• ISSN: 2301-3567 (Print), 2972-3981 (Online)
    • Abbreviated Title: J. Econ. Bus. Manag.
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    • DOI: 10.18178/JOEBM
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HOME > Archive > 2026 > Volume 14 Number 3 (2026) >
JOEBM 2026 Vol.14(3): 245-259
DOI: 10.18178/joebm.2026.14.3.949

Shadows Over Bricks and Tiles: Causes, Impacts, and Lessons of Spain’s Property Bubble

Xiangya Xiao
Xiangya Xiao
Economics, University of Essex, Colchester, United Kingdom
Email: yaya01262023@163.com

Manuscript received Jun 6, 2026; accepted August 20, 2026; published September 14, 2026.

Abstract—This paper analyzes Spain’s property bubble (1996–2008) following its entry into the Eurozone. Low interest rates and capital inflows from European integration generated growth but created structural risks. Spain lost monetary autonomy under the unified eurozone policy, preventing countercyclical measures against market overheating and leading to excessive credit expansion, soaring property prices, and high private debt. Financial regulatory deficiencies, particularly regarding savings banks (Cajas), exacerbated credit expansion and asset bubbles. Spain’s economy relied heavily on construction and services, with weak export competitiveness and increasing vulnerability to external shocks. By examining monetary policy constraints, regulatory gaps, and structural imbalances, and comparing them with the US and Irish crisis responses, the study reveals how Eurozone institutional design—centralized monetary policy versus decentralized fiscal policy—impacts member-state stability. Spain’s lack of independent monetary instruments hindered the prevention of bubbles and post-crisis adjustment, resulting in a deeper recession and a prolonged recovery, offering insights for future Eurozone optimization and risk prevention.
 
Keywords—property bubble, trilemma, monetary policy, Eurozone, international comparison

Cite: Xiangya Xiao, "Shadows Over Bricks and Tiles: Causes, Impacts, and Lessons of Spain’s Property Bubble," Journal of Economics, Business and Management, vol. 14, no. 3, pp. 245-249, 2026.

Copyright © 2026 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

 

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