Spain Real Estate News

The number of people seeking a new life in Spain has surged by 12% as Britons firmly established themselves as the country's fourth-largest immigrant community.

Thousands of Britons are dropping traditional holidays to Spain because of the weakness of the pound and fears over the after-effects of the banking crisis.

The severe fall-off in bookings is alarming tourist authorities and businesses.

Figures from the Spanish tourist industry reveal that the number of Britons who visited Spain in November, for example, was down by 15% on 2007.

The fall has closely tracked the decreasing value of the pound. Britons began to turn their backs on Spain in September, when numbers were down 5%, reaching 7% in October. Last month's dramatic decline came after the pound had lost 25% of its value against the euro in a year.

With the pound and the euro now apparently heading for parity, tourist authorities fear that worse will come – with the all-important summer season now looking grim.

"We are seeing principal markets fall away," explained Marien André, of the Catalan government's Tourism Observatory. "Everything has become very volatile."

That is causing alarm in a country which relies on a steady flow of Britons to keep its tourism sector buoyant.

Some 17 million British tourists land at Spanish airports or drive across the border every year, according to the Foreign Office, accounting for almost one in three tourists who visit Spain, which earns 11% of GDP from tourism.

The Canary Islands, where the mild winters attract many of end-of-year British tourists, have seen the number arriving this winter fall by 15%, while the Costa del Sol area around Malaga suffered even worse, with visitors down by 17%.

Spanish hotels have dropped their prices by 2% this year, but this has not been enough to hang on to British tourists - many of whom now prefer to rent houses and apartments online or off friends and relatives.

While British people are abandoning their Spanish holidays, however, Spaniards are beginning to fill the budget airline seats that they are leaving empty.

The weakness of the pound has made England suddenly seem cheap to Spaniards who previously found Britain's most popular tourist spots too expensive.

With the euro also stretching much further in British shops, Spaniards who last year travelled to New York to hunt for bargains in the post-Christmas sales have been booking into London hotels.

Spanish internet hotel booking sites report increases of up to 70% in London bookings for immediately after Christmas. Bookings for flights plus hotels were up 80%, according to one portal.

One route, from the northern city of La Coruña, to London is carrying double the number of passengers this year compared with 2007.

"The attraction of London is very strong,'' said one travel agent. "It is not that far away and its currency is weak."

Newspaper travel supplements in recent weeks have been full of the bargain prices in London, with iPods now 25% cheaper there than in Spain. Even a pint of beer is now deemed reasonable at €3.60 (£3.40), against nearly €5 a year ago.

Barcelona's La Vanguardia newspaper filled three pages on Monday to explain to its readers the advantages of travelling to London in the coming months.

"No one doubts that this year London will be the favoured destination for those who, despite the economic crisis, still want to keep travelling," the paper said.

Not all Spaniards, however, were mourning the disappearance of the British tourist. "They only ever spend their money on alcohol and then they have to be carted off to hospital after they get drunk and pass out,'' said a comment posted on La Vanguardia's website. "Perhaps we can start bringing in quality tourism now."

Source: Guardian

Interesting analysis of the economic situtation in Spain posted on Spain Economy Watch blog.

 Christmas hampers for elderly Britons are arriving with a difference in Spain this year. Instead of being filled with chocolates and other treats, the Age Concern boxes in Torrevieja on the Costa Blanca will contain dog food, washing powder and other necessities.

Fitch Ratings has downgraded six sets of Spanish mortgage securities issued by Banco Santander, heightening concerns that the damage from Spain's property crash is spreading to the country's strongest lenders.

The loans were "sliced and diced" and packaged in an identical way to sub-prime mortgage bonds in the US, belying claims by the Spanish government that the country had avoided the sort of lending practices seen in Anglo-Saxon economies.

The cluster of residential property securities, worth €4.06bn (£3.27bn), were all based on mortgages that exceeded 80pc of the house value, and many were 95pc or even 100pc. They were all issued in 2007 at the height of the property boom. Fitch downgraded the lower tier A, BBB, and BB tranches of the securities. The upper levels remain stable.

Santander said it had kept an entire block of €1.23bn of loans - known as Hipotecario 4 - on its books after the security was issued in October. By then the market had frozen. The second block of €2.83bn issued earlier in 2007 was partially sold, mostly to investors in Northern Europe.

The pattern that emerges is eerily similar to the final stage of the US sub-prime debacle. The big difference is that the Bank of Spain prohibited the use of structured investment vehicles (SIVs).

