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 Property Insight