Spanish construction in severe slowdown
MADRID, June 10 (Reuters) – Spain’s residential construction sector is in a severe and necessary slowdown which has sharpened significantly this year due to tightening credit conditions, Spanish Housing Minister Beatriz Corredor said on Tuesday.
Spain’s Socialist government hopes to steer the sector, which drives around 10 percent of the economy, towards rehabilitating existing homes given excess supply of around 600,000 new houses following years of overbuilding, Corredor said.
“It is in a very severe, intense slowdown,” Corredor said in a speech to an economic forum. “It has accelerated significantly since the beginning of the year.”
Steepening Spain’s housing slowdown are record high property lending costs which are causing problems for many households with mortgages, Corredor said.
Spanish Prime Minister Jose Luis Rodriguez Zapatero said on Saturday that European Central Bank President Jean-Claude Trichet had to show more prudence after market interest rates rose when he said the central bank might hike rates in July.
Asked whether she shared Zapatero’s concerns, Corredor said it was not her job to tell Trichet what his responsibilities were but he had to consider the impact of his statements.
Corredor said Spanish house prices were now falling in real terms but declined to comment on whether they would fall on a nominal basis, as the International Monetary Fund and most economists predict.
Corredor reiterated it was a good time for first-time Spanish house buyers to enter the market as large property developers are likely to offer price discounts given the high level of new unsold homes.