600,000 new homes, and 200,000 part-completed ones remain unsold, a sizeable proportion of which are in holiday areas. The Bank of Spain says official house prices have fallen 17% since 2007, but many observers believe that the market is much worse than that, as the bank's index is based on valuations, not achieved sale prices. Estate agents say prices of homes have typically fallen 20% to 50% in different parts of the country, with no sector unaffected.
"There is an entire generation of young Spaniards with a millstone round their necks," says Enrique Quemada of One to One Capital Partners, a business consultancy. "They will have to work their whole lives to pay for houses now worth half what they bought them for."
Meanwhile, the holiday home market also remains in the doldrums. A three-bedroom bungalow in Castellon, north of Valencia, has been slashed by its British owner from £109,000 to £79,000, and then to £66,000, but still has no takers. Taylor Wimpey, a British developer which has been building homes in Spain for more than 50 years, has new villas on the Costa Blanca for sale at £140,000, down from £235,000.
On the Balearic Islands, until recently thought of as immune from the crash, prices are down as much as 40%.
"There are some real bargains, especially at the top of the market," says a spokeswoman for Savills estate agency, which has one new luxury villa on Mallorca slashed from £15.4m to a mere £9.5m.
Desperate developers are also faced with a slump in British demand because of the poor euro-sterling exchange rate. As a result, a golfing resort in Catalunya is selling its homes with a guaranteed rate of €1.25 to the pound on all purchases over the summer; the market rate is €1.14.
Most commentators believe that more price falls are inevitable, but even if Britons choose to buy now, the prospect of getting a Spanish mortgage is "pretty bleak," according to Melanie Bien of broker Private Finance.
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