In Spain, a whopping 96% of mortgages are on floating rates, rather than fixes - so every rise hurts almost every mortgage holder.
It looks like the Spanish may be the first group of Europeans to experience a painful ending to the global property boom.
Last week, the Ibex index in Madrid was battered as shares in Valencia-based builder Astroc dived after its accounts revealed that some of last year's profits came from the sale of assets to its chairman, leading to fears that the company was trying to prop up its share price. Its fellow building stocks took a tumble as the fears spread to wider concerns about the property market in general. Spanish house prices have risen 270% in the past 10 years. But now house price growth is faltering, slowing from annual double-digit gains to growth of 7.2% in the first quarter of this year. In many areas, the Costa del Sol included, prices are falling.
And the truth is that the statistics on the Spanish property market make for frankly terrifying reading for anyone who is thinking of, or is already, investing there.
Massive oversupply
The supply and demand statistics are awful for a start. More than 800,000 homes were built last year - that's more than France, Germany and Italy combined. That's even though Spain has the lowest birth rate in the EU, along with Italy – women now have just 1.3 children on average.
That's all bad enough - but Spain's market is also unusually vulnerable to rising interest rates and panicky speculators. In a country of 40 million people, four million foreigners own property, including 250,000 British people.
One of the main reasons that property bulls - and sometimes more sober experts - often claim that house prices won't fall is because if you own a home, and prices are falling, you will tend to hold off selling unless you absolutely have to. So the supply of homes on the market dries up, keeping supply and demand broadly balanced, meaning prices remain roughly stable, until conditions pick up again.
No desire for many to hold
This is debatable on many levels - but even if you accept that argument, the problem for a market like Spain is that holiday home owners and fly-to-letters have neither the desire, nor in many cases, the financial reserves to sit on a property that is falling in value. And that's not even considering the number of ex-pats who emigrate, only to turn around and come back within the first few years of moving.
On top of that, many second home-owners are largely relying on money released by remortgaging their main residential property. So with interest rates rising, for example, in the UK, sustaining two homes is becoming more difficult for all those property moguls who have overstretched themselves to buy their place in the sun.
European handcuffs
In Spain, the situation with interest rates is even more grim. Because it's part of the eurozone, Spain can't set its own interest rates. And the reality is that eurozone rates are largely set with Germany in mind. The trouble is, Germany has been at pretty much the opposite end of the business cycle from the rest of the world (except maybe Japan) for about 10 years now. Rates were very low when Spain joined the euro, which fuelled the boom in the first place - as Bank of Spain governor Miguel Fernandez Ordonez says: "The single monetary policy has meant that excessively loose conditions for our economy have been almost continuous."
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