The former chairman of the US Federal Reserve believes that Spain has a bigger real estate bubble than 'even America'.
'The real estate bubble is bigger than most European countries, even bigger than the one in the United States,' he explained. 'In that sense one would have to presume that there is more vulnerability.'
His prognosis comes as it emerged that at least one leading bank, Cajasol, is refusing to fund new constructions on rural land and in particular new golf course schemes in Spain.
In further proof of the property slowdown, new statistics show that property prices have gone down by up to 10% in a number of Andalucian areas. In the worst slump for ten years, the Guadalhorce towns of Alhaurin el Grande and Alhaurin de la Torre have seen a drop of as much as 13% over the last year.
In comparison with 2007 figures there have also been falls of nearly seven per cent in Antequera. Rincon de la Victoria has seen a drop of 10.3 % and Mijas has dropped by 6.2 per cent. The Eastern Costa del Sol in general has seen a property price slump of nearly five per cent.
While the Western coast has managed to achieve a rise of 5% and inland Ronda 9.8%, an estate agent on the coast admitted that prices have actually fallen in real terms.
Greenspan said that other European economies, such as France and Germany, were 'going well', although with modest growth. He added that the UK had also developed positively and could avoid major recession if the right regulations are put in place.
Greenspan's sombre warning is reinforced by recent figures from the Malaga courts on the high amount of home owners who defaulted on their mortgage repayments. By the middle of March, court officials confirmed that they had already received some 155 cases which amounts to half of the total number of cases registered in the whole of last year.
Banks normally wait for three months before taking cases to court and even then all efforts are made to avoid repossession.
