Have a Look at the Spanish Property Bubble

I've witnessed it last December with my own eyes. The Spanish - and French and Italian - property boom consists to a good part of unfinished houses. Driving along the Mediterranean coast for a good 2500 miles from Genova/Italy via France and Andorra to Tarifa/Spain one sees uncountable numbers of primarily "second" homes hidden behind a forest of "For Sale" signs. While owners of prime beachfront property may see a slower decline of values it is to be doubted that the myriad of available accommodation running up to 50 miles deep into what really can only be called pampa will turn a profit amidst rising interest rates.

PHOTO: A Google image search for "spain unfinished houses" turned up this one as #1 from 29,400 pix. This 1,700 square feet house "near" Spain's Almeria, an hour from the coast, has an asking price of 170,500 Euros or some $225,000 which coincides to be close to the US average single home price. This is a good example of the new ruins of Europe that will litter the landscape for decades to come. Or would you bid for it?

A website aggregating property ads offers a lot of criticism how official Spanish data misrepresent the actual situation on the Iberian peninsula. According to their well presented data the average house price can vary from 39,000 Euros in Ruritania Remote to 610,000 Euros in Barcelona.
So much to back up about my anecdotal evidence that leveraged present day buyers in wide parts of Europe are very likely to suffer hardship to a yet uncertain degree that will depend on the speed of further rate hikes by the European Central Bank (ECB). President Jean-Claude Trichet has not changed his view that credit is "ample" in the Euroarea. Double-digit Euro money supply figures from May show interesting developments in the detail: Annual growth rates of consumer loans are on the decrease while the financial sector is in a trend of piling up more long-term debt.
What I am concerned about is that these property bubbles are beginning to burst while lending rates - and maybe standards too - are still at historically relatively low levels in Europe.
But in a financial world where increasingly much emphasis is again put on "relative" or "beta" performance nothing can be ruled out as long as the ECB does not tackle runaway money supply growth in earnest.