Hard to swallow news for Spanish market

The Spanish property market once again faces the grim reaper as the latest planning approval figures show a dramatic downturn.

Figures for this year show approvals were down over 60% compared to the same period last year. The comparison last year was showing approvals down a further 50% on 2007.

During the years where prices were at a peak, the construction sector made up almost 20% of Spain’s GDP. With the industry in freefall, the connection between slow market recovery and high unemployment doesn’t require Sherlock Holmes.

Property prices in Spain may undergo another shake up as the Bank of Spain is to introduce a plan whereby some banks with repossessed properties are forced to double the amount they write off, if they have held the property for over a year.

Values will be forced down as these banks off load at reduced prices, and this news is about as easy to swallow as concrete for anyone selling a property in Spain.

Investor advice here may well be to wait if every ounce is to be squeezed from any property deal.