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Spanish home sales fell 26% on the year in December, pointing to a continued correction for Spain's once-flourishing home-building industry, according to data from the country's National Statistics Institute, or INE, released Monday.

For the whole of 2008, home sales fell 29%, the INE said.

Spanish home sales fell 36% in November and 28% in October.

Demand for new homes in Spain began to fall in 2007 after prices reached nearly three times their 1997 levels and after years of overbuilding. Demand collapsed last year after the U.S. subprime mortgage crisis ushered in much tougher financing conditions and battered confidence.

Over the last decade, housing investment has grown to account for nearly 10% of Spanish gross domestic product, which is more than twice the euro-zone average.

The sharp retrenchment of housing investment helped push the euro zone's fourth-largest economy into recession in the second half of last year. Likewise, unemployment is rising faster in Spain than anywhere else in the euro zone as its labor intensive construction industry sheds hundreds of thousands of jobs.

Spain posted a 13.91% unemployment rate in the fourth quarter, the highest in the euro zone.

During the boom Spanish property prices were fuelled by a virulent mix of cheap credit and speculation, which inflated a bubble. The credit crunch triggered by the US subprime mortgage meltdown put an end to that, and the bubble has now burst (it was going to burst one day anyway).

But the hangover from the credit binge is a mammoth housing glut, especially of second homes on the coast, and frightening levels of mortgage debt, which means lots of negative equity as house prices fall.

Given the extraordinary nature of the financial crisis and subsequent deleveraging process, this may turn out to be anything but an ordinary housing bust. It could get a whole lot worse.

At the very least, property values now have to return to (or under-shoot) their long-term affordability level of 4 times average disposable household income, down from the recent peak of 7 times income.

Prices for holiday homes may fall even further. After all, who really needs them?

Yet many vendors are still in denial, and continue to ask silly prices, even though they don’t sell. That means that average asking prices are a poor guide to property values. There is a gulf between what many vendors are asking, and what properties are actually selling for. But, thanks to British vendors in distress and the weak pound, there is now a reasonable choice of properties coming onto the market at sensible prices. With their have-to-sell discounts, distressed British vendors are driving the market in coastal and inland areas where foreigners tend to buy.

As a result, some genuine bargains can now be found, though potential buyers will need to do their homework to find them. You can rest assured that unscrupulous types are now busy trying to sell overpriced ‘bargains’.

Despite a recent fall in Euribor, mortgage default rates are expected to surge in 2009. This will create a big headache for mortgage lenders, and it remains to be seen how they will deal with it. It could lead to a surge of discounted properties on the market.

If so, we might soon see some mouth-watering opportunities for buyers, and, at the very least, it should be possible to find good value in Spanish property over the next year or two.

But be warned, some badly developed areas have no future at any price, and there are still plenty of pitfalls to buying property in Spain. Also, there is more to many of the “opportunities” than meets the eye. As always, stick to good locations and the best new developments.

The Bank of England is widely expected Thursday to cut the key lending rate by a further 50 basis points, or half a percentage point, to 1%.

The three months European Inter banking Offered Rate was fixed today at 2.25 per cent, down from yesterday's 2.31 and the lowest rate since October 28, 2005. The news, which means further relief for variable rate mortgage holders, since the three months rate is used as a benchmark by most banks in their variable rate, is a further consequence of the latest cut of interest rates by the European Central Bank. But at the same time it means that conditions are normal again from the point of view of the credit crunch experienced last autumn. Nowadays, as a matter of fact, the spread between base interest rate and the three months EURIBOR is just 0.25 per cent, while last October, at the highest point of the credit crunch, the spread over the base rate was 1.13 per cent.

The Spanish government yesterday slashed its economic forecasts for this year from growth of one per cent to a contraction of 1.6pc due to the global financial crisis.

It also warned of dark days ahead for Europe's fifth-largest economy.

Unemployment, already the highest in the European Union, will hit 15.9pc this year, worse than the 12.5pc forecast in July while the public sector budget deficit will clearly surpass the euro zone limit of 3pc of output in 2009, it said.

The government predicts the deficit will hit 5.8pc of gross domestic product this year instead of around 2.0pc as previously forecast.

"The financial crisis that exists at the moment at the global level has changed the scenario very drastically," Economy Minister Pedro Solbes said following a meeting which approved the new economic forecast.

The government estimates the economy expanded by 1.2pc last year compared to growth of 3.7pc in 2007. The collapse of a decade-long real estate boom due to oversupply, higher interest rates and the international credit crunch has spread to other areas, pushing the Spanish economy to the brink of its first recession since 1993.

Spain's unemployment rate hit 13.4pc in November, the highest in the 27-nation European Union, according to the bloc's statistics agency Eurostat.

The new government forecasts are in line with predictions for the Spanish economy made last year by the Washington-based International Monetary Fund (IMF) and the Paris-based Organisation for Economic Co-operation and Development (OECD).

The IMF predicts Spain's economy will shrink by at least 1pc this year while the OECD forecasts an economic contraction of 0.9pc.

Deputy Prime Minister Maria Teresa Fernandez de la Vega warned that "2009 will not be an easy year" but she predicted measures adopted by her socialist government to stimulate the economy will allow Spain to return to growth next year "in force."

