Real estate market in Spain from stagnation to decline
Strongly decreased the real estate market in Spain, said Times. A huge number of British now is not afraid to lose their holiday homes.
The construction firm Martinsa Fadesa announced that the supply of borrowing becomes increasingly difficult because of increasingly lower prices. The company can not meet their payments and asked creditors for protection from bankruptcy.
Martinsa Fadesa has sold more than 12 500 holiday homes with the promise to complete construction started. Much of the properties are owned by the British. Experts believe that the promise will soil regardless of wealth of the owner of the company millionaire Fernando Martin, who is also former president of football club Real Madrid.
Last year the company used Martinsa huge volume of debt financing as the company bought the other Fadesa, but was affected by the general slowdown in the housing market and the small number of sales. Another obstacle is the large accumulated debt because the credit crisis.
Finance Minister Pedro Solbes of Spain had long ignored the economic problems in the country, but last week admitted that the country is experiencing difficulties:
“This is the most complex crisis that we have ever seen”, announced Minister Solbes.
In his public money should not be used to save companies like Martinsa. They have undertaken their own risk.
14 years building the Spanish economy maintained, but now are seriously affected by the delay. Estimates are that the economic growth of 4% per year will be decreased to 1%. Economists provide recession in 2008 or 2009. In Spain entrepreneurs spent almost half of their income on servicing mortgage loans, as the mobilization of loans becomes increasingly difficult.
Prices of fuel and food inflation increased to 5%. Pounds against the euro lost more than 15% of its value in 2007.
Experts advise that the housing market should be immediately changed. Housing in Spain are still 20% more expensive than their real value.
The protection of bankruptcy of Martinsa-Fadesa applies only to major international company and autonomous branches will not be affected.
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