In many parts of Spain homes are on the market for less than it would cost to build them new, whilst the latest figures show house prices in sunbelt regions fell 15pc in a year.

Spanish house prices declines are accelerating according to the latest house price index from the appraisal company Tinsa. Average national prices fell 13.8pc over 12 months to the end of January, -14.9c in coastal areas, and 11.1pc in the Islands (see table above).

Peak to present, average prices have fallen 35.3pc, and by more than 40pc on the coast, according to Tinsa.

Biggest falls in Europe

Spanish house prices fell the most in Europe in Q3 of last year, according to figures from Eurostat. Spanish house prices fell 15.2pc over 12 months to the end of September, compared to an EU wide fall of just 1.9pc.

Asking prices below replacement costs

As a result, experts argue that asking prices are now below replacement costs in many areas. “In more than half the country asking prices are now below the cost of construction,” said Fernando Rodríguez de Acuña, from the analysts RR. Acuña y Asociados, in comments to the Spanish press.

Acuña also said that house prices will fall another 10pc to 12pc in annual declines of 5pc for the next couple of years, and that some homes are now cheaper than they were in 2001, before the boom took off.

He also argues that the housing market is broken in areas like Toledo, Castellón (Costa del Azahar) and Almeria, where there was little demand before the boom and prices were very low.

A recent report from the American investment bank J.P. Morgan (entitled The Sun Shines Again on Benidorm) confirmed that asking prices are falling below replacement costs, converting Spain into “a country for buyers, where opportunities will appear.” They also report that “vendors are clearly prepared to accept lower prices to close sales.”