Santos Gonzalez Sanchez a mortgage lender and the president of the Spanish Mortgage Association revealed in a statement to the Spanish press this week that the country's property market sector is 'bankrupt'. Sanchez who also speaks on behalf of the country's mortgage lenders said that there is so much debt in the industry that finance for property development has ... effectively dried up. "The real estate sector is bankrupt... the viability of the property sector is in question and it is putting the financial sector in danger," he warned.
In summary, at the end of Q3 2009, Spanish developers had a combined debt of €324 billion in the Q3 of 2009. According to figures from the Bank of Spain this is the equivalent of around 30% of Spanish GDP. The interest bill alone is around €15 billion a year.
Some believe that Spain needs to create a "bad bank" similar to NAMA where all the toxic real estate loans can be dumped, freeing the banks from their bad debts and enabling them to start lending again.
