MADRID House price rises in Spain have slipped below the inflation rate for the first time in a decade, the Government said. It is the latest sign of a sharp downturn in the once booming property market.

House prices in March rose 4.0 per cent year on year, the housing ministry said in a statement. Inflation for the same period was 4.6 per cent, the INE statistics office said. The figures mean that house prices declined in real terms for the first time since 1997.

The property sector has been the driving force behind Spain's economic development in the past decade and accounted for about 7.5 per cent of the country's total economic output, according to the BBVA bank.

Low interest rates that followed Spain's accession to the eurozone in 1999 fed the housing boom as more people took out mortgages.

The market began to slump early last year because of rising interest rates, stalling property prices and the international lending crisis that hit Spain's credit-fuelled expansion. (AFP)

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