According to a recent study carried out by The Economist, flat prices in Spain are rising below the international average rate. The study undertaken by the magazine looked at the evolution of prices in the second quarter of 2007 and included 20 countries from all over the world.
The Economist found that in the second quarter this year property prices in Spain rose by just 5.8% compared to 6.66% which was the average for the countries included in the study. Just one year earlier property prices rose by 10.8% in Spain compared to an international average of 8.4%.
According to the Economist, between April and June this year Spain fell behind Singapore (21.1%), South Africa (14.5%), New Zealand (13.3%), Hong Kong (10.6%), Sweden (9.9%), Great Britain (9.6%), Australia (9.2%), France (8.1%), China (7.5%), Denmark (7.4%) and Canada (7.3%).
Those countries that saw property price rises lower than the Spanish rate of 5.8% were Belgium (5.7%), Italy (5.6%), Holland (5.2%) and Switzerland (1.
4%) while four countries in the study saw property prices drop: Ireland (-0.7%), Japan (-1.6%), the US (-3.2%) and Germany (-3.4%).
However, although property prices are rising at a slower rate in Spain they are still rising above the rate of inflation and it doesn’t affect the rate of growth in prices that the property market in Spain has experienced over the last decade which leaves it fourth in the Economist’s ranking.
Spanish property prices rose by 189% between 1997 and 2007. Other European countires which also experienced property booms during the same period were Irleand with a rise of 251% and Great Britain with a rise of 211% both of which are almost 69% more than price rises in the US.
This brings concerns that the current financial crisis in the US could spread to Europe. The crisis in the US is based on the fact that US banks conceded ‘subprime’ mortgages to people with little or no credit rating with very low interest rates to start off with but which later rose abruptly.
The Economist hasn’t ruled out the possibility of a similar crisis happening in European countries.