A new speculative bubble may be taking shape as global investment firms buy devalued real estate in Spain. Will they beat a new path of dispossession?
At the dawn of the twenty-first century, Spain was flying high. After extensive economic liberalization and adoption of the euro in the late 1990s, all indicators pointed up. Spain boasted the highest use of cement in the European Union, fifth worldwide, as close to a million houses were built in 2006 alone — more than France, Germany and Italy combined. Many were convinced that prosperity was here to stay.
But the boom was built on an asset bubble, where skyrocketing housing prices and unprecedented amounts of credit for developers and homeowners — and thus vast indebtedness — created the perfect storm. While more than six million new homes were built and house prices increased by over 200 percent from 1996 to 2007, in the years since then Spain has seen millions of vacant properties accumulate, housing production at a standstill, price declines of over 65 percent from their peak, and hundreds of thousands of home repossessions. [Read More]
