The last thing the Spanish property market needs is more new homes coming onto the market, but that’s exactly what it’s going to get. 2008 is on course to be a record year for construction completions, says José Luis Malo de Molina, head of research at the Bank of Spain, beating even last year’s all time high of 641,419 completed properties.

Speaking at a conference organised by the developers’ association Asprima, Malo de Molina also admitted that Spain’s property slump is turning out to be more severe than expected, in part due to the credit crunch. For a long time the official line was the market was heading for a soft landing, but now even the government can’t deny the market crisis.

Problems in the property market are starting to have an impact on the wider economy, thanks to the dramatic fall in construction sector unemployment. Jobs are being lost on “a significant scale,” said Malo de Molina. That bodes ill for Spain’s housing market, which needs people in jobs who can afford to pay mortgages.