The sun is still shining in Spain
Valencia and Murcia hit hard
The property boom in 2002 to 2008 were fuelled mainly by retired north Europeans who bought up new-built second houses in places such as Valencia and Murcia, says political scientist Julio Embid, of think-tank Fundación Alternativas.
Real estate prices have now fallen some 30% to 50% from their highs, leaving Spain’s banks, or cajas with housing stock on their books whose current value is much lower than the original.
Meanwhile hundreds of thousands of houses built during the boom remain unsold, and people wanting to buy may find it difficult to get credit.
Mix of interests and lack of financial education
Embid also points to the cajas’ politically-driven executive appointments as a contributing factor to the crisis. “Many senior bankers were low-profile regional politicians or majors, without any financial experience or bank background,” he said.