Fitch said the loss provisions on the debt suggested a write-off of 35pc against book value. "What they are effectively saying is that property prices in Spain are going to fall by almost that much," said Andy Brewer, the agency's senior director for structured credit.

The arrears rate on the most recent vintages has reached 7pc to 8pc, with high levels of default among foreign residents. Fitch said it suspected that British and other North European owners of second homes in Spain were throwing in the towel.

This may create serious legal complications. British owners may assume that they can walk away from a Spanish property that has fallen into negative equity. In fact, they can be pursued for the assets and income in Britain until the outstanding debt is paid off.

A one-third fall in Spanish property prices goes far beyond the sort of correction expected by most economists in Spain, and would cause havoc to the banking system. Official data shows that prices have fallen 3.9pc over the past year, although property developers say the actual drop has been much sharper.

Santander itself is a well-capitalized lender with global operations and can almost certainly cope with any losses, but the smaller regional banks and "cajas" would face serious stress under such a scenario.

Santander's overall arrears rate on its Spanish property loans is now 2.5pc. The bank's non-performing loans ratio is 1.34pc, which is low compared to other European banks.

Sources close to the bank say the writedowns on the securities are based on rising arrears caused by high interest rates and job losses.

Source: Telegraph

The pound has touched an all-time low against the euro - meaning that the eurozone currency is now worth just under 88 pence.

Euro notes and coins were physically introduced in 2002, although the currencies of the initial 11 member countries were first joined in 1999 when their value was fixed in euro terms.

There are now 15 eurozone countries, with a total of 320 million inhabitants.

But why is the currency so strong now and what does it mean?

Why is the pound struggling?

Investors have been losing faith in the UK economy which now seems to be moving rapidly towards recession.

The trouble in the credit markets seems to have hit the UK harder than other countries, especially as the financial sector accounts for a bigger part of the UK economy.

And with consumers having borrowed heavily in the good times, and the government now facing a huge budget deficit, currency traders were in no doubt that the UK economy was in trouble and the time to start selling sterling had arrived.

Another reason is that the Bank of England has cut interest rates in the UK from 5% to 2% in the space of just three months.

Rate cuts generally encourage investors to switch to other currencies which have a higher rate of return.

Why is the euro doing so well?

Given the weakness of the pound, there has been a flow of money into the euro.

The euro is an increasingly attractive currency for investors compared with its rivals - not only the pound, but also the US dollar.

And the European economy, while showing undeniable signs of being gripped by slowdown, is less burdened by debt than the United States or the UK.

The lower size of government deficits, the lower expectations for inflation, and the higher interest rates paid by the European Central Bank have also made holding the euro more attractive.

What will the impact be people taking holidays in Europe?

Well, your pound will not buy as many euros, making things more expensive for you.

And this week, some outlets were only offering 110 euros for every £100 you wanted to exchange.

However as regular travellers between the UK and the continent will attest, the euro has been edging higher for some time.

But the price of a baguette at the boulangerie, an espresso on a Milan pavement cafe or a beer in a Spanish bar may come as a shock for anyone who has not been to Europe for a while.

While a euro is worth about 88p now, it was worth 71p at its physical launch in 2002 (and 57p on foreign currency markets during its all-time low in 2000).

But how about the broader economy? What will the impact be?

Overall, a strong euro is good for the UK economy.

It makes imports from the eurozone more expensive, while UK exports become cheaper to those paying for them in euros.

This is clearly a boost to the UK manufacturing sector in these difficult times.

The eurozone accounts for about 60% of UK exports.

However, if the pound was to fall too sharply, it could lead to imported inflation, as the price of goods from abroad would rise.

Can we expect parity between the euro and the pound soon?

Some currency analysts are speculating that by the end of this year or early next year, we may be headed for parity, where one pound buys just one euro.

However, with the downturn set to grip continental Europe, others expect the euro will weaken.

One key factor is whether the Bank of England continues to cut interest rates more quickly than the European Central Bank.

Does the strength of the euro bolster the case for the UK to join the currency?

This argument is shrouded in politics and patriotism, as well as economics.

One drawback is that the European Central Bank's interest rate applies equally across all 15 eurozone countries, whether their economic growth levels are sluggish or breakneck.

But the euro has many things in its favour, especially when it is at such highs, by helping to keep inflation under control.

