Off-plan property fever swept over Spain during the boom years of the previous decade, when buying off-plan became almost as popular as buying resale properties, despite big differences in supply. Nowadays, though, buying new property off-plan in Spain is difficult to achieve for lack of choice, as new developments for sale today in Spain as as rare as hens’ teeth. The new home business has become the “ugly duckling” of the Spanish property sector, explains the following article published by the Spanish property portal Idealista.com
In 2007, the year the Spanish property bubble reached its peak, people queued outside real estate developers to buy off-plan property because it was a case of buying today or “paying €6,000 more tomorrow”. In the first quarter of that year property purchases worth €39 billion were made, of which 44 per cent were new-build properties.
Eight years later, new-build property transactions barely account for 14 per cent of the total, according to data from the Spanish Ministry of Development (Fomento).
Between January and March this year, the total turnover of the property market was €10.5 billion, and increase of 0.8 per cent on Q1 last year, suggesting the market has finaly stabilised. But new home sales continue falling, registering a decline of 17.7 per cent in the first quarter of the year compared to the same period in 2014, becoming the “ugly duckling” in today’s increasingly stable Spanish property market. Barely one out of every ten properties sold today is a new build.
In the first three months of 2015 just 9,192 new-build properties were sold for a total of €1,489 million – with an average price of just over €162,000 – almost 20 per cent less in volume, and 15 per cent less in transaction value than during the same period last year. The data for the first quarter this year is the worst since 2013.
In contrast, in the same quarter 71,715 resale properties were sold for €9,051 million – with an average price per purchase of around €126,000 – an increase of 8.8 per cent in volume and 3.9 per cent in value compared to figures from 12 months ago.
In terms of sales value, the regions driving the new-build property market between January and March were Madrid (€304.5 million), Andalusia (€244.1 million) and Catalonia (€238 million). Per number of transactions, Andalusia was the biggest market (1,824), followed by the Valencian Community (1,360), and Madrid (1,282).
NEW BUILD PIPELINE
One of the main reasons behind the collapse in new home sales is the shortage of projects underway and above all, the difficulty had by developers to access financing. Although banks are slowly releasing financing funds, in return they require projects to be managed by solvent companies with experience and building quality and well-located properties.
In 2014 new-build licences went up by 1.7 per cent after seven years of continual falls. And construction activity appears to have confirmed its rise in Q1 2015: applications for licences for the construction of new projects increased by 22.7 per cent year-on-year to reach 10,681 licences, according to the Ministry of Development.
The positive trend in new home building has been kept up in the first three months of this year, with 34,873 planning applications approved in Q1, 1.7 per cent year-on-year more than in 2013. That brings to a close seven years of declining numbers of planning approvals.
Spanish Property Insight adapts and translates selected articles from the local press for the benefit of non-Spanish speakers.
This translation is based on the following article (in Spanish): La vivienda nueva, el ‘patito feo’ del nuevo mercado inmobiliario español