Meltdown confirmed

LAST UPDATED: 18 Sep, 2010 @ 10:00
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Prices slump across Spain as US economist Greenspan claims Spanish economy in danger.

Meanwhile banks stop lending on country properties and golf course schemes!

By Jon Clarke and Laura Balfour

AMERICA’S leading economist Alan Greenspan has given a gloomy prediction for Spain’s already ailing property market.

The former chairman of the US Federal Reserve believes that Spain has a bigger real estate bubble than “even America”.

“The real estate bubble is bigger than most European countries, even bigger than the one in the United States,” he explained. “In that sense one would have to presume that there is more vulnerability.”

His prognosis comes as it emerged that at least one leading bank, Cajasol, is refusing to fund new constructions on rural land and in particular new golf course schemes.

In further proof of the property slowdown, new statistics show that property prices have gone down by up to 10 per cent in a number of Andalucian areas.

In the worst slump for ten years, the Guadalhorce towns of Alhaurin el Grande and Alhaurin de la Torre have seen a drop of as much as 13 per cent over the last year.

In comparison with 2007 figures there have also been falls of nearly seven per cent in Antequera. Rincon de la Victoria has seen a drop of 10.3 per cent and Mijas has dropped by 6.2 per cent.

The Eastern Costa del Sol in general has seen a property price slump of nearly five per cent.

While the Western coast has managed to achieve a rise of five per cent, an estate agent on the coast – and even inland in Ronda, which has seen a rise of 9.8 per cent – admit that prices have actually fallen in real terms.

The study carried out by real estate company Salvago estimated that prices will not recover until at least the end of 2009.

In the interview with Spain’s leading newspaper El Pais, Greenspan particularly singled out Spain as being an economy in danger of being harder hit by the current economic slowdown.

He said that other European economies, such as France and Germany, were “going well”, although with modest growth.

He added that the UK had also developed positively and could avoid major recession if the right regulations are put in place.

Greenspan’s sombre warning is reinforced by recent figures from the Malaga courts on the high amount of home owners who defaulted on their mortgage repayments.

By the middle of March, court officials confirmed that they had already received some 155 cases which amounts to half of the total number of cases registered in the whole of last year.

Banks normally wait for three months before taking cases to court and even then all efforts are made to avoid repossession.

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