I have read that there are 1.6m new viviendas in inventory in Spain. This housing bubble is the mother of all bubbles. It is so obvious to an outsider but apparently the Spanish authorities and most importantly the developers are oblivious to the ramifications to society and their shaky economy.

This overhang of unsold inventory will last for years if not a decade. The days of buying a property to turn a quick buck are long gone. When sanity returns to the market, buyers will follow. Prices need to fall at least 50% to return to the mean and affordability measures.

Buyers need to be patient and wait for the market to come to them. The market overshot to the upside tremendously and now there is no reason why it can not overshoot to the downside.

Best regards

To put this in perspective, in the US there are 500,000 unsold single family homes and another 500,000 others. When the population differences are taken into account the size of the problem comes into sharp focus.

The only way to stabilise prices is for them to fall to an affordable level. That means very large price discounts that are not happening. there is huge demand that could soak up this supply from young couples and families that have been priced out of the market.

The holiday resorts are a case apart because they depend on different factors. What we have to see here is a correction that prices the good properties in good areas over those that are of less quality.

Now is a great time to buy quality property in excelent locations such as Marbella and Sotogrande. Be guided by quality not prices. When prices fall your bargaining position becomes much better in securing discounts.

One more tip – developers are not the vendors to go to now, choose established areas with quality properties and deal with agents that have a understanding of values in the local area.

Guy Marrison
Marrison Properties
http://www.marrisonproperties.com