Spain and Portugal will be the two developed countries in Europe where property prices are hardest hit from the impact of ageing populations and low birth rates in the Iberian peninsular, according to a new report from the Bank of International Settlements (BIS).

The BIS says that by 2050, an increasingly elderly population could lead to property prices in Spain and Portugal being significantly lower in real terms than they would have been without the impact of an ageing population.

According to the BIS, in Europe only Portugal will be worse off than Spain, and that in mainland Europe, Sweden and Norway will perform the best, with the UK also being only mildly affected by these demographic trends, due to a more positive growth trend in its population.

The research states that the biggest driver of house prices is demographic change and that post-war ‘baby boomers’ drove up property values since 1960, however they will in future act as a headwind slowing price growth as aging vendors sell up or downsize in the next fifty years.

The report can be found at www.bis.org/publ/work318.htm