Spain's Vibrant Home Market Shows Signs of Cooling in Loans
(Bloomberg) -- Spain’s vibrant property market just showed another small signal of slowing.
While the number of new mortgages on houses reached a seven-year high in 2018, the annual growth slowed, according to data released Wednesday by the Spanish National Statistics Institute. The 42.7 billion euros ($48.6 billion) lent represented a double-digit jump from 2017, yet the increase eased from the previous year’s.
Surging purchase prices and rents in big cities in the past few years nevertheless are provoking the Socialist government to plan urgent legislation to cap apartment rents. Prime Minister Pedro Sanchez is negotiating a mechanism that could allow regions to limit rental increases, El Pais newspaper reported.
Sanchez would need parliament to ratify the decree. He faces possibly being driven from power in April general elections, according to opinion polls.
The number of new house mortgages rose 10.3 percent last year, INE said. That’s down from growth of 10.7 percent in 2017, 14.6 percent in 2016 and 20.8 percent in 2015.
As an investment, homes have been beating many major alternatives. Prices rose an annual 7.2 percent in the third quarter, the most recent period available. That compares with a drop of 9.6 percent in the benchmark IBEX 35 index in the same 12 months, and a 0.1 percent gain in a one-year to 10-year Spanish government bonds index.
Activity varied widely across the country, with regions like Valencia and Madrid showing more than 14 percent mortgage volume growth, to increases as low as 5.2 percent in Galicia and 2.4 percent in Aragon.
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