Spain's economic boom reverses

Over the last two decades Spain has experienced rapid economic growth fuelled by a housing boom.

Offering sun, sea and sand, 5 million new homes have been built in the last ten years thanks to an influx of immigrants to cities and foreigners to the coastal regions.

But the sun start setting on the construction industry in Spain's grossly over-supplied coastal market last year and spreading across the country.

Construction accounts for almost 20 percent of GDP and Bank of Spain's head of research, Jose Luis de Molina, worries about a slowdown.

(SOUNDBITE) (Spanish) BANK OF SPAIN'S HEAD OF RESEARCH, JOSE LUIS MALO DE MOLINA, SAYING:

"After representing for a long period the motor of our economy, the housing sector is now, undoubtedly, the main factor behind the downturn in which the Spanish economy is already into."

The IMF says that the global credit crunch could halve Spanish growth to 1.8 percent and curb lending to a fast-cooling housing market.

So now Spanish builders are tempting cagey home buyers with free cars, mortgage holidays and hard cash.

At last week's annual property fair in Madrid, the number of promoters was down by a third on the previous year.

(SOUNDBITE) (English) HABITAT MARKETING DIRECTOR, LAURA ARGENTE, SAYING:

"We are offering important discounts. Today, we believe, price is a very important factor in this market -therefore we are offering up to 50.000 euros for buying a house."

But even with these discounts, huge numbers of people are priced out of the market.

First-time buyer Carmen Gil says a state-sponsored apartment is her only option.

(SOUNDBITE) (Spanish) FIRST-TIME HOME BUYER, CARMEN GIL, SAYING:

"I don't think it is a bad idea because right now there is fear in the air and that is lowering prices, owners are selling cheaper. I think this situation will continue until the end of the year, so I'm going to take advantage."


But with the burst of the housing bubble tens of thousands of jobs are being lost too and Spain's 3 million immigrants are being hit hard.

Foreigners who worked in construction during the boom are no longer wanted and unemployment in that group rose by more than a half in 2007.

Stefanie McIntyre, Reuters

ca·gey also ca·gy adj. ca·gi·er, ca·gi·est Wary; careful: a cagey avoidance of a definite answer.
gloom n.

1.

a. Partial or total darkness; dimness: switched on a table lamp to banish the gloom of a winter afternoon.

b. A partially or totally dark place, area, or location.

2.

a. An atmosphere of melancholy or depression: Gloom pervaded the office.

b. A state of melancholy or depression; despondency.

hard cash - money in the form of bills or coins; "there is a desperate shortage of hard cash"
priced out - the market has already incorporated information, such as a low dividend, into the price of a stock.
burst n. A sudden outbreak or outburst; an explosion.
bub·ble n.

1. A thin, usually spherical or hemispherical film of liquid filled with air or gas: a soap bubble.

2. A globular body of air or gas formed within a liquid: air bubbles rising to the surface.

hit something hard - to cause something to be much less successful. The tourist trade has been hit hard following the recent spate of bombings.