Spanish developers call for action on housing crisis

Spanish real estate developers have called on the government to take financial measures to combat the downturn in the housing sector. Jose Manuel Galindo, president of Madrid's real estate developer association Asprima, told news agency Europa Press that the Spanish government should help guarantee stable economic growth in the country.

The statement followed the release of new figures on Spanish house sales last week showing that the number of home transactions plummeted by almost 40% year-on-year in March 2008, to about 46,000 units. This compares with a drop of 24% registered in February, and 27% in January, according to Spain's National Statistics Institute (INE).

'The drop in housing construction will have an impact on the country's economic growth,' said Galindo. 'The housing sector represents about 9% of Gross Domestic Product and if this sector drops by 50%, the effects on the economy will be evident.'

The number of mortgages issued in March also fell sharply, by about 40% to 70,000 units, making it the worst fall since 2003, according to INE. The crisis in the Spanish construction sector follows a 10-year, debt-fuelled boom, which reached its pinnacle in 2006 with about 800,000 home building permits.

Earlier this month, Spanish residential property agency Don Piso said it planned to close up to 120 offices with the loss of 350 jobs. The property adviser reported a 66% drop in sales last year. Overall, Spanish real estate services companies closed about half of their offices in 2007, according to data issued by Agentes de la Propriedad Inmobiliaria (API), a network of real estate agents across Spain. API estimated that around 40,000 offices closed last year, which compares to a total of 80,000 previously active in the country.