And while the dollar is gaining strength right now, even the former head of the US Federal Reserve, Alan Greenspan, has said that it is conceivable that it will one day "replace the dollar as reserve currency or will be traded as an equally important reserve currency".

There is also a strong argument that joining the euro would help lure more foreign investment.

Source: BBC

Spanish property prices fell by 7.8% over 12 months to the end of the November, according to the latest monthly Spanish house price index published by Tinsa, one of Spain’s leading appraisal companies.

After the latest decline, Spanish house prices are back to where they were between May and June of 2006, wiping out the capital gains of the last two and a half years.

House price declines are even more dramatic if compared to December last year, when Spanish property prices peaked. In the 11 months to the end of November, real estate prices fell 8.8%, according to Tinsa’s monthly Spanish Property Market Index, known as the Índice de Mercados Inmobiliarios de España (IMIE).

Once again, the most dramatic price falls were on the coast, where prices fell by an average of 8.5% over 12 months to the end of November (and by 12.8% over 11 months). Prices in the Balearics and the Canaries fell by an annualised 8.4%, a big increase on the 5.4% decline in October.

Meanwhile, Spain’s glut of newly-built homes keeps growing, as more completed homes come onto a market denuded of buyers by the credit crunch (amongst other things). There are between 600,000 and 1 million newly built homes now languishing on the market without any interest from buyers.

The good news, at least for the property market, if not for Spain’s job market, is that next year the number of housing starts looks set to fall off a cliff. Developers forecast just 150,000 housing starts next year, compared to 250,000 this year, and more than 600,000 last year.

And finally, the network of Property Experts (REI) announced today that resale property transactions are down 70% since 2005, a fall “much bigger than reflected in the official figures from the Ministry of Housing,” says REI. The Ministry of Housing counts inheritances and gifts as ‘transactions’, which explains why its figures do not accurately reflect market activity

Source: Spanish Property Insight

 The collapse of Spain's house building industry will mean up to 900,000 construction workers lose their jobs by the end of 2009, an industry head said on Tuesday, reinforcing expectations of a bitter Spanish recession.

Spain's construction sector, which until last year employed over 1 in 10 workers or 2.6 million people, has been hit by chronic overbuilding and the global credit crunch.

British pensioners living overseas should be stopped from raking in millions of pounds in winter fuel payments, campaigners are insisting.

Charities and OAP groups will next week protest that more than £10million a year is being paid to those who have escaped the chilly UK and retired to the sun.

Some 50,000 elderly Britons who have moved permanently abroad are claiming the yearly allowance, worth between £200 and £300, which is supposed to help with winter heating bills.

Even those living on Spain's Costas and in Portugal, Greece and some tropical islands are benefiting from taxpayers' money.

As long as they register for the allowance in Britain, they are entitled to continue claiming if they move to any of 29 European countries or their overseas territories.

Under European law, benefits acquired in one member state must be paid to those who move to another.

Price hikes in the UK mean that pensioners' gas and electricity bills have rocketed in recent months, leaving many elderly people frightened they will not be able to heat their homes this winter.

But in Cyprus, for example, which enjoys more than 300 days of sunshine a year, the cost of living is around 25 per cent cheaper than in the UK. Gas and electricity bills average at least £500 less than in the UK.

On Monday, the Fuel Poverty Advisory Group (FPAG) will tell MPs there should be an urgent review of the payments.

Chairman Derek Lickorish said he will urge the Government to think again when he appears before the Commons energy committee.

'There's no doubt this is a very concerning issue as - we will be urging the Government to review its policy,' he said.

'Many of these countries do not even get cold in the winter months but the payments are automatic.

'And many more of the pensioners receiving them are higher rate taxpayers - the wealthy - and have less need for them.

'It is particularly concerning with the backdrop of the credit crunch and the fact the Government's purse strings are hugely overstretched at the moment.

'Obviously there will always be extreme circumstances in which some pensioners living abroad will be in need of funds for winter fuel but there is an overwhelming case for the payments to be better targeted.' 

Matthew Elliott, chief executive of the TaxPayers' Alliance, called for the payments to be scrapped immediately.

He said: "It's ludicrous that people on the Costa del Sol are getting Winter Fuel payments.  

'These benefits are meant to help hard-up pensioners in Britain get through the winter, so they shouldn't be paid to expats.  

'We are constantly told that the Government's computers know where everyone lives, so it should be simple to set the system not to send cheques abroad.'

