The bank's director, Jaime Caruana, states that the figures show a slight slowing down of the rate of property purchases as the volume of funds intended for this purpose and amounting to 1,030 million euros, show a drop of 1.26% during the first months of 2004.
He adds that the strong demand for housing has caused some major price increases in recent years, particularly in coastal areas and the purchasing of property by foreign nationals shows a dramatic increase amounting to some 146% in the course of the last few years, from more than 2,908 million euros in 1999 to 7,179 million euros in 2003.
Of all the different communities more frequented by foreign nationals, it is found that most of the investment is made in the regions of Alicante and M├ílaga.
In view of the current signs of a drop in demand, promoters and builders forecast that in the next 6 years 505 of the demand will be by foreign nationals, mainly British and Germans.
The sector is hoping that between now and 2008 there will be between 175,000 and 180,000 second homes sold, half of these to foreign nationals, and, based on available data, they are 52% British, 22% Germans, 8% French, 6% Italians, 3% Belgians and 6% Scandnavians.
Promoters and Builders notice a "freeze" in property prices.
Manuel Mart├ş Ferrer, the Secretary Genaral of the Asociaci├│n de Promotores y Constructores de Espa├▒a (APCE) has confirmed that there is currently a freeze on property price increases and that a slower new building rate in the course of the first quarter of this year has been also noted. He states that this will discourage speculators and bring a balance in the market.
"This is not unexpected and was actually predicted at the end of last year and this is as good for the consumer as it is for the suppliers, because the rhythm that we have experienced to the end of last year was clearly not sustainable" he added.
Spain is stated to be one of the seven countries living in a property bubble.
According to a survey Published by "The Economist" prices could drop by up to 30%.
According to the publication, the cost of housing has increa-sed at a much greater pace than the RPI in most of the richer countries.
"The Economist" considers that in seven countries in particular - Spain, United Kingdom, Holland, Australia, Ireland, New Zealand, and the U.S.A. - an artificial property bubble has been created which is due to burst and result in a drastic drop in prices.
In a report in the last edition, their predictions show that the margin of price drop is estimated at 30% in Spain, 25% in the U.K. and Holland, 20% in Australia and Ireland, 15% in New Zealand and 10% in the U.S.A. Of course this is an estimate and the drops could be smaller, as some of the price increases with following demand may have also been contributed by the low rates of interest and not just by the rate of income growth per capita which has been at moderate average of 3% to 4%.