While the property market has become one of the most important factors for investors today in countries like Spain, the Spanish people continue to be concerned about the potential property slump and slowing economy. Their elections – which are held on Sunday – will be in part based on these factors.
In Spain, the economy was doing very well, with a record level of growth seen. Then the property market fell through and since then the market has been a thorn in the side of the country's economy. The problems here seem to be tied to the overbuilt property market. At the time, many of these properties were founded on a low euro zone interest rate. At the same time, the economy here was doing very well.
Spain's central bank issued a warning though. The return on property dropped to just 6.8% in the fourth quarter of 2007: this was at 15% in 2005. The return on property is the rents plus property price growth.
Various areas have suffered including the construction industry, property sectors, and the banking sectors, all evident in the fall of the stock markets.
As the country moves towards elections tomorrow, all eyes will be on the candidate that can make the largest difference in this property market.
