Spanish property price inflation slows to 10.8%

According to the latest figures of Spanish Property Housing, the average cost of property in Spain has rised by as much as 10.8 percent over the last 12 months to the end of June 2006. The drop represents a modest fall from the 12 percent which was taken into account until the end of March 2006.

The average cost of property in Spain has been downright falling every quarter since December 2006, when the rate of property inflation was 17.2 percent.

The expected returns of this decrease every quarter would result in the falling of property prices around 4 percent in Spain until 2007. The real property price increases are effectively zero when the consumer price index equals to the property price changes.

According to Antonia Trujillo, Spain’s Minister for Housing, their objective was to gently take the heat out of the Spanish property market without putting the national economy or the household economies under stress. She adds that the government’s plan for soft landing of the properties are well under way, since there already has been a clear vision of it.

According to the latest property market report from BBVA, Spain’s leading banks, there has already been a warning on the probability of a crisis of ‘hard landing’ in the medium term, which has increased to 10 percent. The report is worried that Spanish property market are increasing steadily against a background of rising interest rate, rising household debt and rising housing and which starts at a time when there is already a demand for housing. It is also expected that if there ia a ‘hard landing’ that will take place, it will take place in the next one and a half years, and the result will be an immediate fall of property prices and construction activity. “We are worried by the activity,” claims Luis Escriva, Director of Research at the bank.

Posted on: Spain

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Spanish property price inflation slows to 10.8%

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