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One recent news article in particular sheds some light on the thinking of the Spanish government in the current housing market. It's something I suspected would happen sooner or later.

Let's look at what's happening in Spain at the moment:

1. There's an over-supply of new build properties
2. Buyers are more cautious due to a variety of factors
3. The recent property boom has made it virtually impossible for Spanish first-time-buyers to get started
4. Tourism and housing sectors make up around 30% of Spain's GDP

So, there's a lack of affordable housing and a number of newly-built homes standing empty. Spain is also heavily reliant on it's building and construction sector as a generator of national wealth and employment - not to mention industries directly or indirectly dependent on this sector.

I think we'll see a lot more of what's happening in Catalonia: Regional governments cutting deals with the developers to acquire vacant developments for subsidised housing. Everyone wins.

• The developers manage their exposure to borrowing and stay afloat long enough for the next upswing in the market
• Spain's first-time-buyers get on the property ladder
• The excess property stock is gradually absorbed into the market
• The national economy suffers minimal disruption
• The value of property in Spain stabilises and (hopefully) increases closer to the rate of inflation

I'm not an economist so perhaps I'm missing some terrible flaw in this line of argument - what do you think?

Martin Dell, Kyero.com