So popular is it that there are more Brits here than in the rest of Spain combined. Guess-timates have it that there are some half a million Britons living here, as well as around 200,000 German. In total there are some three million homes on the Costa del Sol owned by foreigners. That’s before you get to the tourists. Around nine million people come to the Costa del Sol on holiday each year.

The Costa del Sol isn’t an administrative area as such. Spain is split into 17 autonomous communities (think counties in the UK or states in the US), and each community is further subdivided into provinces. Our area is the autonomous community (or region) of Andalucia and largely co-exists with the province of Malaga. The city of Malaga is the de facto capital of the Costa del Sol and has a population of 500,000, making it the fifth largest city in Spain. Communications are good, with most visitors flying in to Malaga airport (there is also the offshore Gibraltar airport).

And there’s lots to do for those buying property on the Costa del Sol. It isn’t stretching a point to far to say you could be skiing in the Sierra Nevada (the snowy mountains) in the morning and soaking up the sun on the coast in the afternoon (the drive from coast to slopes is two hours). Watersports are hugely popular, and there are numerous golf courses catering to visitors. While large parts of the coast get unbearably busy during the height of the summer, you are never too far from unspoiled countryside, but you will learn to time when NOT to drive. Certain towns on the coast have large British, German and Scandinavian populations - many people have settled here down the years. If you wanted to, you could probably live on the Costa del Sol and speak very little Spanish, though that would be a shame.

The nature of unspoiled natural areas that draw big tourist numbers is that they don’t stay unspoiled for long. Certainly the Costa del Sol has had its share of unsympathetic over-development. The inevitable happened during the Credit Crunch of 2008-09 when the sheer scale of over supply of new property became apparent. In an annus horribilis for the Spanish property market, this coincided with a long overdue clampdown on illegal building practices. Sadly, this has left many unlucky British buyers (some of whom didn’t do their homework and some of whom were simply lied to) out of pocket and with their homes threatened with demolition. Whether all the ‘toxic’ properties have yet been flushed through the system is very questionable. You can protect yourself of course, but it makes it all the more important to seek proper legal advice.

It’s a nonsense to talk about ‘the price of Spanish property’ just as it is ‘the Spanish property market’ as - like in any property market - there are dozens of micro markets. Every region is different and some are more different than others. Much of Spain still resides in a rural time warp courtesy of a belated catchup from decades of rule by Franco (a blessing in some areas an economic curse in others). But the Costa del Sol is different. Property has for long cost more here, as you would expect with the huge flood of pounds sterling and euros from other parts of Europe (from the Germans and the Scandinavians particularly). Even with a frenetic pace of development and building, which as we saw from 2007 onwards started to unravel badly, supply still wasn’t enough to choke off prices.

That’s all changing now, of which more elsewhere, but even with the collapse of the Spanish property market, some areas will always be strong. The prime location has always been Marbella, with its superb marina at Puerto Banus. Marbella has managed to remain both popular and expensive and has grown accordingly. Close to Marbella is ‘Golf Valley’ with its superb courses and the new town of Nueva Andalucia and along the coast we have the bustling town of Fuengirola and Mijas Costa. Other near neighbours to Marbella are Benalmadena and Torremolinos, which had a truly dreadful reputation as a mass tourist destination in the 1970s (check out ‘Carry On Abroad’ for a contemporaneous view!) but has come back in some style, having many permanent British residents.

The Spanish Government is desperately trying to cope with the fallout from the current crisis in the property market, a market on which Spain is heavily over dependent. The credit crunch and the attendant fall in overpriced property values may have started in the US, but it has spread virus like through world markets. The old saying is that if the American economy sneezes, Europe catches a cold - in this case we’re seeing a nasty dose of Spanish flu.
I’ts largely down to a huge oversupply in the market - far too many newbuild properties in the Costas, and a belated crackdown on illegal building has shattered confidence in the market. And an already faltering Spanish economy has become hugely dependent on the building trade and on the banks supplying mortgages for all the houses and apartments nobody wants to buy.

That’s rotten news for the Spanish exchequer and for anybody trying to sell a property in certain areas of Spain right now. But it’s an ill wind. Pessimists would tell you to hold off from the market for a while yet, but anybody buying for the long term will already be seeing bargains coming to the market. Take the five or ten year view and a little price dip post purchase won’t hurt you. And the Government’s hints (no more as yet) that they may be about to scrap inheritance tax makes long-term buys all the more appealing. It’s a good time for retiring expats to start researching the market.

