Workers face axe due to housing slowdown

21st December 2007, Comments 0 comments

Banco Bilbao Vizcaya Argentaria yesterday predicted the construction sector would shed a quarter of a million jobs over the next two years.

21 December 2007

MADRID - Banco Bilbao Vizcaya Argentaria yesterday predicted the construction sector would shed a quarter of a million jobs over the next two years due to a slowdown in the housing market.

According to a report by the research department of Spain's second largest bank, the industry will lose 90,000 jobs next year and a further 160,000 the following year.

"There will be a greater destruction of jobs in 2009, compared with 2008, and as regards prices, it is possible they may fall in absolute terms in 2009," BBVA's chief economist José Luis Escrivá said at a presentation of the report.

BBVA is forecasting the increase in house prices to slow to 1.4 percent next year - below the expected rate of inflation - from 5.5 percent this year and 10.4 percent in 2006.

House prices have risen more than 150 percent over the past decade on the back of a massive property boom, although there have been clear signs of late that the surge is on its last legs.

The boom was fuelled by rock-bottom interest rates. However, the European Central Bank has raised the cost of borrowing eight times since the end of 2005. House-price increases have also subdued demand, while property developers are finding it hard to acquire finance in the wake of the credit crunch since the summer.

[Copyright EL PAÍS, SL. 2007]

Subject: Spanish news

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