Costa del Sol villas and quality apartments in good locations are crashing by as much as £20,000 to £80,000.

Sellers are also gravitating towards auction houses, where properties can achieve a fast sale at knock-down prices. Inez Rix of Direct Auctions says she has seen a huge increase in business from owners desperately trying to offload property. "Things are getting worse and people are dropping prices drastically where they can."
On Direct Auction's website, properties are being listed as much as 60 per cent below their original valuations. Banks have been incredibly slow to alter their valuation criteria and take account of the crash, but nonetheless, their figures show the kinds of reductions that are now available. A one two-bedroom apartment near Fuengirola, for example, was recently valued at £148,000 and has dropped to £84,000 – that's £64,000 less. Another two-bed property in the same location is listed at £44,000 less than its valuation. One lovely villa in Marbella valued on paper at £570,000 is now on the market at £492,000, a drop of nearly £80,000.
As property prices dip, Rix has seen an increase in the number of owners falling into negative equity, and the banks are sitting on a growing cache of repossessions. One would expect the institutions to sell them off at rock-bottom prices but this is not happening, because there is no precedent of mass repossessions in Spain.
"Many people realise they aren't going to sell their homes in a month of Sundays and are just walking away," says Rix. "The banks are being slow to sell properties to cover their costs but we expect more properties to come on to the market over the next two years." Which means anyone prepared to play a waiting game could bag a real bargain. Most properties showing big reductions are new-builds, bought by investors hoping to sell before completion and in advance of the mortgage kicking in, a practice known as flipping. However, there are also rural properties and exclusive estates being sold at rock-bottom prices by owners who have simply been caught out by the upheaval.
Derek Blaney stopped selling off-plan several years ago when he saw the market becoming overheated and says more responsible agents are glad that the recent scandals and market forces have made the industry more transparent. "Things had to be cleaned up," he says. "Property was being seen as a sheer commodity, people were buying through greed and with no emotional attachment."
Who can blame buyers when they were being wooed with promises of huge returns that now seem impossible? With the credit crisis biting deep, there may be further room for prices in Spain to fall. For those who bought in Spain a year or two ago, none of this will come as any consolation. But for those looking to buy a place in the sun, it's worth following the selling prices of the nicer properties, and steering well clear of vast developments. At some stage, the outlook will change. It may not boom, but it must at some stage level off. And buyers who get the timing right could be on to a good deal indeed.