Currently all over-60s on a state pension - regardless of their income level - receive winter fuel payments automatically into their bank accounts.

They do not have to prove that they spend that money on fuel bills - leaving expats able to use it for whatever purpose they like.

A spokesman  for the Department of Work and Pensions said: 'Winter fuel payments were introduced to provide reassurance to older people that they can afford to turn up their heating in the winter months without worrying about the cost.

'They are only paid to former UK residents living in the European Economic Area or Switzerland if they qualified for payment before leaving the UK.  

'It is a universal benefit. The majority of people receiving the payment need and appreciate the financial assistance.'

Source: Daily Mail

The Spanish land investment scam run for years by Fortuna Estates has finally been busted, with the Spanish fraud squad swooping last week on several office in Mijas and Fuengirola, arresting at least 2 people, and questioning 20 others. This could be one of the biggest Spanish property scams to date, with hundreds, if not thousands of British and Irish victims. The Spanish authorities estimate that Fortuna Estates made at least 65 million Euros out of this fraud.

Fortuna Estates land in Andalucia, in the middle of nowhere

Still under official secrecy orders, the police have released few details about “Operation Fuentespino”, but the Spanish press reports that there could be more than 2,000 victims, mainly middle class investors from the United Kingdom and Ireland.

Fortuna Estates, which had changed its name to Fortuna Land (Investment) by 2007, snared its victims with the promise of high returns from land reclassification projects in rural Andalucia.

“Watch your investment in raw undeveloped land turn into commercial projects with multi-million euro potential,” promised Fortuna Estates, which started selling ‘shares’ in its projects in 2002.

Fortuna Estates contacted potential investors at through property exhibitions, cold calls and mailing lists, and a fairly substantial advertising campaign in the British quality press.

Claiming to be the “leading land investment agency based in Southern Spain,” Fortuna Estates offered its clients ‘shares’ in greenfield projects purporting to turn land in out-of-the-way parts of Andalucia into hot commercial property investments.

Fortuna Land project that never happened

“Working primarily in the commercial sector of land development, Fortuna Estates has developed a program of investment techniques that bring this highly lucrative sector within the grasp of the ordinary investor,” claimed Fortuna.

Targeting the ‘ordinary investor’ was a key part of Fortuna’s strategy. It claimed it was making high-return land investments accessible to people who could not otherwise afford them. Many of Fortuna’s victims probably invested the minimum of around 10,000 Euros, and the vast majority probably had no experience of land reclassification or the realities of investing in Spanish property.

Fortuna sold various different projects over time, starting with a project called Bella Fortuna, then going on to sell projects called Sierra Fortuna, and Cazadores Reales.

An insight into how Fortuna hooked its clients with talk of high returns, backed up with invented figures, can be gained from Fortuna’s sales material.

“These factors have contributed towards the success of the Bella Fortuna project,” goes the patter. “This plot of stunning Andalucian countryside is over 400,000m² in size and located midway between Malaga and Granada, next to the town of Zafarraya. This project was first released to private investors in Sept 2002 at a price of €6.80m² and closed at a price of €9.20m² 14 months later. In Oct 2004 official planning permission for the Hotel Zafarraya complex was granted and the land was then independently valued at €37.59m².”

The valuations were meaningless, as Fortuna made them up to make it look like investors were making big profits, on paper at least. This was enough to keep filling the pipeline with new investors, and convince existing clients to invest more money in new projects. Some of Fortuna Land’s hapless investors are thought to have invested in as many as 3 of their projects.

Fortuna also beguiled it clients by doing all transactions through ‘independent’ lawyers and notaries, and giving clients “legally notarised title deed to the land in which they have invested.”

“ Whether your investment is for 5 acres or just a quarter of an acre, every investment is secured by physical ownership of the title document,” Fortuna assured its investors.

The plans Fortuna had for its land reclassification projects, and the way in which it kept changing them and announcing delays should have had investors’ alarm bells ringing. Plans veered around from hotels with a wedding chapel, to retirement homes, to solar farms. At one point, after long delays, they claimed they had received ‘verbal’ planning permission, but there is no evidence that Fortuna were serious about delivering on their promises.

Most of the victims of this scam are thought to be British, though Irish and Germans investors are also thought to be involved. As an article in the Spanish daily ‘El Pais’ points out, the British have fallen for numerous scams on the Costa del Sol over the last decade, mainly involving property.