The same goes for adults of course. The progress you make in a Spanish class at home will be nothing to the speed at which you advance when you’re out and living there, but it is pretty unforgivable not to start learning the language at least before you go. Any local college will have Spanish lessons, there is a host of good audio courses on CD and DVD available, and with cable and satellite TV in the UK you can even subscribe to a Spanish language channel for a year before you go out. This will also help you learn a little about your new home. Too our mind, too many expats stay as just that for years - talking in English to other expats and struggling by on a little cod and ill pronounced Spanish. If you’re living in a country, really live in it … you’ll find it a much richer experience.

A word about the spelling and language conventions used on this website by the way. Along with most English language publications we don’t use accents, so you won’t find the tilde (~)or cedilla c (ç), nor the acute accent (é or occasionally ó). This of course doesn’t affect the intelligibility of written Spanish words in English. Place names, similarly, are usually Anglicised.

Australia
* www.embaspain.com
* 15 Arkana Street, Yarralumla, ACT 2600, Phone 02/6273 355.
* St Martin’s Tower, 31 Market St, Sydney, NSW 2000, Phone 02/9261-2433.
* Fourth Floor, 540 Elizabeth St, Melbourne, Vic 3000, Phone 03/9347 1966.

Canada
* www.embaspain.ca
* 74 Stanley Avenue, Ottawa, ON K1M 1P4, Phone 613/747-2252.
* 1 Westmount Square 1456, Ave Wood, Montreal, PQ H3Z 2P9, Phone 514/935-5235
* Simcoe Place, 200 Front St,2491, Toronto, ONM5V 3K2, Phone 416/977-1661

Ireland

* www.maec.es/subwebs/embajadas/dublin/en
* 17a Merlyn Park, Ballsbridge, Dublin 4, Phone 01/269 1640

UK

* www.maec.es/subwebs/embajadas/londres/en
* 39 Chesham Place, London SW1X 8SB, Phone 020 7235 5555.
* Suite 1a, Brook House, 70 Spring Gardens, Manchester M2 2BQ, Phone 0161 236 1213

US

* www.maec.es/subwebs/embajadas/washington/en
* 545 Boylston Street 803, Boston, MA 02116, Phone 617/536 2506.
* 180 North Michigan Ave 1500, chicago, IL 60601, Phone 312/782-4588.
* 1800 Bering Drive 660, Houston, TX 77057, Phone 713/783-6200.
* 5055 Wilshire Blvd 960, Los Angeles, CA 90036, Phone 213/938-0158.
* 2655 Le Jeune Road 203, Coral Gables, FL 33134, Phone 305/446-5511.
* 2102 World Trade Center, 2 Canal St, New Orleans, LA 70130, Phone 504/525-4951.
* 150 East 58th St, New York, NY 10155, Phone 212/355-4080.
* 1405 Sutter St, San Francisco, CA 94109, Phone 415/922-2995.
* 2375 Pennsylvania Ave NW, Washington DC 20037, Phone 202/452-0100

For New Zealand, contact the consulate in Sydney

This is a relatively small region, yet it has an extensive coastline, great beaches, mountainous sierra and cosmopolitan cities - it’s a diverse region, at times dazzlingly so. The eight provinces of Andalucia take their names from their capitals, and for the visitor or immigrant to Andalucia there isn’t a dud amongst them. Sevilla is the biggest city, a bustling and lively place, with a mix of Christian and Moorish monuments, its lovely ‘barrios’ (quarters of the city), great museums and stunning Easter festivals (check out the April ‘feria’ too). Sevilla is the setting for ‘Carmen’ and the passion and fire of southern Spain is typified by the town.

Next in size is Granada, home to the Alhambra Palace - the most famous of the buildings left by the Moors, but by no means the only one. Cordoba has the Mezquita, a former mosque, while Malaga is a lot more than a seaside playground in the sun. Check out Malaga’s Moorish fort, plus a fine museum rich with paintings by Picasso - a scion of the city. Cadiz has a less chic reputation - this is a bustling working town, a thriving port and the seafood capital of Andalucia. Many people love atmospheric Cadiz for just this reason, and it offers superb value and authenticity to incomers.

