Spanish housing glut to disappear by 2017

The Spanish housing glut should have disappear by 2017, and work on new homes will have to start by 2015 to prevent price pressures building up, argues a new report from Tinsa, an appraisal company.

new-holiday-home-glut-construction-andaluciaTinsa see signs of small improvements in mortgage lending that could pave the way to a recovery in demand, and a progressive reduction in the glut culminating in 2017.

Under this scenario, housing starts will have to pick up in the second half of 2015 for supply to meet demand in 2018 without price tensions building up.

Tinsa assume the excess new housing inventory stands at around 400,000, based on figures from the Housing Department, and that Spanish economy will continue to grow at its present rate, creating the jobs people need to be able to afford to buy home.

2014 will mark the bottom of the market in terms of demand, with sales of 100,000 homes, and a similar level in 2015, roughly half of them new build. That implies the market can digest 100,000 of the new homes on the market by 2016, leaving a glut of 300,000.

Small investors and the Sareb will take care of another 105,000 homes, leaving around 195,000 homes, which should be disposed of by the end of 2017.

Generalisations can be misleading, however. As Iñigo Valenzuela, head of Tinsa, points out, the market is made up of many segments, some of which have already run out of stock.

In markets like the Balearics, Canaries, consolidated areas of the coast, and city centres where demand is deep and supplies limited, sales are on the rise, whilst price declines and stocks are on the wane.

Prices declines this year

Despite some encouraging signs, Tinsa still expect prices to fall in 2014, but less than the 9pc fall in 2013. According to them, prices have fallen 39pc since the peak.

Foreign buyers will continue to be the best performing segment, as it was in 2013, with non-residents up 34pc in Q3 2013 compared to 12 months before, and resident foreign demand up 20pc.

Price pressures in future

Tinsa forecast that developer financing will return by 2015, in time to ward off price pressures in 2017.

The pipeline of new homes being started today has run dry. This could lead to an acute shortages of the type of new homes that people actually want to buy, with no demand for the rump of the glut of new homes already built in places with no demand.

Given the long lead times in the home building industry this situation is fairly likely to happen, and could spark off escalating prices off-plan, just like last time. It wouldn’t be the first time the bitter lessons learnt were quickly forgotten.



8 thoughts on “Spanish housing glut to disappear by 2017”

  1. Phil

    Complete wishful thinking by the commercially driven ‘A Place in the Sun’ group whose emphasis is on overseas property exhibitions, magazine subscriptions, tv programmes etc to promote property abroad. So typical of Spanish mis-selling to reckon the glut of two and a quarter million homes currently for sale in Spain will be absorbed in under 3 years, on top of which there are reckoned to be three million empty homes in total in Spain. Unless of course all of these will be occupied by Eastern European immigrants.

    Anyone who falls for this crap has to be bonkers, people who write this garbage are capable of robbing their own mothers, it’s all about their own incomes!

  2. Neil D

    A lot of the glut is simply unsellable; never lived in, never will be. Is there any data on actual demolitions carried out or planned? If Spain wants to be the Florida of Europe, then it needs to be a quality destination.

  3. Chris Thorpe

    What a load of old cajones – TINSA? Would this be the same TINSA who were the banks valuers that made a huge contribution to the collapse with crazy over valuations of sub-standard concrete meat lockers? Wishful thinking hardly applies here – it is crass stupidity, delusional and bordering on criminal to publish such crap. Talking the job up is one thing………………

    1. Phil

      ‘Wishful Thinking’ was directed at ‘A Place in the Sun’ not Tinsa, Tinsa is another conundrum!

      Agree fully with your post Neil, especially about Spain needing to be a quality destination, that is in transparency, lower completion costs, better build quality, and all the rest they’re not good at. If only it really was the Florida of Europe, can you imagine the US allowing unlimited Russians, Chinese, Eastern Europeans, and just about every crook in, provided they buy a property for ‘X’ amount? That what Spain appears to have ok’d.

  4. Richard C Moseley

    The point made by Neil is valid. Much of the property supply is totally uninhabitable and whilst there is nothing official to confirm large scale demolition of distressed development projets, it is an inevitability.

    As for TINSA, well it always feels their data is a couple of years out of date, but their predictions of a market bottoming in 2014 is consistent with forecasts from leading investmnet banks and other economic forecasters.

  5. Campbell Ferguson

    SAREB and the banks are selling lots of developments to speculators, but its individual sales to occupiers that matters. That’s the only thing that removes property from the market. Its easy in prime locations and good properties, but once off pitch it can be really hard to impossible at any price. And yet in many addresses there are still people buying individual plots to build their own house. Surely there are enough of those already and at cheaper cost than site and build, without the hassle and uncertainty.

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on