The Bank of Spain warns of the likelihood of a sudden drop in house prices.
The difference that still exists between inflation in Spain and its other Euro-partners, the fast increased rate of private and business borrowing as a result of cheap finance, the persistent increase in house prices combined with the overvaluation of the same are the main risks that are facing the Spanish economy today. José Luis Malo de Molina, director general of the Banco de España research services department, warns that the persistent overvaluation and increase in residential property prices could result in a
"very sudden correction". Although at present it is not quite appreciable, there is a leak in the "bubble"; he draws the attention to the fact that prices have gone up in real terms by as much as 80% since 1997.
"The persistent difference in inflation rate with other Euro-countries is worrying", warns the General Director of the Banco de España, because from the beginning of the Economic and Monetary Union the price index in Spain has grown 6% more than the average in the euro-zone and 8% more than the average in France and Germany. This tendency cannot continue without affecting the competitiveness of the Spanish Economy".
Construction companies state that it is absurd that the local councils decide if land is to be allocated to building hotels or homes.
The president of the Federación Andaluza de Urbanizadores y Turismo Residencial, Ricardo Arranz, states that it is "absurd to think that the local councils" have the power to decide if the land available is to be used for one thing or another, the deciding factor is governed by market conditions which define if the use is for hotels or residential".
A new tendency in Spain
A TV report on Antena 3 revealed that a new tendency of harassment has started to rear its ugly head, particularly in Barcelona and the North of Spain.
Tenants with low rents protected by long, indefinite contracts are being encouraged to leave under pressure.
It would seem that "certain people" are paid to make noise at all hours, throw rubbish, cause damage to the exterior and other nuisances with the object to make life so unpleasant that the tenant leaves and the property is then re-let at a higher rent.
Thightening of lending criteria
The Banco de España has ordered all financial institutions not to relax their lending criteria and to ensure that all types of lending is secured on real assets and guarantees, just as a mortgage might be and not to relax in anyway the criteria and searches that banks normally do to ensure the ability of clients to repay.