Two decades after the Queen of England spoke of her annus horribilis, players in the Spanish property market could rightly avail themselves of the expression to describe this year.

If 2008 and 2009 were depressing enough, while 2010 saw something of a timid recovery, the figures for 2011 represent some of the worst on records for veterans of the sector. Regardless of whatever aspect you choose to look at, be it the number of house or land transactions, housing starts and completions and mortgage lending, all of the indicators show the worst figures since records were first kept. What's more, a recovery is not in sight, with experts predicting an even worse 2012.

"Everything will depend on lending and the labor market, and in neither case do we expect any good news soon," Julio Rodríguez, the former chairman of the state mortgage bank Banco Hipotecario, says.

While credit flows to all sectors of the economy have dried up, the drought is particularly marked in the case of real estate. The number of home loans and the amount of money granted were at rock-bottom levels in the first nine months of the year.

The Spanish Mortgage Association (AHE) warned a few days back that mortgage disbursement is likely to end the year at only 90 billion euros, a fall of 30 percent from a year earlier. "Even in the few cases where there is demand, there is no funding available for developments. For example, despite the fact there are people in the Madrid district of Valdebebas interested in buying subsidized housing, there is no credit available for cooperatives," says economist Julio Gil.

But the most eye-catching figure is that of building permits granted for new homes. In the first 10 months of this year, housing starts amounted to only 83,000, not only a ridiculous figure when compared to the height of the boom in 2006 when there were 865,000 starts, but also if one bears in mind that this is the lowest number since 1960 when architects started to record the number of permits granted."

This year saw a plunge in the construction of protected housing compared with a slight pick-up in the free market. The austerity drive embarked on by the regions points to this trend extending itself over the course of the next few years as the research department of BBVA predicted in a recent report. If during the excesses of the boom Spain had over one million housing units under construction at one point, the figure for this year is 150,000 and is expected to fall to about 115,000 in the second half of next year, according to a report by consultant Horizone.

Not only will construction continue to slump, house prices, which are already at levels last seen in 2005, will continue to fall. Compared with the slight increase seen in home purchases last year, transactions for this year are on course to fall by around 30 percent.

"In addition, of the some 350,000 agreed sales expected for this year, many of them are still pending funding from financial institutions or real estate developers that are not able to provide it. They count as transactions when strictly speaking they aren't," the economist Julio Gil says.

Among the reasons attributed to the weakness of sales - apart from the habitual ones such as the shortage of credit and high unemployment - is the government's decision a year ago to withdraw tax breaks on mortgage payments on the main residence for all those with annual income of over 24,000 euros.

This produced a mini-bubble in house purchases at the end of 2010 before the fiscal incentive was withdrawn at the start of this year. The incoming Popular Party government has announced it plans to reintroduce this tax benefit, and will impose a super-reduced value-added tax rate on the purchase of new homes of four percent, compared with 8 percent at present, measures that could stimulate sales.

The new Public Works Minister Ana Pastor, whose portfolio also includes housing policy, has made reducing stockpiles of unsold new homes one of her priorities. There is an estimated glut of 700,000 unsold units that the domestic economy will take years to run down.

"In order for this to be the case, we need policies that stimulate demand such as those announced by the government. But we also need incentives on the supply side, and that requires a far-reaching overhaul of legislation governing urbanization," says José Manuel Galindo, the chairman of APCE, which groups together the country's real estate developers.

The sector helped drive the Spanish economy and was the main reason why the country's unemployment rate dropped to 8 percent, and also the main reason why it now stands at over 21 percent. Four years into the crisis, the construction sector has witnessed the destruction of 1.5 million jobs and prospects in this respect remain far from bright for next year. Consultant Horizone estimates that the downturn in the home-building segment of the market will see the loss of 200,000 jobs next year.

Four years into the crisis, with the proverbial light at the end of the tunnel still unsighted.