The Fortuna Land scam was run out of offices on the Costa del Sol using companies registered in places like Cyprus and Delaware (USA). Currently the Fortuna Land website (fortunaland.es), claims they have “implemented a strategic relationship with The Oanna Group to realise your investment projects in Spain,” and instruct visitors to direct all future communications to oannagroup.com. The Oanna Group appear to have an office in London.

Despite making several arrests, the Spanish police do not think they have nabbed any of the masterminds, who are thought to have disappeared, and may already be working on their next scam.

Indeed, ‘El Pais’ reports that victims of the Fortuna Estates fraud have already been targeted by new scam that promises to recover their money for a fee of 10% of their investment paid up front.

Source: Spanish property insight

Sterling's dramatic fall against the euro has forced British expats who retired to sunny, low-cost Spain to adopt a more frugal lifestyle. Elizabeth Nash reports

Eugenie Smith, a sprightly 82, still drives her Ford Fiesta to the shops in Torreblanca near Fuengirola, and helps in the charity shop twice a week at the church group, The Ark, run by her son, David, who is pastor there. But the former teacher from Windsor, who moved to the Costa del Sol 26 years ago, struggles to pay her bills since the pound plunged to its lowest level against the euro.

"I've got to keep the car," she says. "I've got spinal trouble so I can't walk up the hill carrying shopping, and there are no buses. And I must keep the gardener; I can't do it myself now, and can't let it run wild. But I don't think I can afford €34 (£29) for my club's Christmas dinner this year. I've got a new great-grandson I want to buy presents for, but I must be much more economical now, when last year I just went out and bought things."

With her teacher's pension supplementing her state pension, Mrs Smith reckons she is luckier than many of the tens of thousands of British pensioners living in Spain whose income has been slashed by more than 20 per cent in a year by the falling pound. But she's cutting back sharply. "My income doesn't cover my outgoings. I must dip into savings for extras, unexpected things. I've just paid €160 at the dentist, and now I need new glasses. It's sunny now, during the day, but it gets cold at night. I wrap a blanket round me rather than put the heat on too early. I'm terrified of my winter heating bills. How long is this going to last? That's what worries me."

The erosion of modest fixed pensions worries many Britons on the Costas, who are experiencing their most difficult financial moment since they started settling here en masse in the 1960s and 1970s, drawn by the sun, and low-cost living. Some 220 miles east on the Costa Blanca, south of Alicante, Torrevieja was purpose-built 20 years ago to attract British incomers, especially retired people, to the sun-drenched, leisurely Mediterranean lifestyle. "It's disastrous for British expatriates on fixed incomes," says Graham Knight, a former policeman who works at Torrevieja town hall representing British residents in the town. "Most of those settled here are on fixed state pensions, and now face costs rising day by day. They've been feeling the pinch for six months or so, since the pound dropped from its January level of around €1.40. Now it's €1.16, and that causes substantial hardship. People are extremely worried."

Judith Ferris, who runs Age Concern in Torrevieja, argues bravely that southern Spain's good health care, gentle climate and a cost of living generally lower than Britain's soften the impact of the plunging pound. But she concedes: "People don't have spare money; those who don't know Spanish must pay translators when they visit the doctor. As they get older, they don't get the benefits, such as attendance allowance, the home care they would in Britain. Some tell me they feel trapped, knowing their money doesn't go as far as it did." This Christmas will be bleak for many, Ms Ferris reckons. "They can't send cards, because post is expensive. We hand out Christmas hampers to those in need: we ask neighbours and friends to let us know, because people are proud and won't tell us themselves they're struggling. Our hampers used to contain little luxuries such as a Christmas pudding or tinned peaches. This year, forget it: they'll contain essentials, washing powder, soup, toilet rolls and the like." And how many will be handed out? "Last year, we distributed some 40 hampers. This year it'll be double that." Dick Conway, active in Torrevieja's ex-service organisations, says: "People are really hurting. They've seen their income fall in value by up to a third in less than a year. Two years ago, those on a basic state pension could get by. Now they're struggling, just as they are getting older and needing more help." Mr Conway is organising Christmas lunches and weekend outings for members. "But this year, people tell me, 'We can't come this time; we're busy doing something else'. The truth is they can't afford it, but they're too proud to say."

