In his monthly review of the Spanish property market, our expert Mark Stucklin reviews the latest issues affecting homeowners.

Travel around Spain today and it's obvious that there's a construction boom in full swing, and the rate at which Spain is turning out new properties is alarming.

The ratio of properties per 1,000 people is already the highest in Europe, so it's not as if Spain needs to beef up its housing stock to converge with the European average.

For sale: It is taking longer to sell properties in Spain

But despite having the highest number of properties per capita in Europe, Spain is building more new properties than any other European country, around 800,000 housing starts (new houses) per year, equivalent to the combined number of housing starts in Germany, France and the UK.

I don't know what happens to all these properties once they are built, but I doubt that they all get sold.

For stability, and the much-desired 'soft landing', one can only hope that the number of housing starts in Spain slows down dramatically, and soon. For the time being, though, there isn't much evidence of that happening.

PROPERTY NEWS UPDATE

The wrecking ball WILL swing in Marbella

The President of Andalusia — Manuel Chaves — has reiterated his administration's intention to demolish projects in the municipality of Marbella that have been illegally built on land reserved for public projects or green areas.

If the regional government of Andalusia were to go through with this, it could affect some 60 of the 300 projects currently under judicial review.

However, it is unlikely that the decision to demolish any illegally built properties will be taken before Marbella's municipal elections in 2007.

Average Spanish property prices up by 12 percent in 12 months

The latest quarterly figures from the Spanish government show that average
Spanish property prices rose by 12 percent over 12 months to the end of March.

Prices rose all over Spain, but especially on Spain's Mediterranean coast.

A full report on these latest quarterly figures will be included in our next
monthly news bulletin.

Euribor passes 3.2 percent, Spanish mortgages get dearer

Euribor — the interest rate most commonly used to calculate mortgage repayments in Spain — rose for the 7th consecutive month in April, pushing up variable-rate Spanish mortgage repayments.

IMF points out risks of property bubble to Spanish economy

The International Monetary Fund (IMF), in it's biannual report on the status
of the world economy (World Economic Outlook April 2006), has once again
voiced its concerns about the high level of property prices and property
inflation in Spain.

Madrid and Barcelona fail to shine in new quality of life ranking

A new ranking of quality of life in 215 world cities by Mercer HR Consulting
puts Barcelona in 44th place, and Madrid in 45th place, behind other European cities like Brussels, Berlin, Dublin, Paris and London.

The Swiss cities of Zurich and Geneva are at the top of the ranking.

"Why, then, does everyone I know who lives in Zurich want to move to Barcelona?" muses Mark Stucklin of panishpropertyinsight.com.

Slowdown in Spanish real estate sector will reduce growth and employment

The forecast slowdown in the Spanish real estate sector is expected to reduce Spanish economic growth by 1.3 percent, and employment by 2 percent (365,000 jobs)
from the 2nd quarter of 2007, according to a new report by AFI/Asprima.

Spanish properties taking longer to sell, prices under pressure

Spanish real estate professionals reveal that apartments are now taking 32
months on average to sell, and that owners looking to reduce this time are
having to slash their asking prices by EUR 30,000.

Wave of 'for sale' signs hits the Spanish coast

The Spanish daily 'La Vanguardia' reports that urbanisations on the Spanish
coast are filling up with 'for sale' signs, and that a reduction in the
number of investors has undermined the sales of new developments.

According to the paper, the average time to sell for apartments is now more than three
years, causing serious problems for speculative investors needing to sell
before completion.

La Vanguardia quotes Emilio Langue - director of residential property at the consultancy Aguirre Newman - as saying that
"investors have practically disappeared from the coast", and that the only
buyers now are people looking for a home or holiday home for personal use.

A shiny suit won't do anymore: Estate agents will have to pass exams

Spanish government to introduce mandatory qualifications for real estate
Agents

"It's easier to sell properties than lettuces in Spain, and this can't continue".

With these words the Spanish housing minister - Maria Antonia Trujillo — has announced plans to regulate the estate agency business in Spain.

Once the new laws have been introduced, only people with an official qualification will be legally entitled to sell property in Spain, and all brokers will have to take out professional indemnity insurance.

For more property information go to www.spanishpropertyinsight.com

Mark Stucklin

Mark Stucklin is an independent analyst who also writes for The Sunday Times on Spanish property.

If you have any questions try the forum at www.spanishpropertyinsight.com

Copyright Expatica

May 2006

Subject: Spain; Property analysis update