Spain unveiled a €3bn rescue package yesterday for a domestic property sector struggling with high debt, plunging prices and an overhang of unsold houses and flats.

After admitting in parliament that Spain faced rising unemployment and slowing growth, José Luis Rodríguez Zapatero, the Spanish prime minister, unveiled a twopronged plan to support property developers and stem the loss of jobs in the construction industry.

'Employment is the main aim of the government,' he said.

Zapatero announced the approval of quoted real estate investment companies that would benefit from tax breaks, in order to boost the rental market and encourage savers to invest in the sector.

Zapatero also unveiled a new credit line that would facilitate “adjustment” in the property market by helping developers use their construction loans for other purposes, provided they committed themselves to making unsold new homes available for rent for a fixed period.

Financial Times