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Residential property investments are set to rise this year in Spain, giving the construction sector a much needed boost.

Investment in Spanish residential property is expected to be 8.2% higher this year than in 2016, forecasts the latest report by BBVA Research.

BBVA made an upward revision of 1.7% on previous 2017 forecasts. The residential property market is expected to continue to grow next year, with total investment rising by a further 5.9%.

The growing market is being driven by an improving economy, record low mortgage interest rates and falling unemployment levels.

The resurgence of the property market has boosted construction activity in Spain, which the Ministry of Development is forecasting to grow by 15% this year. Spain’s residential construction sector was on the verge of collapse after the economic crisis hit and the property bubble burst.

However, the managing director of leading property valuation firm Tinsa, José Antonio Hernández Calvín, said at a recent conference that the country is emerging from “one of the worst crises ever seen in Spain” and that the property recovery which began in Malaga, Alicante and the Balearics and Canary Islands is now starting to spread to other areas of the country.

By the end of 2017, demand for new properties will push the market up by 15% to around 75,000 new homes; this figure is 50% more than what was built in 2015, according to the head of the Housing department at the Ministry of Development, Antonio Aguilar.

Further evidence that the construction sector is recovering can be seen by the fact that new housing constructions account for 4.83% of Spain’s GDP, compared with 3.04% in 2016.