The collapse in Spain’s housing starts has been described as “good news” by Beatriz Corredor, Spain’s Minister of Housing. Spanish housing starts fell by more than half from 760,000 in 2006 to 360,000 in 2008, and are expected to drop into uncharted territory this year.

“Residential construction is returning to the rate that responds to the Spanish population,” said Corredor, talking on Spanish radio. “In this sense, the readjustment in the sector is good news.”

Compared to 2007, housing starts fell last year by 41%, the biggest fall since the Bank of Spain started collecting data on housing starts in 1970.

The downward plunge in housing starts is expected to continue this year. Some forecasts predict less than 150,000 this year, according to the Spanish daily El Pais.

With the credit crunch still starving the property market of money and bankrupting developers, all the signs point towards the worst year for residential building activity since records began. Spain’s biggest developers, who in normal years account for some 10% of housing starts, didn’t start a single property between them in December and January.