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By Kevin Barnett, 25 Oct 2005
House prices across Spain have shown the lowest rise for three years, going up 13.4 percent in the past 12 months – the first sign of a predicted slowdown after equity growth soared to a record high of 25% in the Costa Calida region in 2004 and averaged 18 percent in other second home coastal areas
New figures for the average price per square metre for new and 'used' homes between September 2004 and last month showed a slow-down had begun in the long-time “boom” Spanish property market, the government claimed.
Rafael Pacheco, director general of the Spanish Ministry of Housing, “political architecture” section, said the rise confirmed the long-predicted slow-down had started and the government's efforts to cool-down the housing market had shown results.
Spain's Socialist government fears the backlash if the property bubble bursts with millions owing tens of thousands of euros which they will not be able to pay back. The price of 'protected' or state properties rose 5.7 percent in the past year, while the general index of property prices went up by 13.2 percent during the same period.
In the past three months, house prices even showed a dip in some regions, going down 0.7 percent in Cantabria in the north and 3.6 percent in Extremadura in western Spain – areas generally not affected by the second home/holiday market concentrated on the Mediterranean coast.
And in Andalusia, Aragon, the Canary Islands, Castilla y Leon, Madrid, Murcia and Navarra, prices went up by less than the national average of 1.5 percent.
With last quarter figures still to come, the slowdown is likely to produce a final annual equity growth over the 12% forecast by leading banks, Caja Murcia and CAM Bank who are expecting a similar 12 percent growth for 2006. Both banks are big investors in Spanish real estate developments and mortgage providers to Spanish and foreign buyers. They are members of the newly-formed SIPPs in Spain organisation, with PropertyInSpain.Net, Travelex, Spanish lawyers, leading developers and property valuers.
Alberto Linares of brokers MortgagesInSpain.Net welcomed the slowdown as “it means 1,000s of British families will still be able to buy in an established, mature second home market rather than taking risks in some of the newer and cheaper emerging markets.
“Our banking partners are relaxed with equity growth of 12 percent as Spain remains affordable for most wouldbe property buyers including those thinking about using their SIPPs property pensions,” he added.
Spanish Property News,/i>