BBVA Predict Landing will be 'soft' for Spain

A ‘SOFT landing’ is forecast for the Spanish property market, according to a new study from Banco Bilbao Vizcaya Argentaria, with demand and supply reaching sustainable levels.
“House prices have undergone a further slow-down, the moderation in demand from households has gathered pace, and the indicators of activity are starting to show some deceleration on the supply side,” the report said.
“Household spending on housing will slow in 2007 and 2008, a fall-off is expected to be intense but without turning negative in real terms,” it added. “Investment in housing is therefore expected to fall back from a growth rate of 2.8% in 2007 to 1% in 2008.”
Meanwhile a new report by the UK mortgage lender Halifax confirms that house prices in Spain have risen faster than anywhere else in Europe, surpassing even the UK market. They believe that the slowdown in the Spanish property market is a positive thing, after five years of exceptional price rises.
According to their figures, Spain’s property prices doubled between 2001 and the end of 2006, and increased by nearly 60 per cent in the past two years alone, compared to a 40 per cent average across the eurozone as a whole.
A large number of the buyers boosting the market in Spain are British, with a recent poll by the Taxpayers Alliance revealing that two in every five people in the UK are seriously considering moving abroad. This is a dramatic increase since last year and the highest since records began in 1991, with over 300,000 leaving in the last year, with Spain one of the most popular destinations.
According to Halifax, Austria and Portugal experienced the lowest price increases in the period since 2001, with prices rising by six per cent and seven per cent respectively, while prices in Germany fell by five per cent.
Despite the massive increase in prices over the past five years, Spain is still one of the cheaper eurozone countries in which to buy property, with prices averaging at £150,200, compared to an average of £187,100 in the UK.