PRESENTING: The Worst Housing Market In The World

Photo: CNN

There remains debate over whether America’s housing market has truly bottomed, but it’s certainly not as bad as it was during and immediately after the recession.The same cannot be said for Spain.  

The AP reported Thursday home prices fell 14.4 per cent year-over-year in the second quarter and 15.2 per cent in the third.

Prices in Madrid fell 17.9 per cent.

The situation is so bad, it threatens the banking system, and in turn threatens the the finances of the entire nation. That in turn threatens all of the Eurozone, as its neighbours wait nervously to see if Spain ends up needing a bailout.

What’s the problem?

We dug in.

The busting of Spain's housing bubble was one of the first international ripple effects of Lehman.

It has not stopped since.

Since Q1 2011, the rate of quarterly price declines has accelerated — to -15.2 from -4.1 in Q3.

Here's the price cut history in Soria, in the north-central part of the country.

Here's the building for the first half-price-cut unit.

It's 4-beds, 1-bath.

And here's the building for the other half-cut price unit in Soria.

It's a 3-bed, 2-bath apartment with a balcony.

Another cross section of insane price cuts, this time in Fuengirola, near Malaga.

The facade of mega price-cut unit one

3-beds, one bath

And the second from Fuengirola

Also 3-bedroom, 1-bathroom

More than 350,000 people have been evicted from their homes since 2008. Another 500 evictions a day, according to government figures.

Source: Dow Jones

The evictions have begun tormenting Spanish society. In the middle of being removed from her home, one occupant went into labour — almost certainly from the stress, according to Dow Jones.

Source: Dow Jones

Just recently, two people facing massive mortgage debt committed suicide.

That sparked protests.

They worked. Last month, banks agreed to suspend all evictions for two years. But as any banker will tell you, this will only slow the country's housing market recovery.

But the real culprit for prolonging Spain's real estate agony has been austerity. As he works to get the country's debt under control, Prime Minister Mariano Rajoy has sacrificed this entire sector of the economy.

The rate of decline in unpaid credit obligations has hovered between 3 and 4 per cent every month since August 2011.

Until this past quarter, unemployment growth was actually accelerating.

Spanish banks have been forced to lay off workers in exchange for bailout funds.

Meanwhile, the ghost cities from the first wave of Spain's bubble still linger. Here is Valdeluz, a bubble development outside Madrid. Less than 1,000 people now live in an area built for 30,000.

Source: Daily Mail

More housing bubbles...

See what's happening in North America's No.1 housing bubble >

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.