The Spanish election this Sunday is too close to call. What is certain, however, is that the winner will spend the next four years cleaning up an economic mess of a scale not witnessed in Spain in modern times.
The twin engines of the coming Spanish economic crisis are a collapsing housing market and a current account deficit, now at 10 per cent of gross domestic product. The two are related, of course, as the property bubble has been a driving force behind a credit-financed spending boom.
More likely the loser will go hell for leather to show the true state of this market.
Noticeably the phones are very quiet today but I guess the Easter break will have something to do with that – apart from 3 desperate people who will sell at any cost – toruble is they are in negative equity so no hope there!
1) “Between 1995 and last year, Spanish house prices tripled in nominal terms, and doubled in real terms.”
2) “I would expect real Spanish house prices to fall by almost as much as they have risen over the past 10 years. If one looks at real house prices in the US or Germany over very long periods, one finds that they have been virtually flat – as they should be.”
This clearly tells us that the fall will be an overall 50% (not including the panic which can
lower by more than that).
This means nicer places like Marbella wll have 20% decrease and junk places like
Vera-Mojacar or Salou will decrease by 80% (if anybody will ever be interested).
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