Irfon Walters, 75, bought his flat with his wife, Glenis, in Torrevieja eight years ago; they live on a basic state pension whose value has recently dropped €100 a month. "We have to budget a lot more. I'm having to reconsider subscriptions to clubs I've been a member of for 35 years. Luxuries? We've said goodbye to them. Last Christmas, we took a long break to Benidorm. This year, we're chumming up with a couple of friends to cook Christmas dinner together, to make it go further. If the pound drops further, we'll worry. But we hope to sit it out."

Those who can, return to Britain, as their dream of a life in the sun shrivels and dies. Others buckle under the strain. "In the past year, we've helped a lot of families and single people who are going through a hard time," says David Smith, at The Ark in Fuengirola. "Some in real hardship are going back, to stay with family or take up benefits from the British welfare system. We've helped a lot of people with flights. Difficulties often lead to arguments and family break-ups, and some take to alcohol and drugs as a means of escape, and find themselves on the streets. It's a very sorry state of affairs."

For most, returning is not an option. Few admit publicly they want to sell up and go, because, Graham Knight in Torrevieja points out, "that would be an admission of failure". Most share the view of Eugenie Smith. "We've sold our property in Britain, our children are scattered; there's nothing to go back to. Anyway, we like it here, we like the sunshine, we've made friends here, it's our home."

But the sociable, laidback lifestyle that expatriates value so highly is being brutally cut back. "We used to lunch out two or three times a week, at restaurants offering a four course daily menu costing between €8 and €15," says Colin Harlow, 64, from Kent, who took early retirement, sold up and moved to La Mata, outside Torrevieja, nearly five years ago. "Now we eat at home. It's hit local businesses hard. Last year, you'd have to reserve a table in a restaurant. Now they're deserted."

Mr Harlow, unlike many compatriots, makes an effort to learn the language and join in Spanish society. He does confess he misses English church bells, and rain, but he is committed to his adopted homeland. Yet he has been shaken by recent events. "You base your income on the rate of exchange. We always believed the pound would be strong. We expected fluctuations, but not this freefall. We'll have to tighten our belts and battle on. But if the pound hits parity with the euro, that would be a problem."

Source: Independent

A Spanish property developer said Tuesday it will hold a raffle to unload 31 apartments near Barcelona which have been difficult to sell amid a collapse in the real estate market.

Tickets for the raffle cost 50 euros (63 dollars) and they will go on sale on Wednesday, a spokesman for developer Grupo de Empresas Rob told AFP.

The company hopes to sell 7,000 raffle tickets for each apartment which will be awarded, meaning it would raise 350,000 euros per dwelling.

If the developer does not sell at least 6,500 tickets for a particular apartment, the raffle will not go ahead for that property and participants will receive a refund.

The raffle, which will be supervised by a notary, will be held in the coming months, the spokesman said.

All of the apartments -- which are between 50 and 90-square metres (970-square feet) -- are all located on the same street in the Barcelona suburb of Santa Coloma de Gramenet.

After a decade-long boom, Spain's property market began to slump last year due to rising interest rates, oversupply and tougher lending conditions introduced in the wake of the global credit crunch.

Property sales declined 28.2 percent during the first nine months of this year compared with the same period of 2007, national statistics institute INE said last week.

The drop in sales has led developers to come up with innovative promotions to try to sell properties.

In October another Spanish developer, Salsa Immobiliaria, offered a one bedroom apartment to anyone who bought one of its four-bedroom townhouses near the beach in Terrazas de Miraflores on the Costa del Sol.

In May a man who could not meet mortgage payments on his apartment near Madrid tried to organise a raffle to unload it but he had to call off the contest because he failed to get the proper authorisation.

Source: Google

Spanish car sales fell 49.6 percent in November, marking the biggest fall in nearly 16 years as Spaniards slashed spending amid credit restrictions and soaring unemployment, industry data showed on Monday.

November sales fell to 63,068 units from 125,206 a year earlier, marking the seventh straight month of decline.

It was the biggest monthly fall since January 1993 when sales fell 51.4 percent during Spain's last recession.

'The persistence of severe economic and financial weakness continues to erode domestic demand,' ANFAC said in a statement.

Spain's government last week budgeted 800 million euros ($1.04 billion) towards its struggling car industry amid fears the sector could lose 50,000 jobs.

Spanish households have cut back spending on widespread expectations their economy will enter recession by year end and stay there much of 2009 as unemployment rises above 15 percent.

Spain's unemployment rate was by far the highest in Europe in October at 12.8 percent, according to the European Union.

Source: Forbes.com