This year the price of new housing in Palma has risen by 7.9 per cent, one point above the rise in other Spanish capitals where the average increase has been 6.5 per cent. However, sources in the property industry are expecting the rise in house prices to slow down over the next six months. One of the reasons for house prices easing, is that demand in May and June has dropped while the Bank of Spain has asked financial institutions to put the brakes on personal financing and credit and interests rates have been increased to 4.5 per cent. The average cost of a square metre in Palma and other Spanish cities is 210.300 pesetas.

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