Spain will be a European leader in both house-price inflation and unemployment next year, according to a forecast by the international ratings agency Moody’s.

It seems contradictory that Spain has both high unemployment and high house-price inflation, but that is what Moody’s is forecasting for next year, and it’s already the case.

Though Spanish unemployment has come down from mind-boggling high of 26% in 2013 to 14.2% today after some good years of economic growth, it’s still one of the highest levels in Europe, second only to Greece (16.7%). Moody’s forecast it will fall to 13.4% next year as the Spanish economy continues to expand, albeit at a slower rate than before. In contrast the unemployment rate in Germany is 3.1%, and in the UK 3.8%

What happens to house prices in a country with such high unemployment? They go up more than in countries with much lower levels of unemployment, according to Moody’s, who forecast Spanish house prices will rise by 5.5% on average next year, the highest level of annual house price inflation of all the eight European countries included in the forecast.

In comparison, prices are forecast to rise 4.5% in Ireland and Holland, 4% in Germany and Portugal, 2.5% in France, 0.7% in the UK, and no change in Italy.

In terms of economic growth, Spain is forecast to lose the number one spot to Ireland on 3.2%, with Spain in second place with 2%.

Moody’s also forecast tighter mortgage lending conditions for Spain next year but consider the market risks lower, thanks to more prudent lending, the popularity of fixed-rate mortgages, and the effort Spanish households have made to deleverage over the last decade.

Nonetheless, the agency sees imbalances which it describes as “early warning signs of risks that emerge when house prices rise,” for example higher LTVs on new mortgages and falling rates of household savings.