Like a Phoenix rising from the ashes, homes in with asking prices of between 100,00 and 200,000 Euros are back in fashion now that Spain’s property boom has turned to bust.

According to data from idealista.com, one of Spain’s leading property portals, homes for sale in Madrid with asking prices between €100k and €200k went from over 40pc of listings in 2002 to under 10% in 2006, driven down by relentlessly-rising vendor expectations. Now they are back up to 30pc of listings, and are once again the most numerous group (red line in chart above).

It’s a similar story in Barcelona (red line, chart below), and is a clear sign that asking prices are adjusting to new realities.

To be precise, the study found it takes 55.8 months on average to sell a new flat in the Barcelona metropolitan region, including the city centre.

Assume an average build time of 20 months, and new flats hang around on the market for close to 3 years after being built.

The study also found that closing sales in the off-plan phase is very difficult. In times gone by everything would sell off-plan.

By district, the most hopeless place to be a developer is the well-heeled district of Sarrià-Sant Gervasi, where it takes 82.6 months – or more than 6 years – to sell a new flat from the time off-plan sales start.

The best place to be a developer is the Old Town – Barcelona’s touristy Gothic Quarter (Ciutat Vella) – where it takes 34.6 months, and may have something to do with the fact that there are hardly any new flats to be found in a Gothic Quarter. Anyway, 34.6 months is still getting on for 3 years, so nothing to get excited about.

But however tough life is for promoters in Barcelona, they should spare a thought for their colleagues in coastal holiday-home regions like the Costa del Sol, where it takes between 70 and 80 months to put a development to bed, according to Aguirre Newman.

With these kind of sales times developers either have to have deep pockets or a very accommodating bank. No wonder so many of them have gone to the wall in recent years.

The supply in Barcelona and Madrid of properties for sale under 200,000 Euros has exploded in the last year as vendors drop their prices, reveals new research from Spanish property portal Idealista.com.

Over 12 months to the end of July, the number of properties listed at Idealista.com with an asking prices of less than 200,000 Euros rose 55% in Madrid and 48% in Barcelona.

Since the peak of the boom in 2006, properties in the 100k to 200k Euros price bracket have gone from 8% of the total in Madrid, to 27% today, an increase of 458% since August 2006.

In Barcelona, they have gone from 3% of the total in October 2006 to 18% today, an increase of 638%.

The cause? The credit crunch and an over-supply of property forcing vendors to reduce their asking prices if they want to sell, according to Fernando Encinar, head of research at Idealista.com. “The only way out today for vendors is to realise they have to drop their prices if they want to sell,” Encinar told the Spanish press.

The average cost of renting a flat fell from 1,200 Euros in 2008 to 980 Euros today.

The growing number of smaller apartments available for rent partly explains the fall in the average price, but prices in terms of Euros/m2 were also down, by 8%, indicating that prices fell across the board.

Cheaper rental prices are the result of a fast growing supply of properties for rent, as developers and investors try to rent out the properties they can’t sell.

Almost all the price fall took place in the last 6 months. Prices/m2 dropped by just 1% in the preceding 6 months.

This represents the biggest fall since 2002, when the city hall started publishing rental price data. Between 2002 and 2007 rental prices in Barcelona rose by 63%.

Barcelona property in the Eixample

Rental prices in Barcelona have started to go the way of property prices, falling an average of 2% in the first quarter of the year, from 1,081 Euros/m2 at the end of 2008 to 1,060 Euros/m2 at the end of March, according to a report from Barcelona’s Chamber of Residential Property (Cambra de la Propietat Urbana de Barcelona).

The fall in rental prices comes after a year in which Barcelona’s rental yields rose strongly. Whilst property prices fell by double digits in 2008, rental prices rose by around 16% in the year, driving up rental yields significantly. With rental prices now falling, yields will start to stagnate or fall, depending upon what happens to property prices in the city.

Rental prices fell the most in the upmarket district of Les Corts (-6.3%), followed by the Ciutat Vella-Old Town (-5.1%), Sarria-Sant Gervasi (-4%), Gracia (-3.7%), and Sants-Montjuic (-2.9%). Rents actually rose a fraction in the central district of the Eixample (+0.6%), and by +1.8% in the beachfront district of Sant Marti.

Good news for some people looking to rent a home in Barcelona, and bad news for landlords already nursing capital losses. Rental prices are falling sharply in Barcelona, reveals a new study by local real estate consultants Forcadell. Average monthly rental costs for a typical 75m2 flat has fallen below 1,000 Euros/month, for the first time since 2007.

In the first 3 months of this year the average cost of renting a home in Barcelona fell by 6% to 965 Euros/ month, on top of a 9% fall in 2007. Last year rents fell the most since 1991, and are expected to continue falling this year.

