The smart developers will be the ones that stop ALL new developments immediately. With 1-2 million surplus homes ALREADY on the market it is not obvious how the property market can recover at all in the medium term.
In the US there have been similar well publicised issues in the property market causing some to suggest that all excess properties should be declared derelict and bulldozed. Whilst that might sound stupid it would remove the property surplus, which in turn would remove the ‘killer’ problem of surplus inventory which stifles sales.
Of course it sounds ridiculous that people would bullldoze good buildings, but the fact that they are suggesting it shows how crazy the housing market can become without any form of regulation. We let young estate agent kids go round in their BMW’s talking up the market for years and then we moan that we have to deal with the aftermath. Developers can collude with local planning officers and leave the customer holding the bill for an illegal build. A justice system that is unable to deal with the situation. It goes on and on. In truth the situation for Spain is worse than many imagine. So long as there are 1-2 million surplus homes in the system I struggle to imagine how prices can do anything other than decline significantly in the next few years. If you are not planning to sell then you have nothing to worry about. If you are planning to sell then you may need a strong constitution if you can get ahead of the market with a bigger price decrease than your neighbour. But maybe that idea isn’t a crazy as it sounds.
Of greatest disappointment to me personally is the delusion of the estate agents who personally told me that prices would NEVER decrease in Spain and that I should buy NOW to avoid getting left behind.