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Spain hit by property crash fears
Spanish holiday villa
Holiday home and investment property sales drove the boom
Fears of a Spanish property crash have increased, prompting a sell-off in real estate shares and fanning concerns that thousands of Britons will lose money.
The sell-off was triggered by worries of rising bad debts and speculation that one large company had been buying its own properties to keep prices high.
Spain is one of the main destinations for Britons looking to move abroad or buy a holiday home as an investment.
Analysts warned that a crash could spread to the wider Spanish economy
Closely linked
Spain's economy has been growing strongly in recent years - the government recently raised its forecast for this year to 3.5% - driven mainly by expansion in the construction industry.
Coupled to this has been strong demand for housing helped by the low interest rates that have also underpinned consumer spending and allowed households to take on increasingly large amounts of debt.
However, in recent months cracks have started to appear and mortgage demand has slowed as homeownership levels topped 85%.
The country is over-housed, households are over-indebted and the construction industry continues to churn out houses
Lombard Street Research
On top of that, households now have some of the highest debt levels in the eurozone, much of which is based on variable lending rates leaving consumers open to sudden increases in borrowing costs.
http://news.bbc.co.uk/2/hi/business/6592203.stm
Spanish holiday villa
Holiday home and investment property sales drove the boom
Fears of a Spanish property crash have increased, prompting a sell-off in real estate shares and fanning concerns that thousands of Britons will lose money.
The sell-off was triggered by worries of rising bad debts and speculation that one large company had been buying its own properties to keep prices high.
Spain is one of the main destinations for Britons looking to move abroad or buy a holiday home as an investment.
Analysts warned that a crash could spread to the wider Spanish economy
Closely linked
Spain's economy has been growing strongly in recent years - the government recently raised its forecast for this year to 3.5% - driven mainly by expansion in the construction industry.
Coupled to this has been strong demand for housing helped by the low interest rates that have also underpinned consumer spending and allowed households to take on increasingly large amounts of debt.
However, in recent months cracks have started to appear and mortgage demand has slowed as homeownership levels topped 85%.
The country is over-housed, households are over-indebted and the construction industry continues to churn out houses
Lombard Street Research
On top of that, households now have some of the highest debt levels in the eurozone, much of which is based on variable lending rates leaving consumers open to sudden increases in borrowing costs.
http://news.bbc.co.uk/2/hi/business/6592203.stm