And don’t overlook the smaller provincial capitals of Almeria, Jaen and Huelva, or the little gems of Baeza, Ubeda, Ronda and the Pueblos Blancos (or ‘white towns’) in the west of the region. These are lovely little hill villages, and are surrounded by some beautiful countryside. Apropos of which, there is a wealth of natural beauty - to the west of Malaga you have the coastline of the Costa del Sol of course, famed as a tourist trap but with many beautiful and unspoiled miles of seafront. Should you want to swim with the crowds there are resorts such as Torremolinos, which has been redeveloped yet again since its sixties and seventies heyday, and now boasts new theme parks and leisure facilities. But you never have to go far to escape the crowds - explore the Costa de la Luz to the west, and superb resorts such as Conil de la Frontera and Tarifa. The Costa Tropical has Nerja and Almunecar, while the Costa Almeria has Mojacar, Agua Amarga and San Jose.

Inland there are delights such as the Coto Donana National Park (Europe’s largest wildlife sanctuary). See too the Sierra Nevada National Park, with snowy mountains just 20 miles or so from the sunsoaked beaches. Nearby are the Apujarras valleys, peppered with Moorish mountain villages and to the east of the region we even have desert - Almeria has been used as a filmset for spaghetti (or should that be paella) westerns in the past, and is an enduringly popular location for moviemakers. There are the forest-clad hills of the Sierra de Morena and Sierra de Cazorla, and throughout, little villages and towns, some of them dating back to much grander pasts during the Moorish era, and with festivals and traditional fairs to enjoy.

Malaga and Costa del Sol property
Marbella property

The reasons aren’t hard to see - joining plummeting Spanish house prices is the grinding to a halt of the property market, and the knock-on from that of a rapid contraction in Spain’s building industry - hitherto a pillar of the Spanish economy.  Other woes include cuts in car production (another major element of the economy) and of course there is now a monster budget deficit to cope with too.

But just how bad is the contraction in the Spanish housing market? Pretty dramatic, with sales down 31.5 per cent in 2008 quarter two, though that is still pretty healthy compared to the situation in the UK and United States. The problem for Spain, just like Britain and America, is that many people have been growing rich on paper, thanks to the grotesque inflation in their assets (property) rather than earnings or real money in the bank. Fine as long as it stays on paper, and if people manage to practice prudence while being paper millionaires then it’s a harmless fillip to the ego. But of course, just like Britain, people have been borrowing against these assets; remortgaging and mining the cash from their homes without ever realising their assets. Sell or stay put might be sound advice, but don’t borrow against a theoretical increase in value. The sad inevitability is that falling prices have plunged thousands into negative equity. Still not a problem if you don’t have to sell, but with the economy contracting, jobs going and interest rates remaining stubbornly high (and the bills for the excesses increasingly dropping onto the mat), many people are having to sell.

And as anybody will tell you, late 2008 is a buyer’s market. There are huge numbers of unsold properties competing for your euros, but there aren’t enough mortgages to go round, to fund them all. Something has started to give big time. The future looks worrying too. That budget deficit has to be repaid sometime, and that can only be done through increased tax revenues. The dream scenario is a rapidly reflating economy, with more companies in business and more people in employment, all earning more money and thus paying more in tax to rebalance the books. But as even the most Pollyanna-ish among us now recognises, we are merely at the start of three years or more of pain. Turnover and income are going to be dropping and that means the only way to balance the books is to increase the tax burden on individuals and individual companies - almost inevitably a further deflationary trigger. Things don’t look good at all for the Spanish economy - though if you have cash burning a hole in your pocket, it could be a VERY good time to start looking at rock-bottom Spanish property. The bargain basement is open. Click here to start your search for bargain properties in Spain.

The reasons aren’t hard to find - oversupply of course, and the fact that many builders and developers are desperate to shift property and get cash back onto their balance sheets. One estate agent we spoke to this week reckoned that, credit crunch and further potential property price falls aside, it was a great time to buy a holiday property in Fuengirola or Torremolinos. ‘You’d have to be a little bit brave, because they may fall a way further yet. But if you’re not looking to sell on for a few years, then you’ve lost nothing. Ultimately prices are going to recover,’ he told us.

Of course there are major pitfalls to avoid. The illegal building scam means certain properties are simply being pulled down, so checking the legal aspects thoroughly is more important than ever. Then there is exactly where you’d want to buy. Our man’s enthusiasm for the megabuilds in Torremolinos may be a little misplaced, and we always reckon you’re better off looking for a single apartment in an area where everything else is already let or owner occupied. If you do need to rent your apartment out then you don’t want to be competing with a hundred other desperate landlords. But cautiously, and if it’s not money you have to borrow at a premium, then buying up some of that oversupplied property on the Costa del Sol just now could be a very sound bet.

Spanish property oversupply, part 1

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