Spain slowdown 'necessary'?

The decline in Spain's housing sector is a necessity, claims the country's Housing Minister.

Speaking at a recent conference, Beatriz Corredor made her position crystal clear: "The sector's decline is a necessary correction for Spain, where house prices tripled in the decade to 2007".

Ms Corredor was also positive about the future, predicting that the sharp slowdown in Spain's housing sector ‘would be over by the second half of 2009'.

Falling house sales

Her comments came after the National Statistics Institute (INE) disclosed that Spanish house sales fell 7.1 percent year-on-year in April to 55,802 units after a 39 percent fall in March.

Government data also showed a 13.8 percent year-on-year fall in April house mortgage lending to 12.24 billion euros ($19.2 billion), following a 42 percent drop in house mortgage lending in March.

April's lower rate of falls in house mortgage lending and house sales can be partly explained by the fact that Easter was in March this year and in April last year, INE noted.

Sergio Diaz from Property Company Caja Madrid, observed: "This sudden easing is probably due to Easter, and until we see how the index behaves over the next few months we really can't draw any conclusions," said

Slowdown ‘deeper than expected'?

Spain, the euro zone's fourth-largest economy, is suffering a deeper than expected slowdown as the end of a decade-long property boom coincides with the global credit crunch, record oil prices and a strong euro.

Expectations of a further Eurozone interest rate rise at next week's monthly European Central Bank meeting to 4.25 percent from 4.0 percent are adding pressure to an already depressed sector.

The average interest rate in April for mortgages stood at 5.13 percent, which was 11.1 percent more expensive than a year earlier, INE said.