Just 135 new housing starts in the last quarter of 2008, and not a single one in December: That was the combined output in terms of housing starts for the G-14 group of Spain’s biggest developers, including companies like Martinsa-Fadesa (in administration) and Nozar (fighting to avoid administration) and Colonial and Metrovacesa (taken over by their bank creditors).

The freeze-over in the residential construction sector is expected to continue this year. The G-14 forecasts 150,000 housing starts in 2009, down 40% on 2008, and way off the more than 800,000 in 2006.

Pedro Pérez, President of the G-14, estimates the new build housing inventory at 700,000 properties, though other sources claim that there are more than 1 million new homes on the market, mainly flats.

Pérez also claims that there is demand in Spain for between 400,000 and 450,000 new properties a year, thanks to new household formation and demand for holiday homes from both Spaniards and other nationalities.

In a recent conference on the Spanish property sector Pérez conceded that at the height of the boom, both property prices and housing starts were “clearly excessive and surpassed reasonable limits.”

Pérez now says that developers have dropped their prices 20% since the summer, leaving no room for more falls, as no developer will sell below their mortgage financing costs.