By district, rents fell the most in Gracia, down by 30%, but rose slightly in the Eixample, Sants-Montjuïc, Les Corts, and Sant Andreu.

Behind Barcelona’s falling rental prices lies a moribund property market and an economic recession. Unable to sell, many owners are putting their properties up for rent, pushing up the supply of flats for let. At the same time, the recession and rising unemployment means a dwindling number of people that landlords would like as tenants. Thanks to rental laws that favour tenants, landlords in Spain have to be careful whom they rent to.

Barcelona's Paseo de Gracia feels the crunch

The price of property in Spain’s best addresses is falling along with the rest of the market, at least according to a new report from TecniTasa, one of Spain’s official appraisal companies.

On Paseo de Gracia, in Barcelona, prices have fallen from 11,000 Euros/m2 in 2008 to 9,500 Euros/m2 today, a drop of almost 15%. As a result, Barcelona has gone from Spain’s most expensive address, to the second most expensive.

Prices have held up a bit better on Calle Serrano, in Madrid, which as a result has taken Barcelona’s place as Spain’s most expensive street. Property prices on Calle Serrano have fallen from 10,000 Euros/m2 in 2008 to 9,900 Euros/m2 today.

Prices have also fallen significantly in upmarket areas of Bilbao, San Sebastian , and Zaragoza – by more than 1,000 Euros/m2 in the case of the last two. Prices in the best areas of Girona, capital of the Costa Brava region, have fallen from 6,000 Euros/m2 to 4,600 Euros/m2.

On average, property prices have fallen by 8% in Spain’s seven most expensive cities.

After rising 63% between 2002 and 2007, residential rents in Barcelona stagnated, and even fell slightly in the last 6 months of 2008, according to figures from Barcelona’s town hall.

In 2003, the average flat for rent in Barcelona had 92m2 and cost 884 Euros/month. Today, the average flat has 75m2, and costs 1,096 Euros a month to rent. Having broken the 1,000 Euro/month mark in the first half of 2008, rents then fell slightly in the second half of the year.

“Rental prices are falling more than 1%,” says José García Montalvo, professor of economics at the Pompeu Fabra University, quoted in the Spanish press. “Furthermore, in the last quarter we have started to see tenants renegotiating rents with landlords, which doesn’t show up in the statistics.”

García Montalvo says that rents will continue to fall this year, as many people who can’t sell are opting to rent instead.

Juan José Aguilera, head of Comprarcasa, a network of certified estate agents, agrees. “Now everything that doesn’t get sold is put up for rent. The supply of flats for rent exceeds demand, and prices are falling.”

The fall in rents coincides with a wider collapse in the Spanish property market, as Spain goes into a recession of alarming proportions. Property sales in Barcelona province fell close to 45% last year, but the number of new constructions completions fell by only 5% (to 39,964), implying that the inventory of new homes on the market looking for a buyer is still growing. New housing starts, on the other hand, fell by 72%.

Barcelona's Gothic Quarter

In the past, many of the short-term tourist lettings in Barcelona were illegal, which increased the irritation of angry neighbours disturbed by noisy tourists staying in their buildings. The outcry prompted a drive by the authorities to clamp down on tourist rentals in the Old Town. Many of the apartments illegally rented to tourists belong to foreign investors in Barcelona property.

With help from neighbours, town hall officials and officers from the municipal police (Guardia Urbana) identified close to 900 illegal tourist apartments in the Gothic Quarter. 474 have now shut down, 154 of them voluntarily.

There are a total of 683 flats with licences in the Old Town that can be legally rented to tourists on short breaks. No new licences have been granted since 2005.

The Spanish tax authorities are reported to have taken an interest in the investigation, as few, if any, of the owners of illegally-rented properties declared their income and paid their taxes.

According to the latest data from idealista.com, a leading Spanish property portal, nominal prices in Barcelona capital have fallen 10.6% in the last 2 years, which translates into a fall of 16% in real terms (after adjusting for inflation). A typical flat of 70m2 is now 30,000 Euros cheaper than it was 12 months ago.

Over 12 months the asking prices tracked by idealista.com have fallen by 14.7% in Sants-Montjuïc, 12.9% in Sant Andreu, 12.7% in Horta-Guinardó, and 11.7% in the Ciutat Vella, Barcelona’s famous old town Gothic Quarter.

Coastal resorts around Barcelona popular with second home buyers are also in trouble. Asking prices have fallen by 15% in Malgrat, Pineda y Premià de Mar, 13.3% in Roses (Costa Brava), and 13.5% in Segur de Calafell (Costa Dorada).