New home inventory increasing in some areas

Glut of new homes on the Costa de Almeria

Glut of new homes on the Costa de Almeria

The overall number of new homes for sale might be decreasing at a national level, but the excess inventory is still getting bigger in some areas.

The infamous Spanish property glut (homes never previously sold) shrank by a relatively insignificant amount of five per cent in 2014, but in four regions of Spain, the excess inventory of new homes actually increased by five per cent, namely in Ceuta, Melilla, Vizcaya and Alava (both in the Basque Country).

At an autonomous regional level, stocks declined in all regions except the city communities of Ceuta and Melilla, on the North African coast.

Fortunately, the regions where new home inventories increased are not regions where there is a problematic glut of new homes. Ceuta and Melilla, along with Navarre, Cantabria and Extremadura, are regions with the smallest percentage of new homes for sale, as a percentage of the overall national inventory.

Three autonomous regions account for 50% of the total glut, namely the Valencian Community, Andalusia, and Catalonia.

The Housing Department of the Ministry of Development annually quantifies the stock of new homes for sale by adding new homes finished and subtracting homes sold to arrive at 536,000 new homes on the market at the end of 2014, down five per cent compared to 2013.

The excess new home inventory began to grow rapidly in 2007, when it finished the year with 414,000 new homes on the market, peaking in 2009 with 650,000. It has since fallen by just 17.5%.

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