
Luis Escrivá, Director of Research at the bank.
EU Economy Commissioner warns of Spanish property bubble
Joaquín
Almunia – the EU’s Commissioner
for Economic and Monetary Affairs – has warned
that recent increases in Spanish property prices and
Spanish household indebtedness have increased the risks
of a Spanish property bubble, though he rules out the
possibility of a “abrupt correction” for
the Spanish property market. Almunia expects resent increases
in Euro-zone interest rates to cool down the Spanish
property market. “Rising interest rates must have
an effect on families that have become highly indebted
very quickly, with savings rates at all time lows,” explains
Almunia.
17,000 construction sector jobs lost in Marbella
In the space of a few months the number of construction
jobs in the municipality of Marbella is reported to
have fallen from 20,000 to 3,000, a reduction of 17,000
jobs. Due to Operation Malaya – a police investigation
into municipal corruption in Marbella – the town
hall has stopped issuing new building licences, and
construction on a number of illegal new developments
has been halted.
23.2 million properties in Spain, 1 for every 2 residents
Latest
figures from Spain’s Ministry of Housing
reveal that Spain’s housing stock now consists
of 23,209,842 properties, almost 1 property for every
2 Spanish residents. 68.5% of these properties are first
homes, and the remainder are holiday homes or standing
empty. 81% of residents in Spain are owner-occupiers,
one of the highest rates in the world.
© Mark Stucklin of Spanish
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