Madrid - The deepening decline of Spain's once-booming real estate sector could destroy more than half a million jobs and affect the entire economy, the daily El Pais reported Friday. Housing prices will plummet 8 per cent this year in the steepest decline in decades, a Madrid real estate developers' association estimates.
In 2006, the construction of 760,000 new homes was started in Spain, a figure which was expected to drop to 300,000 this year.
Up to 600,000 employees of the construction sector could lose their jobs in 2008 and 2009, according to El Pais.
Home sales fell by 27 per cent and the number of granted mortgages by 26 per cent in January compared to a year earlier.
The construction sector has been one of the driving forces of Spain's economy, which has begun cooling after a decade of rapid growth.
The sector, which had become highly speculative, has been affected by higher interest rates and the international lending crunch.
Real estate entrepreneurs are calling on the government to take measures to prevent the sectorial crisis from "dragging down" the entire economy, according to El Pais.
State income from value added tax (VAT) has already dropped by 8 per cent in the first two months of 2008.
