House prices up 17% in first six months of 2004
November 16th, 2004
The Spanish property boom continues, fuelled in part by an abundance of cheap credit. Bank loans in mid-2004 were growing at an annualised rate of 16.3% – six times the 2.6% rate of growth in the economy. House prices, which have more than doubled since 1996, rose by 17% in the first six months of 2004.
Elsewhere in Europe, such frothiness would lead to a hard fall. But there are unique factors in Spain which would explain the sustained demand for homes, and which may shield it from a violent crash.
The strong demand for homes is underpinned by a rising population (thanks to a large influx of immigrants), A sharp growth in employment, up 22% since 1995, and the demand for retirement or holiday homes from sun-starved north Europeans ..
From the Financial Times special report on Spain 2004 (subscription required)
