HOUSE PRICES ROSE RAPIDLY LAST YEAR

THE Spanish property market is one of the most active in Europe but some experts are worried that the bubble may be about to burst, along with the UK. Most European countries have seen house prices rise over the past few years, but on the whole the increases have been steady and more recently, the growth rate has slowed down. However in Spain and the United Kingdom, house prices accelerated sharply last year and, according to a report published by the Royal Institute of Chartered Surveyors this week, the increase in house prices in Spain and back home in the UK were much greater than elsewhere in Europe last year. The Balearics is still, on average, the fourth most expensive region in Spain to purchase property, however in the final quarter of last year, the regional increase in prices was below the national average. Nevertheless, house prices, according to Development Ministry figures released this week, still rose by 12.3 per cent in the Balearics, to around 1.613'6 euros per square metre, while the national average was 16.62 per cent, although the average price per square metre was 1.297'73 euros. Looking at 2002 as a whole, house prices in Spain rose by 12 per cent while in the UK, the increase was 25 per cent, although for the period 1996 to 2001, property prices in both the UK and Spain, on average, rose by 41 per cent. Coincidentally, the strong economy and relatively low interest rates which have been fuelling the UK housing market, have also been fuelling some parts of the Spanish property market, especially in coastal regions, such as the Balearics. The strong pound has led to a revival of the UK property market in the Balearics, despite the average price per square metre in coastal areas being 1.100 euros at the end of last year although the local market is not as buoyant as it was a few years ago. In Mahon, Minorca for example, coastal property prices, compared to 2001, rose by 23.3 per cent, Ibiza 19.4 and in Palma, 17.8 per cent. The regions where property prices rose the most last year were Madrid, Murcia, Andalucía and Castilla-La Mancha. In Madrid property prices shot through the roof, rising nearly 23 per cent.