Spain vulnerable to sudden drop in house prices
14 September 2005, MADRID — The Spanish housing market could see a sudden fall in prices shortly, a new report claims.
14 September 2005
MADRID — The Spanish housing market could see a sudden fall in prices shortly, a new report claims.
The report, on European housing markets by Standard and Poor's credit rating agency, said Spain could see a drop in consumer confidence as house prices carried on rising while growth had slowed sharply in other countries.
The Financial Times reported the agency said its concerns were echoed by those of European central bankers.
Spanish house prices have risen about 140 percent since 1997, with annual inflation hitting 17.2 percent at the end of June.
Price growth has been matched by a boom in building. Last year, Spain saw a record 700,000 more new homes built than in Germany and France combined.
Jaime Caruana, governor of Spain's central bank, warned recently that prices were about 20 percent over-valued.
The S&P report agrees the housing boom is partly fuelled by immigration growth, more women in the workforce, plus low interest rates.
But it also says that a cooling-off is long-overdue.
Subject: Spanish news