Spain always had potential, a low population compared to the nations large land mass, and the warmest all year round weather in Europe. This fuelled the massive growth of what once was considered a rural backwater, into a dynamic new economy in the late 1990′s.
What fuelled this “boom” was real estate speculation, the stability of Spain’s economy as it adopted the Euro, and the relative low labor costs of Spanish workers before Central Europe fully joined the European Union.
During this property boom, building and home ownership fuelled a never ending development of Spain’s famous coastline, creating what many saw as a never ending concrete jungle by the beach. Property prices rocketed, as did the ease of loans, often unsecured, and as risky as the “sub prime” mortgage game in the United States.
Few speculators eager to cash in on the profitable business of selling the “Spanish Dream” of a first and second home, noticed that as property prices rose, as the market was in reality flooded with new, empty properties. Banks started to give home loans to anyone with an income, even contemplating “generational property loans.”
Andalusia was one example. Many local people earned no more than 600 euro a month, in fact the majority of people working in Spain, earned the lowest salaries in former Western Europe. But were encouraged to buy a “home”, and a new car,- when they could barely afford to rent a room on their salary.

Rising living costs, and low salaries killed the Spanish dream for many expatriates as was the shortage of any available work. Before the current unemployment crisis, young Spaniards demonstrated in Madrid, citing the fact they could not live on 600 euro a month. Expatriates cashing on this boom, sold on often buying properties in Bulgaria and South Africa, Spanish-based real estate agents promoted.
Corruption also helped kill the economy. Before the 2008 collapse Spain had the unenviable reputation of having three former Majors in jail at the same time, and the local police chief. All helped create a mini-boom in Marbella, at the expense of “selling” public land to favored speculators, and awarding illegal ownership papers. This corruption killed the faith in Spanish property ownership.
After the property boom burst, Spaniards who work earn just enough to pay a monthly rent, or cover the mortgage cost particularly on a sub prime mortgage. Almost 50% of young Spaniards are unemployed, many now dependent on their families for support. Spain gas the highest:official unemployment rate in Europe.
Economists knew Spain’s development was unsustainable, and ready to burst. Once European union business grants ran out, many small businesses, the mainstay of the Spanish economy closed, leaving Town and City centers full of vacant properties-Adding to Spain’s employment woes.
Real Estate agents surviving this current crisis still insist, Spain has a future, but a business that depends on commissions, will always need to be positive to sell a product. And that was what really went wrong with Spain.
Too many Banks, local governments and businesses were dependent on selling the dream, despite the fact the economic fundamentals were wrong. A credit economy, were 100% mortgages were given to people whose salaries barely covered their basic living costs, is not sustainable.
And there are those who still sell the myth of Spain, despite the nations dependence on selling the thousands of empty properties, in a nation facing a population decline with no natural resources and a declining industrial sector.
Spains future lays in tourism, but it competes against cheaper destinations like Bulgaria, Thailand and even Turkey. The National Tourist board want to attract Asian tourists, but forget that Asia also has beaches, and most Asians prefer to visit Cities or places like Bali or Phuket- areas Spain cannot compete with.
Spain’s debt ridden economy was a result of corruption, greedy speculators, developers looking for a quick buck, and consumers that believed in the fallacy. An economy were a waiter earning a minimal wage could own two houses, and a new car, is over.
One rosy development in Spain is the nations agricultural sector, which can produce naturally grown citrus fruits, and in colder regions vegetables. But a modern country facing a debt crisis in 2010, faces deflated property prices, and may have to restructure its debts, and re-model its basic economic strategy to survive.
Marbella property

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