Stuart Law, managing director of Assetz, commented: "Spanish property company shares were clearly overpriced and investors are bailing out after finally recognising that prices cannot keep growing.
"This could be good news for the property market as a whole, as it will reduce the vast gearing of listed property companies, reduce the high levels of housebuilding which has led to some oversupply in the market, and also decrease levels of illegal housebuilding in Spain, which is very distressing for buyers when they discover their purchase is not secure."
Assetz disputes the likelihood of any significant house price drop in Spain, which is currently benefiting from annual growth of around 7%, with a long term growth rate of 5 - 7% looking highly sustainable, especially in the tourist hotspots.
Law continued: "Falling Spanish house prices in real terms is actually old news, not least when talking about new build properties in the tourist locations, as developers have been offering discounts for two years now in an effort to maintain their sales volumes. However, these price reductions have not shown up properly in the house price indices.
"The reason for this is that black money (cash passed over the table at the time of purchase to reduce capital gains tax) has been reducing over the last two years or so under legal pressures, which has led to reported prices of sales transactions increasing. This has counteracted the actual new build price reductions.
"The net result is that the rate of property price increases have lowered to more moderate levels over the last two years, but a lot of the froth in terms of pricing has been taken off the market in that time. Two years ago, when Spanish new build house prices did suffer a correction (at the time when developers started to discount and investors started to get caught out when trying to flip properties) it was very little reported.
"Our view now is that house prices in Spain are firm but sustainable, not least as a result of the strong demand from British holiday home owners who continue their love affair with Spain. The Spanish holiday home market is also underpinned by strong rental yields in holiday hotspots of 7 - 8% and good yields will always ensure a healthy capital value of a property."
