International ratings agency Standard & Poor’s (S&P) point out that Spanish politics is now the main threat to the housing market recovery.

S&P’s latest report on European property markets forecasts that Spanish house prices will rise by 2.5% this year, implying the recovery will cool down a bit in the course of this year, with prices rising more slowly than in 2015.

S&P point out that “robust economic growth, falling unemployment, and the growing interest of foreign buyers,” were the principal drivers of the housing market recovery last year.

“However, the political uncertainty following the inconclusive results of the general election on the 20th December 2015 could have an influence on the recovery,” caution S&P, who expect the uncertainty to continue for the first half of the year.

The first attempt to form a Government since the general election failed today when the socialist candidate Pedro Sánchez got just 130 of the 176 votes he needed to take power.

The problem is that political uncertainty could drive up borrowing costs in Spain, making mortgages more expensive and so reducing demand for housing. It could also undermine consumer confidence, which would also reduce demand.

Nonetheless, S&P say that Span’s economic outlook “continues to be positive,” creating jobs, which in turn creates demand for housing.

Foreign demand is also helping, rising 17% last quarter, led by the British, French, and Germans.