Well, I found a study (in French) on Spanish real estate by BNP Paribas, with somewhat ambiguous results, and not enough hard info to diary. However, there are a couple of graphs that I wanted to comment upon:

This shows a comparison between actual prices (the top line) and theoretical prices on the basis of the net present value of future rent for the same place. The formula is included, it's obviously sensitive to a number of hypotheses like growth and inflation.

The graph is used to suggest that real estate is now somewhat overvalued, but it appears to be a recent thing, and there might yet be a catch up of rents as on previous occasions. So I don't find myself too worried by spanish real estate prices.

This one shows the amazing benefit to Spain of joining the euro (and also explains why real estate prices have gone up so much: debt has become a lot cheaper).

When we talk about Europe, and the dynamism of the economies of the periphery vs the continental ones, we should not forget that the continental economies also "gave" their better signature to the others at basically no direct benefit to them - if only to see their neighbors get more prosperous and integrated with them. That's what Europe is about, as well: the amazing catch up of those that were behind. Of course the central core is declining, relatively speaking: it was a choice.

That last one is an example of a VERY BAD graph. It has been built specifically to make it look like the evolution in the 3 countries is farily similar by dubious manipulations of the graph:

• the base of the index is not given (it looks like 100=the peak of the early 90s market for each country, at different times, which is terrible methodology to compare them)

• the graph does not start at zero;

The only relevant information is that the 3 countries have real estate prices that are similar in terms of ratio to the 1990 peak, but as we do not know from that graph how overvalued that peak was in each case, it's hard to know what to make of that information. Judging from the fall after the peak (-40% in the UK, -20% in France and Spain), one was more than the others. That makes the subsequent growth artificially underemphasised in the case of the UK (going from 60 to 170 is + 180%; going from 80 to 160 is +100%).

Again, my conclusion would be that the Spanish real estate market does not appear to be too horribly overvalued (with the French becoming bubbly, and the UK one having been bubbly and now on the cusp of - we don't know...)

In the long run, we're all dead. John Maynard Keynes