As a Spanish property lawyer based in Manchester, the first thing I am asked when I am introduced to people is: How is the Spanish property market doing?

The words “Spanish” and “property lawyer” appear to have a sudden effect on the other person and they start to interrogate me on the subject. This is something I now accept just as anyone from New Zealand is used to being asked if he has had a relative appear in Lord of the Rings! However, at the same time it has made me an avid follower of the Spanish property market, not only because of my profession but also because I want to be able to brief anyone who asks me the same question.

As many know, the situation in Spain is far from ideal. Experts reckon that there are approximately 1.5 million properties for sale including re-sale, off-plan, new build and bank repossessions. Bearing in mind that annual demand is around 220,000, it is clear that the market will require six or seven years to recover. This is one of the conclusions of a report from property analysts RR de Acuña & Asociados, which in my opinion reflects pretty well the current state of the market.

Beatriz Corredor, the Spanish housing minister, recently stated that property prices will continue to fall although she believes they are close to the bottom. She has recommended developers rent their properties until the market recovers, especially since Spain has one of the lowest ratios of rentals in Europe as the Spanish believe renting is a waste of money.

The oversupply is bad news for sellers but more positive for those fortunate cash-rich buyers who are looking for bargains as there are clearly a lot of opportunities, with both developers and banks offering up to 40 per cent discounts.

Banesto bank, for instance, recently launched 1,200 properties with discounts of as much as 40 per cent and with up to 90 per cent finance on loan values for up to 40 years. Other banks are following this example.

Whether these prices are still inflated or not is another question. Some claim banks have been holding back their star properties and what has been released so far is only the unwanted stock. Regardless of whether this is true, there is no doubt that some properties come with very attractive finance deals which would be almost impossible to get if buying directly from a developer or the seller.

At the same time, the future looks grim for developers. Many of these, including big names such as Martinsa-Fadesa, Aifos and Tremon, are in administration and more will bite the dust in the next two years when construction activity, which is still at very high levels, takes a nosedive. As for property prices, opinions are divided. The majority think prices will continue to fall although there are optimists – usually politicians or developers – who reckon that the worst is over.

I would conclude with the predictions by RR de Acuña & Asociados, which is that prices will drop by over 9 per cent in 2010 and over 4 per cent in 2011, representing a total fall of 25 per cent since 2007. Not a promising picture for developers, but it will offer opportunities for patient investors as bargains will flood the market.

This article was published in The Manchester Law Society Messenger in December 2009.