Spain’s residential property market is heading for a hard landing, as tightening credit conditions exacerbate problems of oversupply and years of rampant price inflation. Financial Times
Completed house sales for January dropped 27% year on year, according to figures released yesterday by the National Statistic Institute, while total lending to house buyers fell almost 28% to €13.4bn (£10.5bn).
The figures, based for the first time on the change of ownership of properties, are the most telling confirmation of Spain’s economic downturn.
The economy, and in particular its dependence on a construction sector that is rapidly decelerating, became the central theme of the election and poses the biggest challenge to the government of José Luis Rodríguez Zapatero, prime minister.
Data over the next few months are expected to confirm a broader slowdown, with some economists forecasting GDP growth this year of about 2%. This is about half the rate of 2006, when 800,000 housing starts were approved – more than France, Germany and the UK combined.