Ghost Towns? In Spain?

The real estate bubble is quietly bursting... everywhere...
It is now so bad in Spain, entire developments sit abandoned.

" The abandoned developments are evidence of a housing glut that will lead to Spain's first decline in home prices since at least 1992, when the Housing Ministry started keeping records. "

Its so obvious looking at the numbers...

" Spanish builders constructed 750,000 houses and apartments last year, more than France and Germany combined, while annual demand runs about 60 percent of that, according to the Finance Ministry. "

Capitalism, as always, will sweep away the excess in the most efficient and ruthless manor.

" New and existing house prices will drop by 20 percent from now through 2009, Bernardos estimates. The country built an average of 432,411 houses per year from 1996 to 2005, more than France and the U.K. combined. "

How could all this happen?

" Spanish home prices have more than doubled since 1998, exceeding growth rates in the U.K. and Ireland, two of Europe's fastest-growing markets. The increase has been driven by a drop in interest rates to less than 3 percent from about 15 percent as Spain adopted the euro, household incomes that swelled as women joined the workforce, and a surge in vacation home purchases by Northern Europeans, mainly Germans and Britons. "

Sound familiar?

" As prices start to decline, Spanish homeowners may face the same challenges as buyers in the U.S., which is in the second year of a housing slump. Falling prices may spur higher delinquencies as buyers face difficulty refinancing. Spanish buyers may face an even higher risk of losing their property because housing prices are based on appraisals rather than actual sales, and appraisers often inflate values. "

Deliquincies and defaults... different country, same story.

" Defaults on Spanish home loans in the first quarter were the highest in at least four years, according to Standard & Poor's. The S&P Spanish RMBS delinquency index for loans backing residential mortgage-backed notes increased by 23 basis points to 1.75 percent during the first three months, S&P analysts wrote in a report on May 29. That compares with an index level of 0.7 percent in March 2004. "

The UK is next...

Source: Ghost Towns Appear in Spain as Decade-Long Boom Ends (Update2) (http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ar3L878k5YM4)