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Crisis. The housing bubble

The housing bubble occurred in Spain during the 1997-2006 decade.

Houses price was doubled. Property price grew beyond goods price. //

According to Gandoy, in comparison with the European Union, construction

reached a huge importance in Spain. The housing expansion was the base

of the economic growth model, due to the demographic growth provoked by

immigration and to secondary residences demand by national investors and

Europeans. The housing demand rose thanks to easy credit granting

because of lower interest rates. Prices were accelerated by the supply of

building for speculative reasons which made the supply and construction

activity increase.  // The housing bubble can be summarized in five causes. The first one is that

banks lent money to people that did not offer enough guarantee of returning

it. The second one is that the Bank of Spain did not control the financial

institutions. The third cause is an expansion which was not controlled nor by

the national govern, neither by the autonomous and local ones. The fourth

cause was that citizens went into debts without thinking on the consequences.

Finally the fifth one is that development companies built houses whilst they

had not sold the ones built before. //

When the housing bubble ended, a financial crisis started in 2007; this

coincidence, according to Picazo, affected the employment because a big

number of people worked in the construction. Furthermore, it had enormous

consequences: localities went into debts and built big urban projects, the

construction companies (in spite of the benefits they got) fell into debts by

buying lands to gain more money, as well as citizens owed money and could

not pay their mortgages, banks stopped granting credits and started seizing

properties. The landscape totallychanged and the environmental

consequences have been irreversible.  // 

Housing crisis will not end until the million of houses in stock are sold. It is Necessary to encourage the demand by granting loans and changing the

housing construction laws, being more respectful with the environment. 

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