If the banks go through with it, Spain will discover what the real market value of housing is in a country with 24+% unemployment. As the question is where will the buyers come from?
House prices continue to fall across the Iberian peninsula, with the ratings agency Fitch predicting a further 15% decline in Portugal and Spanish banks vowing to sell off unwanted stock at rock-bottom prices.
Spain's second-biggest bank, the BBVA, said it would be accelerating its sales of toxic property assets, lowering prices as necessary.
It has €8.7bn (£6.8bn) of real estate on its books including building land and thousands of built and half-built residential properties.
Most of that property is connected to developers who have been unable to repay loans since the housing market crashed four years ago. "We will adjust prices month by month to speed up sales," BBVA's chief executive, Angel Cano, said on Tuesday.
The Sabadell bank, which has absorbed the loss-making Caja de Ahorros del Mediterráneo (CAM) savings bank, recently said it would be selling off new properties at a 38% discount.
Spain's largest bank, Santander, has reportedly dropped prices by 35% to 45%. Anecdotal evidence suggests discounts of up to 68% in some previously unsold promotions on the Costa del Sol.
Spanish house prices have already fallen about 25% since their peak. But many analysts are expecting another 10% fall, which would make the overall decline similar to that seen in Ireland.
Experts warned that further shrinkage of Spain's economy, which is in a double-dip recession and affected by strong austerity measures, could force prices still lower.Lower house prices seem like a safe bet as the Irish banks have still not taken the action that BBVA is talking about and lowering the price until it sells.
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