The decline in demand for overseas property is not unique to Spain, using the Google trends link attached http://www.google.com/trends?q=spanish+property it can be seen that the lack of searches is not just a Spanish phenomenon. You can compare different counties by separating each search by a “comma” e.g. Spanish property,Bulgaria property,Cyprus property the results clearly show that the search trends are almost identical.
I accept that Spain’s reputation and in particular the CDS has been damaged by corruption and over development and would expect this to take 1-2 years before some equilibrium is restored.
The area of the market that will continue to suffer is off plan as potential investors realise there is not a quick buck to be made, for this reason we see that attention is now focusing on sensibly priced, well presented resale’s in good locations, with buyers whose prime interest is not ROI and yields.