Alarm caused by OECD report on the Spanish housing market

Our Euroresidentes mailbox has been flooded this week with messages from Europeans who own a house in Spain and are worried by reports that the OECD expects housing prices to fall sharply during the next year.

In its latest EconomicOutlook Report released last week, the OECD says that in the medium term (in 2 or 3 years time) housing prices could fall suddenly and sharply in Spain.

The real estate market has been an issue in Spain for the past four or five years, and housing prices have risen annually here by a massive 17%. Last year in a special report on Spain, the OECD warned against offering futher incentives for future house buyers and suggested the Spanish government should introduce alternative policies such as rent subsidies for low-income families.

Pedro Solbes, Spain's Finance Minister said however that he did not expect there to be a sudden fall in housing prices in Spain and many experts consulted over the past week have tended to agree with him. The general feeling among economists here is that housing prices will start coming down in new urban areas which have sprung up around large towns and cities in Spain during the building boom over the past few years. But housing prices in coastal areas and consolidated urban areas are unlikely to fall.