Mortgages, house building down sharply in Spain

MADRID, Oct 22 (Xinhua): The number of mortgages granted to prospective home buyers in Spain fell again in August, one more bad news for the Spanish economy, figures showed Friday. August 2011 saw a 41.7-per cent drop in mortgages granted in comparison with the same month in 2010. It is the 16th consecutive monthly fall and the total number of mortgages which were granted, 29,231, is the lowest number since 2003, when the current system of calculation was introduced. The average value of a mortgage granted in August was 106,922 euros, 12.6 per cent lower than in 2010, while the total value of money lent, 3.125,4 million euros, is 49.1 per cent less than a year ago. The data is released the same day as figures show the Spanish construction industry is still struggling to climb out of the economic crisis. The government recently introduced a reduction in VAT from 8 to 4 per cent for people buying newly built houses in an attempt to stimulate the industry, but that has so far had little effect as figures published by the ministry of public works show. The construction of new homes fell by 24 per cent in the second quarter of 2011 compared with the same period in 2010, with 31,077 homes completed. That is 13,679 less than a year ago. This in turn compares unfavourably with the first three months of the year, with an 11.7-per cent decline in construction to show that the construction industry is still shrinking: data which is backed up with recent unemployment figures that confirm the sector is still shedding jobs. Recent worries about the continued level of private debt in Spain and recent decisions by debt qualification agencies, Moodys, Fitch and Standard and Poor's to lower their rating of Spanish banks will do little to raise confidence in the sector and the figures look unlikely to improve in the near future.