The Bank of Spain has voiced concerns over the high levels of debt in the housing and construction sector. “It’s a cause for concern that requires the vigilance of management, experts and institutions,” says the bank’s director of research José Luis Malo de Molina.
According to Malo de Molina the housing and construction sector has the highest level of debt in the economy. Borrowing in the construction sector has reached 800% of the sector’s gross value added, compared to 300% in the energy sector, and way above debt levels in other sectors such as transport and telecommunications.
The bank’s concerns have heightened with the recent financial turbulence, which the bank expects to raise borrowing costs even if interest rates fall.
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