Spanish housing crashes

According to the FT – The sell-off dragged down related industries such as construction and banking and caused a 2.7 per cent drop in the Ibex 35 index of leading shares. The fall also rippled through other European markets as investors worried about its knock-on effects.

Sacyr Vallehermoso, the Spanish builder locked in a hostile takeover battle for Eiffage of France, fell 8 per cent, significantly reducing the value of its all-share bid.

Investors got the jitters after Astroc, a Valencian real estate developer, went into free-fall last week when its audited accounts revealed some of last year’s profits came from the sale of Astroc assets to Enrique Bañuelos, its chairman.

Meanwhile, the heavy debt load of some real estate groups and worries about oversupply – with 800,000 new housing starts approved for this year, compared with an estimated demand for 600,000 – also contributed to the sell-off.

House prices rose 7 per cent in the first quarter, their lowest increase in eight years. But in many parts of Spain, house prices are falling.

In the UK TV programmes have gone from positive stories of the postman with a multimillion pound housing portfolio to programmes painfully outlining the problems of selling your overseas dud.

The world will always have winners and losers, unfortunately it seems that those who can least afford it end up losing the most. Hopefully stories of collapsing holiday home prices will temper the irrational exuberance of those who feel housing is as ‘safe as houses’.