The Spanish property market has been in the eye of the storm on many occasions, both for good and bad reasons. Recently, it was because of a sharp fall in the value of Astroc Mediterraneo, and subsequently other Spanish real estate companies, on the Madrid stock exchange.

The British press went to town with its typically sensationalist coverage of the Spanish stock market's "Black Tuesday", announcing a Spanish property market crash and warning readers of the huge losses facing British investors. It failed to point out, however, that the actual property market in Spain had not suffered any consequences!

Attention-seeking headlines of this kind need to be balanced with the relevant facts and a clear understanding of how those facts impact the underlying value of Spanish property. It was, in-fact, the speculative phenomenon of the Spanish stock market that got a slap in the face, leaving the Spanish construction sector and Spanish house prices untouched.

The British press failed to point out, for example, that the shares in Astroc Mediterraneo, which fell so sharply, and initiated the story in the first place, rose more than 1000% last year alone, and that even after the fall, were still up over 100% on their value this time last year - a great annual return by any measure. To conclude that a stock market correction was well overdue might have been a more rational explanation. A sceptic might attribute the chosen headline to its more positive impact on newspaper sales!

The reality is that house prices primarily reflect the supply and demand for houses. Although demand for Spanish property has seen a marked decline during the last year or so, compared to their earlier boom levels, due primarily to rising interest rates across Europe, evidence is now appearing to suggest that supply is also being cut back, as Spanish developers channel resources and efforts into new markets, such as Poland and Romania. Indeed, the stock market scare is itself likely to result in a further supply cutback.

If you are considering the purchase of a Spanish property and are concerned about the recent headlines, it is recommended that you mitigate any potential risk by considering the following options, instead of the more popular off-plan purchase that became so popular during those boom times:

1. Consider the purchase of a key-ready or soon-to-be-ready property. Some developers now have properties in these categories. It is no longer necessary to wait two years or more for your Spanish property.

2. Consider re-sale properties (properties purchased off-plan some time ago by investors but now being sold on prior to completion). The drawback of re-sales has been mitigated by the recent market changes.

3. If you’re an investor, concerned primarily with your return on capital employed, you should look for distressed sales (people who purchased off-plan some time ago and who cannot complete the purchase now that the property is almost finished). You should expect a significant discount to current market value, but you will need to act very quickly.