Prime Minister Zapatero says property market has bottomed out

Spanish PM Zapatero

The Spanish property market is on the mend, the Spanish PM has claimed in a visit to New York to reassure Wall Street that Spanish Government bonds are a safe investment.

Spain’s Socialist PM Zapatero is in on an official visit to New York, where he is taking every opportunity to tell everyone how swell things are in Spain, not least in the housing market.

After reaffirming his government’s resolve to slash the deficit, and using the pages of the Wall Street Journal to declare the debt crisis over, Zapatero then went on TV to argue that the Spanish property crash has run its course.

In an interview with the financial channel CNBC, Zapatero even claimed that house prices are beginning to rise in some areas, though not for holiday homes.

“In fact, in the last 2 to 3 months, we have seen that prices are not only not falling, but even rising in certain parts of Spain, where people buy their first home,” Zapatero told Maria Bartiromo, CNBC’s star presenter (also known as the ‘Money Honey’). This, he argued, shows that “demand appears to be on the rise.”

Zapatero is at odds with 80pc of Spaniards, who believe that house prices will fall over the next 12 months.

Zapatero’s optimism will be inspired by official figures from both the Ministry of Housing and the Institute of National Statistics showing home sales increasing and prices rising in the most recent quarter. But as I wrote in a recent article ‘Official figures claim property prices rising for first time in 3 years’, if you believe that, you’ll believe anything. The question is; will Wall Street believe anything? It certainly has done in the past.

Spanish Government Debt as Safe as (Spanish) Houses

The Spanish PM, who is on an official visit to NY, is using the opportunity to try and reassure the financial markets. According to El Pais, Spain’s leading (and government-friendly) paper, Zapatero is trying to convince Wall Street that “investing in Spain is a sound and sensible option.” Zapatero told investors in NY that Spanish government debt is “safe and profitable”.

If Zapatero can convince investors that Spanish bonds are safe, the Government’s borrowing costs will go down, which might help Zapatero get re-elected.

Earlier this year, when the Greek crisis came to a head, the markets also began to worry about the risk of default on Spanish bonds, driving up the interest rate investors charge Spain to borrow money. Rates have since subsided, but doubts linger on, so Spain is not out of the woods yet.



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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on