If the spanish government had any idea how low confidence was in the spanish building business then they would do something to re-assure investors that they would have proper protection.
I agree that there is NOTHING that can be done to ease the credit crunch for mortgage lenders, I agree there is nothing that can be done about the surplus of properties in the spanish housing market. But one thing the government HAS to do (and soon) is make a regulatory system which protects buyers from
a) builders/developers that go bust. Here I suggest a mandatory insurance scheme that all builders/developers have to use. This would be similar to the scheme used by holiday companies and protects the customers if the holiday company goes bust
b) Illegal builds. It should NEVER be the case that the buyer is left holding the baby if the developer does an illegal build. Legislation is needed to impound all company assets, closing the developer down if needed, if an illegal build is done. Better still, an independent watchdog has to approve EVERY single build project and the approval is binding.
As I have said before, irreparable damage has been done to the spanish building industry when the TV companies showed the bulldozers levelling luxury villas.
The reality, of course, is that nothing will be done and the spanish property market will be in the doldrums for the best part of the next decade. Prices will come down, how far ? maybe 50% or more before the next boom-to-bust property cycle can begin again.
property development ought to be the golden goose for spain, and with proper protection/legislation it could be. But right now they are the laughing stock of europe