Spanish market reaches maturity after stock exchange 'scare'

Spanish market reaches maturity after stock exchange 'scare'
3rd May 2007

By Daniel R Talavera

The Spanish property market has always been in the eye of the storm, both for good and bad reasons. Last Tuesday, the speculation which has shaped the market over the last few years finally ended in capital losses, thus heightening fears that the Spanish property boom is coming to a grim end.

Last week's events, however, have nothing to do with the underlying reality: the Spanish market is currently in the maturity stage, in which the housing offer decelerates whilst demand continues to grow. This maturity process marginalises the speculative phenomenon, which was slapped by significant stock exchange losses, and signals the beginning of the property market's landing after a number of buoyant years.

The Losses

The sharp fall of the Valencia company Astroc in mid-April set alarm bells ringing about a property market crash. Though this fall also affected other companies within the sector, with stock exchange interest rates recording average losses of 2.5% to 2.8%, the scare had a favourable effect on the rest of the sector. This was Tuesday. On Wednesday, the stock exchange closed with a gain of 0.29%, which resulted in the affected companies plummeting further into crisis, whilst fears heightened for the rest.

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