A bubble about to burst? The Spanish Real Estate Market

Seminar paper from the year 2007 in the subject Economics - Case Scenarios, grade: 1,0, University of Göttingen (Volkswirtschaftliches Seminar), course: Spanish Economy, 16 entries in the bibliography, language: English, abstract: This paper discusses the phenomenon of asset bubbles with an application to the Spanish real estate market. It is organized as follows: The first section provides a brief introduction into the subject. It firstly discusses some mechanisms of property markets and determinants of asset bubbles. For further clarification it secondly refers to some countries which experienced similar processes and respective causes for their bubbles. To wind up the introductory part section 1 briey also mentions potential threats of price bubbles. Section 2 carries out an analysis of the Spanish real estate market in order to identify possible drivers of demand. It also illustrates some similarities with countries which have in fact experienced a (bursting) price bubble in the past. The section concludes with an evaluation whether or not Spain's real estate market is indeed suffering from a bubble. Theoretical findings will be supported by data supplied by the Spanish Housing Ministry.