Spanish home sales plummet

Bargain prices have failed to lure home buyers in Spain. The number of transactions in July was down 36 per cent from a year earlier, with 2011 shaping up as the worst year since the market peaked in 2007, according to government data.

"For an economy that came to rely on real estate to pay the bills, that is nothing short of a disaster," writes Mark Stucklin of Spanish Property Insight.

The market is down 55 per cent from 2007, Mr Stucklin notes.

With prices off anywhere from 20 to 40 per cent in many areas and more than 700,000 houses empty--many in second home developments--the market started to pick up in 2010. According to government data, 240,000 homes were sold in the first seven months of last year.

But only 204,000 transactions were recorded in the same period this year, despite low interest rates.

Mr Stucklin believes the bottom may be approaching, "but a meaningful recovery in transactions and prices is far from imminent."

Certainly the latest data is sobering for a country that was once the most active property market in Europe, wooing buyers from around the world.

"When I think back to 2007, it amazes me to remember the swagger and sense of invincibility prevalent in the sector," Mr Stucklin writes. "How we have fallen, and how true that pride comes before a fall."