Thank you very much for your reply. It was very helpful.
My wife is Spanish so I am some what familiar with the wage scales in Spain. I am amazed that given the wage scales in Spain that any normal person can afford to buy a flat in Madrid.
I don't know if there is any validitiy to this, but someone in Spain in the banking industry told me that when Spain converted to the Euro, alot of funds in Pesetas that had been hidden for tax purposes were injected into the economy. In order to continue to keep these funds off the books a lot of it went into real estate. This supposedly started the upward spiral of prices. Once the public saw the market heating up this drew in a lot more investors, legitamate and otherwise.
If this is true then, I'm told, what we are seeing is an artificial bubble of price inflation which should burst sometime after it becomes very much cheaper to rent than make a mortgage payment.
All will be revealed in the fullness of time.
Been there, done that-