Spanish house sales drop sharply

Spain's 10-year property boom has turned to bust this year

Spanish house sales slumped by 26.3% in the year to July, according to official figures.

Mortgage lending plunged by 33.2% to 10.2bn euros ($14.9bn; £8.1bn), said Spain's National Statistics Institute.

The credit crunch has led to a property slump in Spain and many economists say it is on the verge of recession.

The property market has been the main driver of economic growth over the past decade, but analysts say Spanish house prices are still up to 30% overvalued.

Property slump

The July figures were slightly better than those for June, when the year-on-year declines for both house sales and mortgage lending were even steeper.

Spanish house prices declined 0.3% between April and June, according to official figures from the country's housing ministry.

However, estate agents estimate prices have slipped by about 5% this year.

Next month Spain will launch a new house price index, which will be an alternative to current housing ministry statistics which analysts have criticised for not accurately reflecting the property market slump.