Housing boom ‘to slow down’

18 June 2004

MADRID – The housing boom should slow down soon, the Bank of Spain predicted Friday.

Analysts said the rapid inflation in house prices across Spain was expected to slow down.

It should end the pattern in which prices rose by 17 percent alone this year, compared with the previous year. 

In its annual report on 2003, the Bank said that demand for housing was strong but prices were too high.

The author of the report, Jaime Caruana, said homes represented three-quarters of the capital of the average Spanish family.

He said that families were placed in this position because of the “dynamism” of the market since 1997, which had pushed prices up. 

Though Caruana said it was “very difficult” to predict how the market would develop, the report predicted a “slow down in prices, as happened before”.

But the report called for prompt action from the government to ensure that a fall in house prices did not affect the economy too drastically.

It called for better urban planning to relieve the pressures on finding homes for sale in cities and larger towns – and also to reduce prices.
 
The Bank also said that the government should improve the rental market.
 
[Copyright EFE with Expatica]

Subject: Spanish news