Sales have fallen by 60% and the overhang of unsold property (about 920,000 homes by the end of the year, on one estimate) make take years to clear. Sesena, a speculative property development just outside Madrid, has become notorious, with over 13,000 properties occupied by a few hundred householders (the location of the development, in La Mancha, hasn’t helped).

Spain’s largest property developer, Martina-Fadesa went under in July, having failed to refinance a loan. 12,500 houses and apartments are reported to be at risk. Spanish cajas - the equivalent of building societies or savings and loan institutions – have faced a wave of debt downgrades as their proportion of bad debt rises. Mergers are likely in the sector, under discreet pressure from the Bank of Spain.

The government of Prime Minister Jose Luis Rodriguez Zapatero has responded with a tax stimulus package for construction and consumption, but is restrained by a worsening fiscal position. The Bank of Spain has tried to boost liquidity but as has been demonstrated elsewhere in the world, simply giving money to banks is only a partial solution to the problem of insufficient lending. Moreover, with responsibility for regulation and spending devolved to regional level, the recipe is for a haphazard response to the crisis.