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Property Fears
Mixed messages concerning the property market continued last week as the president of the Building Constructors Association, Juan Roig, confirmed that buildings were continuing to be erected at a similar rate to that of the last two years. He claimed that new builds were still the most popular, with the second hand housing market recording substantial falls. His statements were backed up by several leading estate agents who confirmed that although the housing market remained strong, it had been slightly affected by the recent rise in interest rates and increases in prices over the last few years.
One agent claimed that prices on new builds would in fact increase this year by three per cent, although an apartment that previously took three months to sell would now take six months.
However their views were not shared by all agents, some of who claimed that the housing market was on the cusp of significant falls. They revealed that prices in second hand properties were already starting to decrease, and would continue to do so in the immediate future. Their views were shared by the financial institutions, who reported that mortgage requests had fallen significantly during 2007.
Cristina Faura, of Banca March, said that the high price of property was discouraging people from buying, which would inevitably bring prices down due to a lack in demand. She said that the average mortgage within the Balearics was €170,346, resulting in repayments of €903 per month. This works out at 52.8 per cent of an average family's annual salary, the highest in Spain after Madrid. She said that the current high interest rates would lead to mortgage re-payments not being met and an eventual decrease in price.
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(ibiza-sun)
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