British factory orders continued to fall sharply in November and manufacturers are their most gloomy about future output in nearly 30 years, a survey showed on Wednesday.
The Confederation of British Industry's monthly Industrial Trends survey showed the factory orders balance picked up slightly to -38 from -39 in October.
That was a touch better than analyst forecasts for a reading of -41 but still indicative of a steep contraction in demand.
The balance measuring companies' expectations for output over the coming months fell to -42 in November from -31 in October, the lowest reading since September 1980.
The figures are likely to reinforce expectations the British economy is sliding into recession and could contract for much of next year, resulting in further falls in interest rates.
"With a sharper and more prolonged UK recession in prospect, conditions are going to remain tough for some time," said Ian McCafferty, economic adviser to the CBI.
The price expectations balance fell to zero this month from +10 in October, the weakest reading since May 2006.
The survey was conducted between Oct. 23 and Nov. 12.

Mareazul at Grand Coral Playa del Carmen - Real Estate News Grand Coral Riviera Maya is the leading real estate development in the entire region.

Grand Coral Riviera Maya is a luxurious mega-development located inside the Playa del Carmen city limits.  It is adjacent to the city’s downtown district, a favourite destination on the Riviera Maya.  Grand Coral covers  531 acres with a ¾ mile stretch of pristine Caribbean beach front. The development is located thirty minutes south of the Cancun international airport.

Mareazul beach front condos playa del carmen is the signature development in the master community.

Grand Coral Riviera Maya is being developed by two of the largest and most successful banks in Spain, Bancaja and Banco Valencia. It is the largest development in the entire Rivera Maya as well as one of the largest in Mexico in terms of investment, land area and population density. The size and uniqueness of the property combined with the special characteristics of the region provide an unprecedented opportunity for international real estate investors

This mega-development will be divided into separate districts--which include the largest commercial shopping area in the region, high-end hotels, beach clubs, fashion districts, a Nick Price PGA approved 18-hole golf course and luxurious residential zones--all facing the Caribbean Sea on the Riviera Maya.

Grand Coral Riviera Maya is a totally environmentally-friendly resort.  75% of the area in the project will be landscaped grounds, natural forests, lakes and ecologically protected zones.  The second largest coral reef in the world is located directly in front of Grand Coral.  The reef is the second largest living organism on the planet and one of the oldest as well.  The developers of Grand Coral are dedicated to preserving this natural wonder so that the residents can enjoy it forever.

Grand Coral will soon be one of the top destinations in the world.

The condition of one of the horses in Cádiz last July - Photo Seprona/20minutos.es

The Guardia Civil inspected the stables at Medina Sedonia in July and found horses in a dreadful state being kept in dirty facilities. Without a technical report from the Junta they cannot act.

A British woman, Suzanne Jenkins, who has been ordered by a court in Gloucestershire in the U.K. not to own any animals for two years after causing ‘unnecessary suffering’, is currently running a finca with 35 horses in Medina Sedonia in Cádiz.

The British authorities had to put down five horses and ordered her to pay a 1000 pound fine.

Here in Spain, Seprona, the environment section of the Guardia Civil visited her property in July where they think 17 horses had died because of the dreadful conditions in which they were being kept. One was found held up in a sling, being too weak to stand on its own feet.

Suzanne Jenkins blamed the poor quality of the local water and hay for the condition of the animals, and the regional agriculture department in Andalucía confirmed that the water sent to it for analysis from the finca had a high salt content, although Ms. Jenkins spoke also of a virus. She had, it seems, made similar claims for the conditions of her animals in the United Kingdom.

20 minutos newspaper revisited the finca in Medina Sedonia last week and reports that there has been an improvement in the condition of the animals, but still considers that the facilities and cleanliness are inadequate.

However Ms. Jenkins brought 52 horses from the U.K. and now there are only 35. Animal protection groups believe the rest have died, but without a technical report from the Junta de Andalucía, the Guardia Civil say they cannot act.

Suzanne’s father Mike, told Público newspaper at the doors to the property that her daughter is now in the U.K. to appeal against her sentence there, but it begs the question how can someone banned from owning animals in Britain, calmly establish a stables here in Spain?  SOURCE: typicallyspanish

It’s official - the euro zone is in recession. Not that it’s a surprise. The financial fallout there was arguably just as serious as in the United States and in the United Kingdom. Many other countries will experience their own downturns as American and European demand for their exports dries up. But who will recover first?

Despite all the hype about internal demand in emerging economies, I think the rich countries will recover first. Almost all of the major developing economies have the United States or a European powerhouse as one of their main trading partners. Even Brazil, which does lots of business with its neighbors and China, had the United States as its top export market in 2007. It’s true that some private investors, scared by the crisis, will shift their money away from the traditional powers into emerging economies. Overall, however, those economies need the United States and the European Union to start growing again. Those Chinese factories won’t reopen until they do.

Between the United States and the European Union (or the euro zone, if you prefer, though that group leaves out the United Kingdom), I think the United States is likely to be the leader. After some early faltering, it is now acting more aggressively than Europe to create liquidity in the credit markets. It may still suffer as housing values continue to fall, but so might Europe. Moreover, while American banks and corporations are rushing to clean up their balance sheets and get through layoffs, Europe’s byzantine corporate structures may harbor yet more dirty secrets. Europe sometimes has an advantage in government action, since the executive and legislative branches of government are united in a parliamentary system, but in two months the United States will have one-party leadership. And finally, though it’s not fashionable anymore to boast about the American economy’s dynamism, it has shown itself several times to be the most resilient of the world’s economic giants. Recession in the United States may be deeper than in Europe - indeed, the American economic cycle has been broader for decades - but it may be shorter, too. Source: Herald Tribune