The price of Spanish homes has risen more than 200 percent during the past 10 years, and “[a]t the height of the construction boom in 2005 there were 7,000 estate agents on the Costa Blanca,” according to the Daily Telegraph. Low mortgage rates offset the rising costs of home purchases and now approximately 95 percent of Spanish homeowners have adjustable rate mortgages, according to the Wall Street Journal.
However, the Spanish property bubble has popped. In the second quarter of 2007, the rise of property prices was below the rate of inflation for the first time in 10 years. So far this year, 300 of the Costa Blanca’s real estate offices have closed their doors, according to the Daily Telegraph. Spanish homeowners, unable or unwilling to sell, must watch in horror as interest rates rise beyond their reach.
