It seems the sun has finally stopped shining on the Spanish property market as prices have dipped sharply after a ten-year boom.

The Spanish Government had hoped for a 'soft landing', but instead firgures showed a dramatic fall of 27 per cent in the buying and selling of houses and a 24 per cent drop in the number of mortgages being granted, the lowest amount since 2004.

These conditions can be attributed to a number of things, one of which, according to Spanish property expert Mark Stucklin, is that foreign property owners are:
"swimming in debt" due to the high prices of property in Spain. "The average Spanish home costs 7 times average earnings" he continued, "and property prices have tripled".

The favourite hot-spot for Britons looking to retire or buy a second home has been mired in controversy over recent months due to a 1988 law which aims to protect the Mediterranean coastline by removing some developments apartments and hotels.

Worried that the coastline is becoming overcrowded with new-build apartments and hotels, and some of them resembling "a council estate," the government has brought in a dramatic solution to the problem.

The 1988 Coastal Law dictates that many of the properties on the Spanish coastline are on 'public land', meaning that they can feasibly be demolished. Up to 500,000 property owners could end up losing their land should they be forced to move under this law.

The Government has denied that there will be "mass demolitions," but many property owners are worried about the confusing nature of this piece of legislature that has taken so long to come into effect, during which time councils turned a blind eye to construction along the country's coastlines.

There does seem to be a ray of light on the horizon, though, as the recently elected Spanish Socialist Party leader Jose Luis Rodriguez Zapatero has promised to bring in some positive changes for Britons looking to buy into the Spanish property market.

The changes promised will mean that people looking to buy in Spain will have better protection through more regulation of the sector. The party also wants to encourage buyers to purchase their property through mortgage providers, and by doing this they can have a tax-free allowance of up to 60,000 euros.

Commenting on the proposals, Peter Esders, partner at The International Law Partnership, says: "Although there has been no change in leadership, the proposals should prove very encouraging to potential investors and current owners of property. Regulation of the property market is long overdue and proceedings to action this will make trading in this market safer and thus improve confidence in the Spanish property market on a worldwide level."

Despite the controversies and current conditions in its property market, Spain is still the number one destination for Brits looking to move abroad. With these new regulations promised, they can hopefully continue to do so safely and profitably.

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Related articles:
Spanish property still popular
Mortgage blow for Spanish property buyers
Changes to Spanish property laws

For more information visit:
Spanish Property Insight
Law Overseas

Article published 01/04/08