Spanish real estate companies took a hammering in the stock market yesterday as evidence mounted that Spain's 10-year property boom is ending, writes Leslie Crawfordin Madrid

Shares fell in Fadesa, Inmocarral, Colonial, Metrovacesa and Urbis after a year of feverish speculation which had seen real estate stocks rise by more than 1,000 per cent in some cases.

Yesterday, however, disappointing data on house prices and reported trouble with some companies triggered a big sell-off.

House prices rose by 7.2 per cent in the first quarter, the lowest increase in eight years, according to data published yesterday by the housing ministry. In many regions, house prices are falling.

The ministry said that there was now an oversupply, with licenses having been issued for 800,000 new housing starts compared with an estimated demand for 600,000.

Builders say that there has been a rush to apply for construction licences ahead of stringent new environmental standards which come into force this year and that this has added to the glut of unsold property.

The tepid news from the housing ministry came on top of reported trouble with some companies in the sector and the misadventures of Sacyr Vallehermoso in France.

Traders said that most investment funds had already exited the real estate sector and that the free float for many of the listed companies was very small. "This makes it easier to hold up the stock valuations artificially," one trader noted. He added that some companies, such as Fadesa and Colonial, were in the process of being absorbed by larger groups.