Barcelona Living

From El País: ?House price rises continue to soar in extended boom: average cost of a new home up just under 12% in past year? | ?House prices continued to rise at double-digit rates in the past year, as an unrelenting property boom further distanced the dream of lower-income families of owning their own home in a country where there is a notable lack of affordable rented accommodation.

According to figures released Friday by the appraisal group Sociedad de Tasación, the average price of a new home in the 12 months to June was up 11.9 percent, compared with the same period a year earlier, when the increase was 10.7 percent.

The cost of a new home increased in all of the provincial capitals in the first six months of the year, when the average price was up 6.3 percent at ?2,675 per square meter. The increase in 42 out of the 49 capitals was over 5 percent, and below 4 percent in only three.

The average price in Barcelona was up 9 percent at ?4,034 per square meter and up 4.4 percent in Madrid at ?3,788 per square meter. At the other extreme, the cheapest places to live in Spain were the provinces of Lugo and Pontevedra in the northwestern region of Galicia, and Badajoz in Extremadura in the southwest, where the cost of a new home was under ?1,400 per square meter.

Property prices have risen by over 150 percent on average since the current boom started in 1998. Over 80 percent of Spanish families own their own home, the highest rate in Europe. Unlike other European countries such as France, Germany, Britain and Holland, local municipalities have not built up a pool of publicly owned housing for rent.

The standard lease period in the private rental sector is five years, and there are millions of apartments in the country lying unoccupied. The Socialist government set up a housing ministry when it took office in 2004. The department, however, has had limited success in encouraging renting as an alternative to ownership.

The housing boom has also raised concerns on the part of the Bank of Spain, which estimates property prices are overvalued by up to 35 percent. As a result of the need to take on increasingly bigger mortgages due to the boom, household debt has shot up to 110 percent of gross disposable income.?