Friday, April 27, 2007

Spanish Crisis

Over the last week, there has been a tremendous loss in confidence in Spanish property market. One leading property firm Astroc lost 60% of its share value. .

In January the Organisation for Economic Cooperation & Development warned Spanish house prices were overvalued by up to 30%. Since 1999 prices have risen by 15% a year.

These prices have encouraged over investment and consequently over supply.

One widely held belief in recent years, was when the Euro was introduced in 2002, may criminal organisation invested illicit cash into Spanish property before the pesata became defunct.

What does it mean?
Prices will stabilize, possibly falling until market values reach more reasonable values.

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