Spain sees 14 percent drop in property sales in 2007
Posted by admin March 15, 2008
MADRID: Spain’s embattled real estate sector received more bad news Friday when it was announced that property sales were down almost 14 per cent last year, with the sharpest decline in the fourth quarter.
“In 2007, the total number of property transactions was 788,518, a drop of 13.93 per cent over 2006,” the CRE, an organisation that collects data on property transactions, said in a report.
The largest drop was in sales of older homes, which saw a decline of 15.05 percent, compared to 12.41 percent in new properties, it said.
In the fourth quarter, the decline was even more pronounced, with transactions plummeting 21 percent from 203,993 in 2006 to 161,906 in the same period in 2007.
The figures are further evidence of the slowdown in the property sector in Spain after years of growth during which millions of new homes were built and prices rocketed.
The government announced in January that property prices rose just 4.8 percent in 2007, down from 9.1 percent the previous year and the lowest increase since the boom in the market began 10 years ago.
The property sector has been the driving force behind Spain’s economic development in the past decade and contributes 7.5 percent to the country’s GDP, according to a study by the BBVA bank. The construction industry also employs 13 percent of workers.
The low interest rates that followed Spain’s membership in the eurozone in 1999 fueled the housing boom as Spaniards took out mortgages to buy homes for the first time or to trade up to a larger house.
But the market has begun to stagnate due to rising interest rates and the international lending crunch that has hit Spain’s credit-fueled expansion.
- Source: Reuters, Mar. 14, 2008
