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Not sure what the source of this is – it was sent to me by email.
Note that Lombard Street Research – a topflight firm of economic and financial analysts quoted in the article – use Spanish Property Insight as a key source of information, as do other research firms like Mintel.
Anyway, here’s the article
NEWS FLASH: The United States is not the only country suffering from significant financial imbalances. Neither is it the only country where underwriting standards were thrown overboard as a result of many years of rising collateral values. Even if these factors were not at play it would be debatable whether world economies could emerge unscathed from a U.S.consumer slowdown. With the attitude towards aggressive lending changing markedly, some of the heretofore benignly neglected bubbles could pop.
Spain – Residential Property Bubble Extraordinaire
According to a quote by David Owen of investment bank Dresdner Kleinwort, cited in the blog Seeking Alpha, “Spain could face serious difficulties this year as the excesses of a decade-long boom finally catch up with the country. The size of the Spanish corporate sector’s financial sector is truly really scary. It rose to 14.5% of GDP in the third quarter of 2007 from 10% in the first quarter. This must be a record for a relatively large economy. Clearly this is not sustainable. Cost imbalances have a nasty habit of unwinding quickly and very painfully.”
The article goes on to note that Spanish direct investment in residential construction (ex mortgages and other related businesses) is 18% of the economy versus 6% in the U.S.
Diana Choyleva, an economist at Lombard Street Research in London, is quoted as saying “Spain is like the U.S, on speed when it comes to the housing market. It is highly likely there will be falls in nominal prices.”
It also cites Moody’s as saying that Spanish loan delinquencies may rise 15 fold by the end of 2008 due to increasing interest rates.