There are two camps of thought, one says things may get worse, whilst others, including myself, say things can only get better.
However, even though there is a glut of unsold properties across Spain, in some areas there is less and in some there is more.
And those that were forced to sell because of high interest rates, well they have all done so or managed to hold on, and now interest rates are rock bottom and will not go lower, and will stay low for some considerable time.
There are some developers out there desperate to sell whilst there are others, including ours, who is not and is refusing to lower prices than those from when we purchased. There will be, and are, bargains to be had, but only from 'Bank' stock or developers desperate to sell, and such bargains are already selling like hot cakes to shrewd investors, who are looking at the long term investment.
As for re-sale, any further drop in prices will be those who for reasons other than fiscal borrowing, are desperate to sell. Indeed some re-sales I've seen advertise have gone up slightly. Why? Because of what I've already said.
More and more re-sales now are not forced, so they are re-thinking their prices. We did the same in the UK, we sold our house when prices started going back up, and put our asking price up, and when we did, we had more interest than ever before and sold within 8 weeks of doing so.
In the UK, VAT has now risen back to 17.5% and I also suspect will go up in the next budget - they either have to make drastic cuts to public spending or raise revenue by some other measure, and they can't 'directly' tax people any more than they do already, so 'in-direct' methods of tax (VAT) will probably go up.
As for people not spending in Spain, not from what I've seen. Every time I go to the shops they are jam packed, and most business I speak to say they are managing, even though we are in recession, and speak of light at the end of the tunnel.
Some EU economists say that the Spanish economy is about rock bottom... mind you others say that it 'may' worsen slightly during first two quarters 2010.
So, based on my own experiences here in Spain, and looking at the long term picture, I feel things will 'slowly' start to get better during 2010, especially as there is already greater interest from the Brits to have a 'Holiday in the Sun' this year due to the awful weather they had in the UK 'staycation' during 2009, and if you couple that with the freezing winter the UK has had, and is still experiencing. Indeed, my parents are staying with us as we speak, and having been here now for 4 weeks, can see why we moved and indeed are seriously considering doing so themselves... and they are pensioners!!!
And going back to the Spanish VAT increase, Spain has by no means the highest VAT in the EU, even when you take the proposed increase into account.
There is sometimes 'method to madness'.