If you think the property market in the UK and US has its problems then you should see what Spanish property owners have to deal with. We know all about the credit crunch and the attendant difficulty in getting any kind of mortgage finance. And all our economies are subsiding gently in recession as 2008 closes (the definitions of how much ‘negative growth’ you must suffer may vary, but we’re all heading in the same direction). But to that mix add a gross oversupply of properties and the fact that many of them have been illegally built and you have a very nasty set of circumstances for many owners. It certainly isn’t the time to be selling a Spanish property but it could be a very good time indeed to be buying one. But first things first - what got certain parts of the Costa del Sol into this mess in the first place.

You’ll notice we choose our words carefully. It’s certain parts of the Costa del Sol. One of the most nonsensical statistics you’ll see in property pages, though oft-quoted, is the ‘average’ price of a property in London, the Costa del Sol or wherever. There is no such thing. If I take a €1m villa and a €200,000 apartment I can calculate that the ‘average’ price of property is  €600,000 … it’s a meaningless statistic. The second popular nonsense is to talk about ‘a property market’ at all. Anybody who spends any time buying, selling or researching property knows that a mature market has dozens of micro markets - one-bed apartments may be stalling but family homes can be racing ahead. So let’s dig a little deeper and not talk about ‘the price of Spanish property’. We need to segment the market.

But certainly some parts of the Costa del Sol have seen development madness. The average Spanish house price (you see, even we are at it) doubled in the first seven years of this century. The eye-boggling stat comes next - 866,000 new homes built in Spain in 2006, against 140,000 in the UK. But who is going to buy all these properties? There are still ‘only’ 70,000 Brits who own properties in Spain, so unless the Spaniards themselves are multiplying at a frightening rate or catching up on a severe shortfall of housing, somebody is building too many houses, right?

Spot on. There have been way too many properties built and just at the point when the supply of overseas buyers dries up. Many of the purchases would have been by Britons, financing the buy with equity released from their British home. The slump in UK housing values has choked off that supply of punters. And how have they managed to outstrip the building rate in the UK so dramatically anyway? Well Britain has planning laws of absurd rigidity - it’s one reason we never build enough homes. Spain has seen the reverse - the planning laws are easier to start with. Fine in itself - but what has emerged over the past few years (it’s long been an open secret) is that many of those homes have been built illegally. So where so bad. And how, you are asking, can this be good news for those looking to buy Spanish property? In a later piece we look at the fallout from the Spanish illegal property fiasco.

Part 2