"The Bank of Spain has said Spanish homes may be up to 30% overvalued. The government, which faces elections on March 9, expects house-price growth to ease to low single digits but not turn negative. But it is no longer just housing which could be a problem."
"Commercial property -- pricey by regional standards -- could suffer too since a slower economy will undermine corporate demand for space and drag on rental growth."
"But it could yet face more trouble as an unprecedented construction boom -- accounting for almost 20% of Spain's economic growth -- slows sharply. Across Spain, unemployment is rising faster than anywhere else in Europe."
"Consumer confidence is at its lowest level since Spain's last housing crisis, in the early 1990s, according to Eurostat and Bank of Spain data."
"Spanish property developers, having enjoyed what once seemed an unstoppable boom, could face a severe mauling unless they bow to more realistic pricing as the economy slows and banks rein in lending."
So housing bubbles start to "pop" around Europe with first Spain and Ireland, next to follow are the UK, France and the nordic countries. As in any party, there is an end...finally 2008-2009 would be remembered as the peak in another over extended housing market driven partly by unusually low interest rates...
See an article that was posted in November 2007 : what could be the trigger...Spain?
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