I. De la Vega/El Pais (Spain)

Spain may want to look to its neighbors for ideas on how to control rising house prices.

Anyone who has lived in Madrid over the past five years can attest to the city's soaring property prices. According to a recent report by consulting firm Grupo i, between 2000 and 2004 prices rose 106.5 percent in the capital and 60.2 percent in the suburbs of Madrid. This year, the group estimates, property prices will rise a further 13 percent.

The rest of Europe is also experiencing a surge in both prices and construction, and it may prove helpful for Spanish authorities to examine what is happening in neighboring countries if they are to help staunch the yearly price surges and provide housing to low-income families.

In general, real estate markets reflect a country's economic development, according to the Royal Institution of Charted Surveyors' (RICS) European Housing Review for 2005. In Germany, for example, which has a higher unemployment rate than in Spain, it is more difficult to find a house for sale.

In the Netherlands, authorities have allowed semi-private companies to renovate buildings to be then rented or sold as part of a public housing plan. This public housing, however, is managed by private companies. This formula could be transplanted to Spain, as each year there are more private companies that look to build rent-controlled apartments.

In the late 1990s, the Netherlands experienced one of the highest rises in property prices in Europe. Since 2001, however, the rises have leveled out and even fell in 2003 due to a dip in the country's economy. But waiting for an economic slide may not be the best idea for Spain, which would do better to develop measures to make renting more affordable.

Similar conditions to those of Spain can be found in Ireland. According to RICS' Michael Ball, the rise in prices in Ireland derives in part from small investors who buy properties with the aim of renting them. In addition, there are special mortgage plans that cater to this: of the total mortgages issued, this type accounts for a third of the total.

In France, the government has for years introduced similar incentives for people to rent. The most recent is the Robien system, in operation since 2003, which makes it easier to purchase property that buyers agree to rent for at least nine years. These investors are also allowed to write off a maximum 50 percent of the rent-derived income from their taxes. According to Bouygues Real Estate, one of France's largest firms with 61 percent of the market, about 56 percent of the buyers who purchased the total 112,000 properties sold in 2004 were private investors who in turn rented the properties. Last year, prices in France for apartments rose 12 percent and increased 17 percent for houses, the latter representing about 60 percent of the total real estate market.

France, the experts say, does not have the problems with property speculation that Spain does. Nor is it so common in Switzerland and Britain, because, they say, urban planning depends much more on public participation. According to urbanization expert Martín Bassols, although several anti-speculation measures have failed in Switzerland, there are norms to prohibit the resale of all non-agricultural and construction-based properties until two years after the purchase date.