11th of January 2006
iPropertyGROUP News
Spanish property market to see aggressive construction in 2006
With real estate prices rising by an average of 140% in the past seven years, new figures indicate that there were 800,000 new home starts in Spain last year to accommodate growing demand for second homes.

Live In Spain, an organisation backed by several leading Spanish developers, recently forecast that spending on Spanish holiday homes will double from approximately EUR25 billion in 2005 to EUR45 billion by 2010 (a rise of 117,000 homes purchased to 150,000 in five years). It is also estimated that 1.7 million of the 3.7 million holiday homes in Spain are owned by foreigners (70% of which are British and German).

In addition to this, a report from Caixa Catalunya, the Spanish savings bank, last year claimed that there are 1.2 million properties built before 1920 that should be replaced with newly built housing (and 2.6 million properties built between 1921 and 1960 that will need major refurbishment).

In spite of concern about a glut of new build coming onto the market in some parts of Spain, house prices increased by just over 10% last year, according to figures from Sociedad de Tasacion. While this is the lowest rise for some time, following 12.5% and 15.8% increases in 2004 and 2003 respectively, it is still in line with the average annual increase of 10.8% since 1985. A recent slowdown has come as a result of competition from the new accession states in Eastern Europe and, more recently, the decision by the European Central Bank to raise interest rates for the first time in five years - to 2.25%.




Source: The Overseas Property Professional